Bankers' bonuses: Bad policy

Defend a banker anyone? Shall we forget the misdemeanours of the past few years and let them get on with it as they did previously? Was mis-selling, rate-fixing and wholesale impunity just a minor aberration?

Perhaps I am being flippant, but really is it time to move on with how we treat our financial services sector?

There is anger and deserved contempt for the profession, and to some extent, deservedly so. The actions of several banks, both retail and investment, brought the global economy to its knees in 2008. Many of the banks were over-leveraged with billions of pounds worth of sub-prime and toxic assets on their balance sheets. At the same time, whilst a huge bubble was growing in the US housing market, bright minds were being recruited by the world’s biggest financial institutions and being remunerated with six-figure salaries and generous bonuses. Yet, this was not a revolution in creating wealth. It was entirely artificial and five years later, we the aftermath is still affecting the economy.

Small and medium sized enterprises are suffocating from a lack of credit within the system. Banks are being asked to meet lending targets, yet at the same time having to slim-line their balance sheet and maintain a higher capital ratio too. In 2008, banks weren’t able to function as banks because they lacked liquidity, now they are unable to lend because they need to hold on to their money.

This is where the problem lies; mainly in culture and language. Banks are perceived to conduits of free-market capitalism, unregulated machines that stuff money into the pockets of the rich. This is a ridiculous argument, yet it is frequently echoed by lazy politicians and journalists. The financial services industry contributes more than ten percent of the UK’s national GDP and employs well over a million people. Even after the crash.

Whilst regulation may be required, it is important to stress that more regulation is not the answer, simply good regulation.

EU regulation is an attack on the UK

The EU’s decision to introduce a Financial Transaction Tax as well as a cap on bankers’ bonuses is exactly not that: it is bad regulation. Whilst the City of London, the UK’s financial heart, has remained staunchly pro-EU, it has remained silent over these proposals. Make no mistake, when these were put forward, EU politicians were simply testing the water to see how keen people were for such measures, more will follow. This is simply an attack on Britain’s financial heart and the fact that the UK was the only country to oppose the measure for capping bonuses demonstrate that we are simply on our own.

It is also another example of the undemocratic nature of the EU. 26 nations, unelected by the British people, are forcing regulations on us that we simply did not vote for. This is before we question whether it will work or not. A similar financial tax introduced in Sweden in the 1980s simply forced all Swedish bond traders to move to London overnight. Who is not to say that the same will happen again this time? People argue that people would be unwilling to move away from London and the huge markets it serves, but why would an industry want to remain somewhere when the regulation is simply punishing and burdensome?

Bankers’ bonuses will drive up salaries, which are far more difficult to claw back than bonuses. In the event of another crisis, it will simply entail banks firing more people than addressing remuneration. In effect, they will be more unstable. Let’s not forget that banks are simply too clever, if there is a way of getting around it, they will do. People always tend to forget that these costs ultimately will be passed on to consumers i.e. you and I.

This is simply a bad policy.

What is most important that a British politician recognises this. For too long there has been no political capital in defending bankers. If this does become UK law, then MPs should realise that this is bad politics and not only will it cost growth, but cost jobs too. If a referendum does eventually happen, then people may realise that unnecessary rules and regulations from Europe are having a detrimental effect on the UK economy. The only way to avoid it, may be leaving.

UK Economy: Where to next?

What a fine mess we have got ourselves into. Today, Britain became the latest country to return to recession after figures revealed that the British economy shrunk by 0.2% between January and March this year. After months of commentary asking whether Britain would face a double-dip recession, the Chancellor George Osborne will now face a brutal bombardment to whether his plans are working.

The belief in the Treasury was that growth would not be easy to come by, the independent Office for Budget Responsibility (OBR) forecast growth at 0.8 per cent in 2012 and 2.1 per cent in 2013. The original figures were far more hopeful.

The admission that the target to wipe out the budget deficit within this Parliament would not be fulfilled only made the Chancellor and his Treasury team more resolute. Whilst America has seen a healthy return to growth, Britain has been undermined by the uncertainty caused by the debt crisis within the Euro zone. The bite of austerity would continue for at least another two years into the next Parliament.

Ironically, as these harsher conditions have ensued, the government debt is actually increasing. The loss in tax revenues has meant the Coalition will increase national debt to around £1.4 trillion by the end of this Parliament. So whilst the budget deficit may eventually be eradicated, there will still be a long term national debt burden for future generations to deal with. Economists are still uncertain of the long term effects of low interest rates combined with tranches of quantitative easing.

So was the Labour shadow chancellor Ed Balls correct? Was the coalition government cutting ‘too far and too fast’? It appears now that the coalition’s strategy is running at the same timescale as former Labour chancellor Alastair Darling expected it to before the last general election. According to Mr Balls the coalition has made the cuts but created no growth.

However, despite the poor headlines for the Chancellor in recent weeks, it is unlikely to shake him and his Liberal Democrat partners. Mr Balls has been vociferous, yet despite his so-called ‘five point plan’ he is yet to suggest anything of substance. The double-dip may actually force pressure on the Labour treasury team to announce some of their ideas, a stage which may get them caught out.

The previous set of employment figures showed that for the first times there were more jobs created in the private sector than lost in the public sector, a trend that Mr Osborne can only hope to continue. Today’s figures if anything are more likely to make the Chancellor ignore calls from the opposite benches and look towards greater market reforms from the right. As chief strategist of the Conservative party, be certain it will not be something he is willing to get wrong.

Bankers' Bonuses: A sensible policy.

The question surrounding bankers’ bonuses continues to dominate political debates. Fred Goodwin, the disgraced former Chief Executive of the Royal Bank of Scotland (RBS), joined an unflattering list of people, including Zimbabwean tyrant Robert Mugabe, to have their Knighthoods stripped. His successor, Stephen Hester, also succumb to growing public and political pressure by waiving his annual bonus.

Goodwin, who oversaw the flawed takeover of the Dutch bank ABN Amro, was made to resign after the UK government were forced to rescue RBS with a bailout package worth in the region of £45 billion. In 2009, RBS went on to report the biggest loss in UK corporate history totalling £24 billion. Goodwin, meanwhile, left with a pension pot worth in the region of £703,000 a year. Hester his replacement, by all accounts a good manager, has had to oversee massive changes in the organisation and deal with plenty of criticism as he has put to task. The UK government still owns 81 per cent of RBS shares.

Bankers are still not popular in the UK after the financial crisis in 2008, and despite the curbs on pay and apologies from bosses, financial regulation and policy is still an affliction on government policy, particularly bonuses. As the public sector endures a pay freeze and high inflation, it would be difficult for a government to be seen endorsing bonuses to a bank which is owned by the public.

Last year, the Chief Executive of Barclays Bob Diamond, once called the ‘unacceptable face of banking’ by the former Labour Business Secretary Peter Mandelson, told members of the House of Commons Treasury Committee that the period of remorse and apology for banks needed to end. Diamond, who received a £6.5 million bonus in 2010, believed the language being used on British financial institutions was unfair and could have an adverse impact on future regulation. The Barclays chief, aware of the public mood, introduced a new ethics code for misbehaving or ostentatious bankers.

Bob Diamond

The government has been unable to counter the venomous attacks from the media and its ability to generate campaigns. The Daily Mail’s front page targeted ‘Sir Fred’ day after day and then subsequently Hester. The Transport Secretary Justine Greening was forced to be seen to prevent Network Rail chiefs from taking their annual bonuses too.

Perhaps this is where the Conservative party is getting into trouble. It is too keen to submit in what is developing into a shotgun democracy. It wants to protect the City but it doesn’t want to be seen as protective of bankers. The Labour Party, who can still form no sensible policy or opinion of their own, continues to flip flop on the spur of public opinion. They are more content on trying to target left-leaning Liberal Democrats and splitting the coalition. Their agenda is fast becoming one of envy and class, yet the Tories retreat from any form of debate. Most people agree that it was correct to strip Goodwin of his Knighthood, but the hysteria is spiralling out of control.

This is fast damaging London’s reputation. The RBS Chairman Sir Philip Hampton said that bankers’ pay is something that needs reforming but it would require an overview of how we want to the City to work. If the 50p higher rate of tax on highest earners remains in place until the next election, London and the UK could potentially become an economically and politically ugly place to do business. It is a question that government must answer sensibly and putting business and jobs first. Otherwise, bonus season will become a never ending carousel for government.

The 'Right' of Europe

As the party conference season descends on the UK after the Summer Parliamentary recess, much of the focus will be on the three major parties and their policies towards the economy, education and health. One party that will be holding its party conference this week in Eastbourne, will be the United Kingdom Independence Party, UKIP as it is ubiquitously known, and its charismatic leader Nigel Farage. Known within the mainstream as a party that rejects UK membership of the European Union, UKIP is often seen as a place for right wing Tories to retreat to when they don’t like the direction of the Conservative Party. Yet, with bailouts within the Eurozone and increasing concerns about immigration, where does the future lie for parties of the right within Europe.

All across the continent, parties with right wing agendas have surged in popularity. Countries like Finland, in the heart of liberal Scandinavia, saw the True Finns party take almost a fifth of the votes in the recent Parliamentary elections, finishing third overall. The True Finns reject the EU bailout of countries like Greece and Portugal and promote Finnish women to stay home and have more children, preferably ‘ethnic Finns’. This was all democratic, whilst across the border in Norway, Anders Behring Breivik a lone gunman killed scores of younger members of Norway’s Labor Party, an institution he felt that had polluted the Norwegian way of life.

Traditionally, we associate right wing politics with racism and anti-Semitism. The massacre at Clifford’s Tower in York, the conquest of Toledo in Spain and latterly the Holocaust. Yet anti-Semitism is becoming less accepted by most European countries, all European countries recognise Israel and have anti-Semitism laws in place. In fact, figureheads of Europe’s right wing movement such as Marie Le Penn of France’s Front National or Geert Wilders, the Netherland’s most outspoken politician both embrace Judaism. Most right wing parties on the continent have turned their scorn towards Islam.

Too much immigration is not necessarily a right wing dictum; you are just as likely to feel resentment of uncontrolled immigration from traditional UK Labour Party members to traditional Tories living in the Shires. The right has always been successful in threading such political wisdom through appropriating the right of the individual and the need for a smaller government. Single issues parties like the British National Party (BNP) have usually failed because their narrow point of view and lack of political organisation, rare successes can be attributed to voters wanting to give the Government of the day a bloody nose, nothing more. UKIP does not pursue a racist agenda, it is libertarian, it believes Britain has the right to control its own borders and sees Europe as a talking shop full of unelected bureaucrats. In the last European elections in 2009, UKIP secured 13 seats, the same as the governing party of the day, Labour, and under an electoral system that is slightly more favourable to them.

When asked about what concerns voters most, Europe is normally an issue that comes way down the list of priority for most of the electorate. Yet, it would be interesting to see what would happen if UKIP perhaps took a sharper line on immigration, like other European parties. The current Conservative Government of the day would have a dilemma of what to do regarding its coalition partners, the Liberal Democrats. In 2005, under the leadership of Michael Howard, the Conservatives took a right wing stance on crime, immigration and Europe, forcing Tony Blair to move his election strategy to the same audience, most likely because they did not have the capability of winning. In an age where austerity is king and voters want secure employment and an accountable political and tax system, it would be interesting to hear what Mr Farage has to say and whether he decides to tread on the toes Mr Cameron.

The Euro: A lot on their Plato.

As most of Britain watched Murdoch in the dock at the House of Commons Home Affairs Select Committee, the Euro countries finally agreed to bail out Greece once again with an enormous 96 billion pound loan. Immediately markets across Europe were relieved, particularly across southern Europe where the Spanish and Italian economies were teetering from Greek contagion. However; the French president Nicolas Sarkozy has said that this bailout is purely to deal with Greece’s economy and other Euro countries will not move to assist the other ailing PIGS (Portugal, Italy, Greece, Spain). Yet as Britain strictly stays on the outside and European countries head towards fiscal union, where does the European project stand?

After centuries of war and bloodshed, it is remarkable to find that the European project has been so successful in turning military hostilities into economic partnerships. A continent ravaged by war became one of the world’s most important free markets. It appeared to be the correct decision to take as well. Europe, an economy of ideas and inventions would be an ideal competitor against the US and Japan. The decades after the Second World War saw great European statesman bridging differences and pushing beyond economic matrimony to a full-scale political partnership. This was a generation that had lived or emerged from two wars that had destroyed and killed millions, the plans that were unfolding before them seemed not only possible but the only option.

However, the increasing integration of the European project hit a brick wall, literally, when the Berlin Wall came down. For fifty years, Western Europe was a bulwark against the Communist East and now with democracy sweeping across Eastern boundaries, what was Europe and the EU supposed to stand for? Germany was always central to the project and unsurprisingly leaders were concerned about a reunified superpower in the middle of the continent.

European institutions, whether in Brussels, Luxembourg or Strasbourg have fundamental issues: a weak mandate, they lack transparency and accountability, further bureaucracy and perhaps most importantly to ordinary Europeans, they don’t know what it stands for. Perhaps this was the trouble with the European project; there was an original idea and as things kept on moving along, no one questioned where it was going. Monetary union was purely a facade to continue the project and did not encompass any financial instruments to ensure its success. Politicians and cultural commentators have speculated that a single currency would ultimate fail because the EU had no fiscal powers to monitor and penalise countries. As we have learnt over the past few weeks, there was no mechanism in place to leave the Euro.

The recent financial crises occurred because of a political impasse against the European project. Each country had its own interests to bear against an increasingly frustrated national electorate. It is unsurprising; billions of Euros are being spent on bailouts, particularly Greece, when its economic affairs were in a ruinous state before it joined the currency. Why should billions be spent in on the Greek economy when they should never have been allowed in from the start. This is not a victory to the little Englanders of the right-wing press who claimed it would all end in tears from the start; their grievances were aimed at bendy cucumbers and the inability for town halls to parade the flag of St George. This was a rose-tinted view that economic union would endure culminating in further political union.

So does a two-tier Europe have a chance? That is Euro countries forming a political bloc with countries such as Denmark, Sweden and the UK on the outside. It certainly retains the status-quo, France and Germany dominating the internal politics and directing its future. Tighter regulation of finances would bring control of taxation and other macroeconomic measures in house. That would be a massive repeal of sovereignty. Yet is there a political or cultural demand for such changes? Do European people seem content to move in a closer direction? The rejection of the Lisbon treaty or European constitution would suggest no and after the recent bailouts Northern European countries would demand checklists to ensure tighter controls on the PIGS, not to mention new entrants. Yet for the Euro to survive, as it stands now, this is the safest solution.

And Britain. Although it is not part of the bailout plan, it is yet to hear the last of Europe.

Printing the presses

The week’s dominating story surrounding the phone hacking allegations made by News of the World (NOTW) journalists is becoming an ever increasing business and publicity nightmare for News Corporation and Rupert Murdoch. This afternoon’s announcement that Britain’s biggest selling newspaper will stop printing after 168 years is a serious blow to the revenue stream of the world’s most famous media mogul. With probable criminal investigations and multiple public inquires into the scandal much scrutiny is being placed on News International’s Chief Executive Rebekah Wade (former editor of the NOTW) and her successor Andy Coulson (and deputy at the time) who later went on to become David Cameron’s press secretary. Yet how much scrutiny should also be focussed on the Prime Minister? Many commentators believe politicians kowtow to easily the media, especially the printing presses, but is Mr Cameron’s slow response subject to what some may say is an unhealthy relationship.

According to sales figures from March the newspapers (The Sun, The Times, The Sunday Times and NOTW) from News Corp sell well over 23 million copies each week. Even in a medium where circulation is dropping year on year) the power of newspapers to drive opinion is still an extremely important vehicle for politicians to maintain. Under Mrs Thatcher, Rupert Murdoch enjoyed an extremely healthy relationship and used his friendship to acquire the Times, without it being referred to the Monopoly Commission. He in turn used his power to back Maggie in her fights against the Miners and in Brussels. Later on, during the New Labour years, armed with two fierce media men, former political editor of the Daily Mirror Alastair Campbell and Peter Mandelson, Tony Blair was able to contrive most editors into plugging his vision of a new Britain. It became extremely insidious and some of the press had sympathies with the government after the Iraq War and the Hutton Inquiry into the death of the weapons inspector Dr David Kelly.

So is Cameron really at fault? Is it not part of the political game? He courted the Murdoch press during his time in opposition and they forcibly backed him against the dithering Gordon Brown in the 2010 election. Does he not owe them a favour in return? There are plenty of examples from overseas, particularly America, that show what problems Presidents can face when they get on to the wrong side of the press. The Watergate scandal saw the downfall of Richard Nixon and many saw the end of Lyndon B Johnson’s presidency down to the press coverage of the Vietnam War. The CBS anchor Walter Cronkite famously reported that the conflict was “mired in stalemate” to which LBJ was reported to have said “If I’ve lost Cronkite, I’ve lost Middle America.” Since these times politicians have seen it as a duty to court the press. As Enoch Powell said “Politicians criticising journalists is like sailors criticising the weather”. They are in affect part of the game.

Cameron is known to dine regularly with the likes of Matthew Freud, a PR man who is married to one Elisabeth Murdoch and he also attended the wedding of Brookes two years ago. So far, the Murdoch press has been very loyal to the coalition Government, yet the resignation of Andy Coulson was when many questioned started to question Mr Cameron’s own integrity.

This is particularly why the Prime Minister needs to be careful, people will think the delay and dithering of his response come down to the fact that he does not want to decapitate a Government-endorsing newspaper. When questions are now being raised that the PM knew that Coulson was complicit in signing off cheques to bribe policemen then the pernicious details do not look favourably on Mr Cameron or the Murdochs. The reputation of the British press is notoriously sensationalist and scandal based, but the public fury and ethical questions being asked are not good all round, Mr Cameron should be aware of this and know when issues are in the interest of the people rather than himself.

It's the economy, dumbass!

The political change taking place across the Middle East and North Africa has surprised most commentators and politicians in terms of its success and speed. Many of the countries that have changed during the ‘Arab Spring’ had been controlled by strongmen who had been in charge for decades. Hosni Mubarak, who stood down from Egypt after thirty years, was only the third president since the 1952 revolution. What has interested me most besides the timing, has been the reaction of the world’s major countries, particularly America. The US has been a major player in the region in the past sixty years, providing aid (and arming) Israel, placing sanctions on Iran and removing Saddam Hussein from power in Iraq. The US has a varying record across the world but it is always unanimous when it comes to promoting and pushing values of democracy and liberty.

These values are mentioned dozens of times in any presidential speech and evolve ultimately from America’s Declaration of Independence and Bill of Rights. American troops are deployed all around the world to protect the love of their country and the values it evokes. Yet despite the vivid portrayals of flags and parades adjoined to the rhetoric from the likes of Sarah Palin and Michelle Bachmann, I wonder whether America is perhaps over-democratised and whether its ‘brand’ of politics is tarnishing the way the system works?

To many, 20 January 2009 was a historical day across the world, but particularly in America. Barack Obama was sworn in as the first black US President. It was a magical moment to watch and the banners for change were painted across cities and small towns in America through the ubiquitous ‘Hope’ posters that will come to define a generation. Yet since that day the obvious stalling of the American economy has defined Obama’s first term as President and with that an infectious antagonism has developed between the President’s Democrats and the Grand Old Party (GOP), the Republicans.

The passage of Obama’s healthcare bill that in essence extended insurance provision to the poorest in society caused fractions between both parties. Obama’s Presidential opponent, Senator John McCain called the bill ‘unconstitutional’ and the President was called a liar by Republican Joe Wilson during a joint session of Congress, a major disrespect in American conventions and in most democracies. The issues of late has been the nation’s high unemployment rate, around 9%, and the inability to agree on America’s deficit (currently America’s total debt stands at $14 trillion (and increasing)). The Democrats, who suffered defeats during the midterms, struggled to pass through the President’s budget until the last minute. Yet, the belligerent GOP who block every bill proposed by Mr Obama, have struggled to formulate their own deficit reduction plan. Congressman Paul Ryan who put forward a much tougher plan, compared to the Democrats, called the ‘Path to Prosperity’ wanted tighter reforms to healthcare and federal spending. This too was voted down. Politicians are embattled over the Treasury’s ceiling limit of American federal debt and the unrest is visible as states such as New Jersey, California and New York struggle to tackle their public spending, even the NFL nearly went on strike. Yet amongst all this, it appears we are yet again in election season.

Despite the US elections being over 18 months away, we have already descended into the hubbub of caucuses and campaigning. The Republicans candidates are still deciding whether 2014 is the best opportunity for them to run. Most headlines nationally and internationally focus on the glamorous, relentless yet fallible Sarah Palin. An ambassador of the Tea Party and a saviour to America’s right, Palin has taken herself on a tour of the US but has yet to confirm whether she will stand. The flamboyant property tycoon Donald Trump also ruled himself out after questioning Obama’s citizenship. Another unhealthy idea evolving from America’s Right is the re-emergence of Reagonomics, in honour of the Republican’s ideological God – Ronald Reagan. Yet Reagan’s policy of cutting taxes yet maintaining a large military capability through borrowing seems idiotic but plays with the patriots’ hearts, despite a horrendous deficit. There appears to be plenty of choice of candidates but no one outstanding.

American electioneering has revolutionised the way democracy and politics works and moves. From the advent of Presidential debates that saw the rookie John F, Kennedy defeat the experienced Richard Nixon to the sophisticated internet campaign that saw Obama steamroll Hilary Clinton as nominee then John McCain. Presidential campaigning is a billion dollar industry and has been used over the years to the Philippines, Venezuela, even the Scottish National Party (SNP) adopted the technology in the recent local elections in the UK.

Now here is the problem, expect utterances of ‘American exceptionalism’ and the usual musings of freedom, hope etc. Yet, it appears to deflect from the big elephant in the room. Bill Clinton’s infamous election phrase, ‘It’s the economy stupid!’ America is in a safer position compared to Britain because the dollar is the world’s reserve currency and developing nations are still prepared to buy US Treasury bonds. Yet the dynamics of American electioneering deflect from the intrinsic importance of policy making and sorting out the economy. The current UK coalition between the Conservatives and the Liberal Democrats could of course collapse at any time, coalitions do, but the five year plan to wipe out the deficit, despite its critics, is backed and understood by most members of the British public. The British economy is of course entirely different to the American, but the flexibility of the Parliamentary system, which does have its flaws, has shown that the benefits over a codified and rigorous constitutional system. America’s love of democracy isn’t helping any recovery.

America should be proud of its values and persistence to promote and enhance the lives of others across the world. Its labour markets are flexible enough to create new jobs and adapt to the global economy, yet it the constant dogmatism and disorder, perhaps over-democratisation, mixed with the professional electioneers, has caused it to stall and lose focus on important matters. By no means, would any American lust for the Chinese political system or the over bureaucratic system of India but it would aspire for year on year high economic growth and end site to potential financial meltdown. The world could not afford the American economy to default, but you wish someone would stop talking about flags and just say ‘it’s the economy stupid!’

Next stop, Mugabe.

Lord Palmerston, one of Britain’s most influential Foreign Secretaries in the nineteenth century is often remembered for his famous dictum:

“We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

This is true of any nation. The US delegation that visited Mao’s China in 1972 was treading on dangerous ground. History Professor David Reynolds from the University of Cambridge said at the time it is like comparing ‘America opening talks with Al Qaeda’. Every story has a context and President Richard Nixon was pursuing a policy of containment from Soviet influence with his mandarin Henry Kissinger. China, under the insular rule of Chairman Mao, were political pariahs. They had contributed in World War 2 to help defeat Imperial Japan, but several years later (after the Mao’s succession) sent forces against the West on the Korean peninsula. The US decision to open talks was made easier by the Ussuri River conflict agaisnt the USSR three years previously. Communist China and Soviet Russia were now sworn enemies. This not only allowed the US to start talks with China, particularly about containing the Vietnam War but it opened up a diplomacy that would transform the two nations economically.

It is the same within the Middle East. The peace treaty between Israel and Egypt was transformative, after decades of war, it showed the ability to negotiate over trade and ultimately co-exist. This asks the question of Britain and whether it is willing or able to move on and talk to the wasp’s nest in the loft, Zimbabwe and its belligerent and ailing leader Robert Mugabe.

British history in Africa is grey. Comparing it to other nations and their empires such as Belgium or Portugal then you could mistake the British for saints. The ‘Scramble for Africa’ saw land divided between other countries with the line of a ruler. Unlike places like India or Hong Kong where institutions were laid down, a loose form of indirect rule was placed with strong tribal leaders to control affairs on site, whilst decisions were made from the Colonial Office in Whitehall.

The 1960s and the ‘winds of change’ speech uttered by PM Harold MacMillan saw swathes of British Africa declare independence; The Gold Coast, Kenya, Nigeria and South Africa. All these nations elected their own governments and power was truly handed over from London. Yet the British exit from Rhodesia did not change much in terms of politics. Ian Smith, a white militant, took charge and retained the apartheid system that subjugated Black Rhodesians. The guerrilla war that ensued finally ended in 1979 through the signing of the Lancaster House Agreement in London that ended Smith’s unilateral declaration of independence. It also introduced to the world the wily and implacable Robert Gabriel Mugabe, a product of the British Colonial system.

Why does Mugabe in particular revile the British establishment? Zimbabwe has a shocking human rights record; but what of the genocide in Darfur or the habitual rape of women and children in DR Congo? Freedom of the press – it is hardly a model system but compared to Eritrea. The dispute over land distribution is probably worse in neighbouring South Africa. If Mugabe is going to win an Oscar then it will be for his economic mismanagement, but the picture is often presented more fiendish than it is in comparison. Yet Zimbabwe, behind Afghanistan, Iraq and Iran, still features highly for UK press concentration. It ultimately boiled down to the fact that Mugabe, with his agile political skills and connivance, managed to defeat the British who left an Africa unfavourably for black Africans.

Yet despite his brazenness and ferocity, Mugabe still admires his ‘mother country’. He is known to enjoy afternoon tea and like Idi Amin, the Ugandan tyrant, wistfully respects the Queen and the Royal Family. Travel bans to the EU and US not only prevented his wife from trips to Harrods but separated him from the Establishment. This of course is entirely different to his revulsion towards the British Government, they only made things worse.

This is a man that oversaw an operation translated from Shona (the majority ethnic language) meaning ‘drive out the filth’ that saw bulldozers smash through homes of voters of the MDC (now in government with Mugabe’s Zanu PF) and Zimbabwe’s other ethnic group. This is a man that caused great instability across the whole of Southern Africa. A Black African killing black Africans, driving millions of refugees into neighbouring countries and overseeing the disastrous appropriation of white farm land to black natives that caused the whole region to suffer economically and without food.

We hear rumours that Mr Mugabe, now 87, is terminally ill with prostate cancer, yet still clutching to power. His latest economic policy is to see that all foreign owned enterprises must be have least 51 per cent ‘native’ Zimbabwean investors, a policy that is unsettling big firms such as Barclays Bank. The US and EU sanctions have also seen Mugabe flirt towards the Chinese, trading diamonds for military hardware. With a breakdown in relations between Mugabe and Prime Minster Morgan Tsvangirai the elections scheduled for next year could turn out as farcical and bloody as 2007.

Is this the opportunity for Britain, like Nixon all those years ago, to reach out an olive branch to Mugabe and reset relations? Not only could it possibly heal fractious wounds and generate a new relationship akin to somewhere like Sierra Leone; but it could prevent trouble in the short term. Who is to say that when Mugabe finally releases power (probably through death) that there will not be a power struggle from rapacious generals creating more unrest ; or alternatively a backlash against Mugabe’s ‘vets’ (war veterans who are in effect work as a paramilitary, yet they were probably not old enough to have participated in the independence war.) This would not be akin to an Arab Spring but another Rwanda, with consequences across the region.

Yet both parties are too stubborn to think along these lines. Mugabe will never give way and Britain would see this as submission. However; after its mismanagement since the 1890s and post independence, this could be the Empire’s medicine and redress after decades of mistakes, and ultimately an avenue for economic cooperation as Palmerston said.

Foreign trade: The moral or economic good?

An interesting story bypassed the news agenda last week that could affect British interests in the future. The Chinese vice Premier Li Keqiang visited London and other parts of the EU to sign multi-billion pound trade agreements. He was also trying to rebuild China’s image after the Nobel Peace Prize, where the winner Liu Xiaobo, a Chinese pro-democracy campaigner, was absent through house arrest. China is opening its frontiers to the world and formulating its own foreign policy, proscribed to be undermining the work of many Western Governments insisting on human rights and education, compared to China’s open trade policy with any nation. To what extent can countries like the UK lecture other nations about human rights, yet trade openly with them. Can foreign policy in any way be idealistic or does pragmatism rule the waves. In any instance, self-interest or supranationalism is always going to affect one party.

Anglo-Sino relations have historically been fractured. The Chinese have always felt that British global hegemony had subjugated their proud traditions and the effects of two 19th century opium wars humiliated the Chinese Emperor and its people. These measures saw the frosty handover in 1997 of Hong Kong, in what the British saw as the end of Empire and the Chinese saw as a return to status quo. Almost 15 years after the handover, to what extent can Britain lecture China about human rights, not because of its own colonial past but more the obvious economic and cultural gulf between the two nations. There have been run ins over the past few years; the former Climate Change Secretary and now Labour leader Ed Miliband, angered the Chinese Government over his comments that they had destroyed potential negotiations at the Copenhagen Summit in 2009. Ties were broken off after the UK saw Chinese policy in Zambia as a form of colonialism and then there is the continuous argument that perpetuates over Tibet.

The ultimate goal of foreign policy between countries, effectively nowadays, is to pursue trade and maintain friendly relations. Realists identify with this and the dictum of 19th century Foreign Secretary Lord Palmerston is often quoted, “Nations have no permanent friends or allies, they only have permanent interests.” Newer forms of diplomacy like the one pursued by American President Woodrow Wilson through the advent of the League of Nations ultimately failed, and failed disastrously because of the self-interest of individual states. The EU and other trading blocs have been more successful because the financial incentives are axiomatic. The pursuit of a moral foreign policy has been unsuccessful because no matter how pressing an issue is, if 5000 defence jobs are lost because of a philosophical foreign secretary then the people will call for his head. The idealistic legacy of William Gladstone perhaps is something to learn from history. A grand social reformer at home, but his dogmatic pursuit of Christian interventionalism saw him fail to convince other nations that it was for the moral good. Something his indefatigable rival Benjamin Disraeli saw from the Opposition benches as naive. Perhaps the belief the world can be shaped by universal truths is a failing itself.

It is therefore in Britain’s interests to be trading with countries like Libya. There is the obvious financial benefit but there is a diplomatic discourse that breeds ideas. Opening economic borders opens groups to the realms of democracy and free speech. China learnt in South Africa, a country with a history of human rights abuses, that it cannot expect South African workers to work in the same conditions as its Chinese counterparts. Britain will continue to increase trade in China, Turkey and Russia but it will be well aware that in the aftermath of recession the pound speaks louder than a human rights lobby.

Rwanda and Kenya: all Eyes On East.

The British press tends to have a pejorative, backward view of Africa and have artificially portrayed it as a wasteland since the winds of change brought decolonisation over 50 years ago. The view of South Africa before the World Cup was that it was a country overrun by AIDS orphans, poverty and inequality. Now there are facts and stories to prove these correct but it is examined through a form of myopia that seems unlikely to change for the foreseeable.

As the tourists and the media have left South Africa back to their own territory, it has been shaping up in East Africa, Africa’s potential Euro-zone style economic area. It does not warrant a ‘make or break’ style headline, but concurrent events across the region will have significance on the short and long term goals of the region.

This month will see elections in Rwanda as Paul Kagame continues to keep a tight grip on power. Rwanda will always be associated with the Genocide of 1994, where 800,000 Tutsis and Hutus were slaughtered in one hundred days. Yet, since the genocide, Rwanda has become an economic tiger since its rebirth; Kagame created a hub for economic investment, free from corruption with broadband speeds quicker than rural England. Diplomatically, Kagame has become a darling of the West, transforming the former Belgian colony into a member of the Commonwealth and attracting millions of dollars in aid money each year - including £50 million from the British Government. In fact, tensions led him to cut all diplomatic ties with the French Government and saw Rwanda, a  country with no British heritage, adopt English as its national language.

His strong-willed approach has brought him criticism from many internally and internationally. Former political allies have been shot, a national newspaper editor was murdered, opposition politicians have been gagged or placed in jail and Rwanda’s internet has been heavily censored, all have murders are suspected to be linked to his regime. Many have drawn similarities to his autocratic style to that of Mugabe and Israel’s Ben Gurion and that despite his prominence as a progressive leader, he is still a soldier at heart. Many argue that because of his armed interventions and Nyere-style reforms that he is a real African hero and deserves a final seven-year tenure will serve the Rwandan people well.

Across the border in Kenya, a proposed referendum will decide an overhaul of the country’s archaic and top-down political system. The shocking and violent election of 2007 nearly brought the West’s economic hub to the verge of civil war. Michela Wrong’s controversial book ‘It’s Our Turn to Eat’ uncovered the endemic corruption and revealed how tribal politics ravaged the country’s treasury and ultimately forced the UN and the West to prevent further bloodshed. The referendum hopes to address the constitutional powers of the executive, judiciary and enhance the role of the county system; not to mention the blurry seams of accountability. Not only does Kenya serve as a stable economic and political hub for the region but it is important for the rest of the world as many of Somalia’s pirates are being tried in Kenya’s courts.

Both of these events will help give purpose to further political enrichment and quell or enhance any fears in the West. Regional stability is essential in breaking down trade barriers between neighbouring Uganda, Ethiopia and Tanzania. It is next year before we will have to wait to for another contentious poll, not in Somalia but a potential South Sudan. We will have to wait to see what happens.