A Long Way Around But We Finally Made It

After a circuitous two-day trip we finally managed to escape from the travesty that has befallen Boris Johnson’s Britain and land in Greece. This involved a flight to Geneva then a train trip to Zurich and finally, the following morning, a flight to Athens. Arriving in Geneva one is reminded of something that seems to have escaped the ‘New’ Britain – efficiency. We caught a train directly from the Geneva airport for a comfortable scenic ride directly to the Zurich airport. Train officials were mortified that the train was 6 minutes late. They shouldn’t have worried. This small taste of efficiency was very welcome. British officials, on the other hand, seem to have lost the ability to be mortified by anything, let alone mere train delays. A delay of only 6 minutes would be cause for celebration throughout the country. One more thing, the check-in queue at Swiss Air in Zurich very early on Friday morning was extremely long. But there were more than 20  check-in counters and they were all manned. Consequently the queue moved quickly. The same story at security. Every position was manned and it took less than 3 minutes to clear security despite the crowds.

            Because our trip had originated in the UK we were tested for Covid-19 at the Athens airport. We had previously given our trace-and-track details and were allowed to continue our journey even though the results wouldn’t be ready until the next day.  Had we tested positive – we didn’t – we would have been notified to self-isolate for two weeks. Seemed like a reasonable approach – especially when compared to the ham-handed approach in the UK where there was no attempt at testing (let alone tracking) and arriving passengers were simply told to quarantine for two weeks. Now, when the UK is finally modifying that policy many countries aren’t sure they want British tourists because of the virus spikes in the country.

Track and trace? Promised by June, now delayed indefinitely.

            British governments weren’t always this incompetent. But now there’s a prime minister who acts as though he would be much happier as the master of ceremonies at some pub’s karaoke night rather than lead a serious country. That’s hard work and requires real knowledge of major issues. Much easier to use one’s natural glibness and focus on simple, short crowd pleasing slogans like ‘Get Brexit Done.’

Much more fun than Prime Minister's Question Time

            Even though Britain is starting to re-open the country faces many more serious challenges like a treaty with the European Union and a trade agreement with the United States. Both of these are problematic. If this wasn’t enough they have to figure out how to pay for all billions of Pounds given to support companies and individuals during the worst of the virus.

            The deadline for the treaty stipulating relations with the European Union is December 31, 2020. Failure to agree a treaty by then would mean Britain leaving with ‘no deal’ which would result in total confusion and self-inflicted damage to the British economy. But, sadly, British negotiators seem to have adopted the ‘My-way-or-the-highway’ approach in these talks which were going to be difficult in the best of cases. This is fine if you have the upper hand which the UK most definitely does not. It needs friction-less trade with the EU far more than the EU needs an obstreperous, naively arrogant Britain.

            Unfortunately, Boris Johnson displays little interest in or knowledge of economics. Concerns of business and financial leaders worried about being cast adrift from the country’s largest and most important market interest him not at all. He loves the idea of so-called Global Britain able to form its own trade relations untethered to the cumbersome EU. In theory possible, but that requires the very diplomatic and bureaucratic skills scorned by the current government. It also requires management skills fatally lacking during the Covid-19 crisis.

            The government’s big hope is a trade deal with the United States. After all, Johnson and American president Donald Trump share a deep contempt of the European Union and a deep distrust of independent bureaucratic competence. 

Both of them believe sheer bluster can replace competence

But Johnson will soon discover that it is very hard for a small fish to negotiate equally with a whale. The only way the US would agree to such a trade deal is if Britain basically accepts everything the US wants – namely free access to the health care system and food markets.  This raises fears in many parts of the UK about soaring drug prices and lower food safety standards. Those fears may well be exaggerated but given their acceptance by a large part of the UK population they pose a real hurdle for Johnson. 

On a more practical note, there is absolutely no chance at all of any trade deal being completed before the US presidential election in November. If Joe Biden wins Johnson could face someone much more eager to work with the EU than with an ‘independent’ Britain. I suspect the priority of any trade deal with the UK would slide way down the long list of issues that any Biden administration would face. Johnson would quickly discover that the world is a very lonely place for medium sized countries not connected to any major economic bloc.

'None Of The Above' Should Win This UK Election

After one of the most moronic, unedifying campaigns I have ever witnessed British voters are going to the polls on December 12 to choose between a collection of deeply unpopular and flawed political parties with leaders I doubt their mothers would trust.

            The Conservatives behind Boris Johnson, a man of absolutely no known principle or conviction other than self-aggrandizement, appear headed for victory on the back of his mantra-like repetition of ‘Get Brexit Done’. Ask the inarticulate Johnson about the weather and his automated reply will be ‘Get Brexit Done’ All the phones at Conservative headquarters are probably programmed to answer any call with that nonsense. It’s worse than hearing Pachelbel’s Canon in every lift in London.

Boris Johnson shows the chances of 'getting Brexit done' by the end of 2020

             Granted, the Brits are heartily sick of the entire Brexit fiasco, but they are fooling themselves if they think this election will get Brexit done. The devil is truly in the details that will be hammered out in negotiations that will mostly likely extend well beyond Johnson’s mendacious claim of the end of 2020. If he secures a comfortable majority in parliament we can look forward to some rapid Johnson back-peddling on that time table. But he is very practiced at back-peddling and U-turns. Right now he is beholden to the collection of Little England fantasists in his own party who believe that somehow a shrunken, isolated Britain will flourish in a world dominated by large, powerful trading blocs. A rational person would think once or twice about abandoning a tight trading relationship with the UK’s largest partner in order – perhaps – to sign deals independently with countries that have limited trade with the UK. But then, no one ever accused the rabid Brexiteers of thinking rationally. And the Brexiteers’ Holy Grail of an independent trade deal with the United States? Good luck with that one. The UK will be at the complete mercy of a domineering United States. How sad it is to see a once-proud nation reduced to going around the world with a begging bowl.

            And Labour? Jesus wept! Yes, the social welfare safety net in Britain is torn and tattered. Sadly, the current Labour Party is dominated by a so-called radical wing whose thinking really hasn’t advanced very far from ideas first proposed by Lenin’s Bolsheviks at the Second Party Congress in 1903 – held in London at what undoubtedly has become hallowed ground by the current Labour leadership. Labour’s answer to the clear social issues facing Britain is to make everyone poorer. Forget Britain as an aspirational, growing economy where everyone – not just hedge-fund managers – has a chance to grow. Labour views the country’s economic pie as fixed, static with the only question being how to divide that shrinking pie into ever smaller pieces. Soak the Rich is a popular concept in many countries until you realize that that same tiny sliver of the population provides a hugely disproportionate share of the country’s taxes – taxes that could pay for needed social programs. By pretending to march forward with their eyes firmly fixed on the rear-view mirror the Labour Party will find that it has lost touch with much of its traditional base.

Labour leader Jeremy Corbyn trying to figure out the question

            In this environment of deeply damaged, untrustworthy major parties one would like to think that a rational third party might provide a reasonable alternative. Alas, no. The Liberal Democrats were once the great hope of people who had voted Remain in the 2016 referendum. But the party has had a terrible campaign that focused solely on the unrealistic goal of repealing the famous Article 50 setting in motion the great EU divorce. To compound their problems the party said it would agree to form a coalition with Labour in the event of a hung parliament where no one has a clear majority. This terrified many Tory Remainers who decided to hold their noses and stick with the Conservatives rather than risk Labour getting into power through the back door.

At least he makes one laugh laugh and not weep

            The only comic relief of this dreary campaign has  been watching Nigel Farage channel his inner Dirty Harry as he bangs on about the evils of the European Union. His idea of negotiating a withdrawal agreement is to take a smoking Magnum 45 into the meeting room and tell the assembled Brussels bureaucrats to ‘Make My Day, Punk!’ I’m sure he has a comic career on one of the American cable channels. Or maybe Donald Trump can find a job for him negotiating with North Korea’s mercurial leader Kim Jong-un.

Has The Tide Finally Begun To Turn Against The Extremes

Has the tide started to change? Has the negative, extremist populism that has dominated political rhetoric for so long slowly begun to recede? Recent elections in Europe and the UK certainly give some hope to those who reject the hard-line uncompromising positions of either the far left or the far (alt) right.

            In France, recently elected Emmanuel Macron just saw his newly-formed party roar to an overwhelming victory in the crucial first round of parliamentary elections. On current form his party, La République En Marche, should win more than 400 of the 557 seats in parliament. With this victory, he completely overturned the political status quo by burying the traditional parties of the Left and Right. Macron, France’s anti-Trump, showed just how meaningless those traditional alignments have become, and in the process breathed some long-overdue fresh air and vitality into French politics.

He is now firmly in control

             He now has the power to enact the sweeping legislative reforms he promised to get the French economy growing. Among the first items on his ambitious agenda is reform of France’s notorious labor law that makes it very expensive to hire anyone and almost impossible to lay anyone off – regardless of prevailing economic conditions.

            Macron’s desire to introduce much more flexibility into French labor has – predictably -- incurred the wrath of the far left, who traditionally reject any move to relax the current strait jacket of regulations. Jean Luc Melanchon, leader of the far-left La France Insoumise (Unbowed France) has warned Macron that he should not tinker with the employment laws. The fact that his party received only a negligible share of the vote doesn’t seem to have made much impression of Melanchon. Like many people, he severely underestimated the desire of the vast majority of French people for a thorough, pragmatic approach to get their country moving again. Macron’s type of pragmatism now has the chance to do more for the sans culottes of France than anything the traditional Left or Right have to offer.

            As a deeply committed Europhile, another key part of Macron’s agenda is to deepen and strengthen the European Union. He has already moved to re-ignite the Franco-German motor of the EU. It is not all clear just how much Chancellor Angela Merkel shares his views about deeper integration, but with her recent comments about the EU having to act much more independently from the United Kingdom and the United States it is possible see much greater Franco-German cooperation for more integration.

They hold the keys to the European Union

            It is doubtful that anyone could live up to all the expectations that Macron has generated. He may find that using great power effectively is much more difficult than getting such power in the first place. Sooner or later he will stumble and generate a backlash from even his most fervent supporters. But, in the meantime, it will be fun to watch him trying to pull a country as steeped in tradition as France into the 21^st century. Right now, he has the wind in his sails. One only hopes he is a good enough sailor to survive the inevitable storms.

            The reversal of fortune between France and Britain could not be more dramatic. After a startling election last week that saw the ruling Conservatives unexpectedly lose seats, Britain is now drifting rudderless in very dangerous seas. For years the British political and chattering classes have used France as a shining example of why Britain must leave the European Union. “How can we be tied to this failing enterprise called the European Union? Just look at France! What a mess! They will never get out of that hole.”

            Now, it is suddenly Britain that looks old and bungling compared with the youth and vitality across the channel. Macron is only 39, while British Prime Minister Theresa May looks very old and haggard at 60. We are already hearing voices that maybe the so-called Hard Brexit – a complete break from the EU – might not be the smartest thing to push for at this time. These concerns are supported by recent economic data that show Britain at the bottom of the league table. First quarter growth in Britain was only 0.2% while the Eurozone recorded growth in the same period of 0.6%. The much-derided Euro has also picked up strength against Sterling.

Whoops! This wasn't supposed to happen.

            We were recently in Holland, traditionally a strong British ally, and heard almost a sigh of relief at the prospect of Britain leaving the EU. “For years, all they did was say ‘no’ to every initiative for closer European integration. They wanted to opt out from this, opt out from that. In short, they always fought harder for British exceptionalism than for the whole concept of a strong European Union. It will be a relief to have them gone. Now we can get on with things,” said one senior Dutch executive.

            I doubt that Macron will be in a mood to do Britain any favors in the upcoming Brexit negotiations. I expect him to pay much more attention to moving his aggressive EU agenda forward than worrying about Britain’s continued relations – if any – with the union.

            The anticipated re-election of Chancellor Merkel in Germany and the election results in Holland and France demonstrate that, in Europe at least, the vast majority of voters want nothing to do with political extremes. They want solutions to their problems, not the theoretical rantings of the extreme Left or Right. It remains to be seen if the shock results in Britain will have the same results.

Could Turkey Make Northern Cyprus Its 82nd Province?

Negotiations to end the decades-long partition of the critically-located Mediterranean island of Cyprus are set to enter a new and theoretically critical stage this week in Geneva. There have been many ‘final stages’ since the island was divided between Turks and Greeks following the intervention of the Turkish military in 1974. But there are great hopes, at least by international negotiators, that this ‘final stage’ just might work.

Much has happened since 1974, including the internationally recognized Republic of Cyprus – the Greek part of the island – joining the European Union. The northern, Turkish part of the island, remains internationally isolated, recognized only by Turkey. The Turkish part of the island survives on hundreds of millions of dollars of subsidies from Turkey. The Greek part of the island has recovered from its financial meltdown and is buoyed by the promise of natural gas in its territorial waters.

Will the island re-unite or be split completely?

The rough outline of the Plan A solution to the island has been well known for decades. It would involve the Turks giving up some land, compensation for people on both sides who lost property, keeping some sort of local autonomy for the Turks, and ending years of economic and political isolation by joining the southern part of the island in the EU.  Sounds logical – to the outsider. But the deep, underlying distrust and dislike between the two communities have always been major barriers to this settlement.

Furthermore, there is the very sticky issue of ‘guarantors’ – those three countries of Greece, the UK, and Turkey who were supposed to ‘guarantee’ the stability of the island. This guarantor system failed spectacularly in 1974 when the Turkish army landed to protect the Turkish minority – and in the process left several thousand troops on the island who remain to this day. If there is a settlement what happens to this guarantor system? Will the Turkish troops leave the island? Will the Turks accept the security of the European Union instead of the security of their own troops?

Will they actually leave the island?

            However, beyond all these island-based issues there is a real elephant in the room that could scuttle all hopes of a deal. That elephant is the political maneuvering in Turkey to change the governing system of the country to give President Tayyip Erdoğan unfettered, unchallenged, unchecked power. Turkey's prime minister and parliament would be reduced to feeble rubber stamps with this change.

            In order to get the votes he needs in parliament to pass the constitutional changes Erdoğan needs the support of the Nationalist Party – a party who not only hates the Kurds but loathes the very idea of a settlement on Cyprus that includes the reduction or complete withdrawal of Turkish troops from the island. Even with the support of the Nationalist Party the issue is a near run thing. Several members of the Nationalist Party have balked at supporting changes reducing parliament to an afterthought. And there are even reports, nothing more, of ruling party AKP members who don’t like the idea of an all-powerful president.

            Assuming the bill passes parliament, there will be a national referendum to approve or reject the change to a presidential system. While Turkish polls are unreliable at best, a leading poll shows support for the referendum falling short of the required 50% + 1. Failure at the referendum stage would be a disaster for Erdoğan by puncturing his aura of invincibility and denying him the power he so blatantly wants. This he cannot allow.

            Thus, the elephant in the room of the Cyprus negotiations. Erdoğan could easily whip up nationalist sentiment in Turkey (not hard to do) by stonewalling any change in Cyprus. The brilliant Turkish journalist Metin Munir – now reporting from the safety of Cyprus because no paper in Turkey has the nerve to publish his work – says there is a Plan B being actively discussed in Ankara. That plan is simply to annex the breakaway Turkish Republic of Northern Cyprus making it Turkey’s 82^nd province if negotiations fail. Such a move may bring international condemnation, but would be immensely popular among the nationalist Turks.

He would sell himself as the great savior of our valiant Cypriot brothers and win the referendum in a landslide. Any opposition would be drowned in cries of national traitors, tools of foreign powers seeking to destroy Turkey. Such a campaign would be ugly but effective.

            International condemnation of such a move would have no impact whatsoever. It would only strengthen the deeply ingrained feeling that a Turk has no friends but a Turk. Erdoğan would loudly point out that the world did nothing to stop Russia’s annexation of Crimea. Therefore, why should he even listen to any criticism? The European Union would howl and scream. But so what? Turkish/EU relations were already at a dead-end. How much worse could they get? Greece would complain bitterly. But Greece is in no position to do very much. What would the United States do? That’s a very good question. No one has a clue at this point about Trump’s foreign policy which so far has been limited to 140-character tweets. Besides, right now most Turks think that America is behind every problem that Turkey is facing. Russia? Who knows? Putin is currently manipulating Erdoğan brilliantly. But will that manipulation extend to allowing dismemberment of Cyprus?

            Threatening Turkey with harsh economic sanctions won’t work. The Turkish people will gladly suffer mere economic hardship to preserve what they see as national honor. And furthermore, Putin will simply move into any vacuum created by Western isolation of Turkey.

            Any possible settlement on Cyprus is going to have to pay as much attention to political fine tuning in Ankara as it does to developments on the island itself.

It's Time For Some Honesty About Immigration

Listening to the fevered rhetoric about immigration during Britain’s recent referendum you would think that a tsunami of starving dark-skinned people from the nether regions of the world was about to engulf England’s ‘green and pleasant land.’

            Hyperventilating opponents of the European Union left the impression that the village greens and quaint little tea houses were about to be over-run with Romanian camper vans and swarthy Bulgarians barbecuing God-knows-what on their handy grills. Barefoot, somewhat grimy children would swarm over the once-pristine cricket pitches gobbling up the tea and crust-less watercress sandwiches so carefully set aside for the players.

Is this at risk of being over-run by Eastern European immigrants?

            Unfortunately, facts in highly emotional referendum votes are thin on the ground. What may have begun as principled opposition to the European Union easily morphs into tribal fears of anything different. Since the referendum these tribal fears have led to several very ugly racial attacks in various parts of the country as the UK’s version of the Klu Klux Clan gets going. We were in Southampton last week-end when a peaceful Moslem commemoration of the end of Ramadan had to be cancelled because of fears of racist attacks. The very next day there was a demonstration of people loudly opposed to any and all refugees.

            Britain’s political classes should be ashamed of themselves for failing to confront the issue of immigration head-on long before the vote. I cannot recall one single rational debate on the issue. The stage was left to those who could only express their inchoate outrage at the mere thought of freedom of movement with the European Union. All this anger at the imagined dire state of affairs in the United Kingdom, this frustration at failing to fit in to a globalized world had found its source – the hapless Eastern European immigrant willing to work at jobs no Brit would consider.

           

            Even now, almost two weeks after the vote, there is no thoughtful discussion of the issue, no debate on real issues. For example,

1.     Exactly how many immigrants from the EU are now the Britain?

2.     What percentage of the total British population do they make up? Is a big percentage, small percentage, or completely statistically insignificant?

3.     How would Britain’s health care service work without these recent arrivals? When my wife was in hospital the wonderful, caring nurses and staff were from all over the world. There was not one native Brit among them.

4.     How would London’s booming (until the referendum anyway) construction business thrive without the thousands of Polish workers?

5.     How would Britain’s service industry – hotels, restaurants, shops -- function without the immigrants?

Also, how much investigation has there been into the dark side of immigration – the exploitation of illegal immigrants?

            None of this has been openly discussed, and irrational fears have replaced facts. Many people are now calling for a so-called points system – similar to what Australia uses – to match would-be immigrants to skills required in Britain. Ah yes, but there’s a catch. You might allow in a highly skilled computer expert, but what about his family? Do they get to join him, or do they go to the back of the queue? And then there is there is the bureaucracy. Right now, the UK has absolutely no idea how many people overstay their visa, the border agency is overwhelmed, and tracking people once inside the country is impossible. When informed about someone overstaying their visa the police just laugh and say it is not their problem. And UK officials are supposed to set up something as sophisticated as a point-scoring system!? A daunting task for a country whose rail service would embarrass moderately prosperous Third World countries.

            Furthermore, there’s a potential immigration nightmare if the UK leaves the EU in a huff. Right now there are thousands of refugees living in squalid conditions near Calais. Without a border agreement, what would keep the French from solving that problem by shipping them all to the UK? Why should the French cooperate by keeping them in France rather than shipping them to the green fields of Kent just across the water?

Is Sangatte coming to Kent?

            There are perhaps legitimate reasons to believe the UK was never going to be a good fit into the European Union. Given its long history of parliamentary democracy and a globally respected legal system it is easy to see how UK politicians would reject the very idea of that system being subordinated to the recent, untested EU system of governance. Unfortunately, the EU leaders are tone-deaf to the rising complaints of EU over-reach and are threatening the entire structure. And here we are now at a major cross-roads. Will grown ups or sulky children take us forward?

            I have no idea who the next leader of the Conservative Party will be or just how successful he or she will be in the endless rounds of exit negotiations. I only hope they remember that Britain is a parliamentary democracy, and that parliament should not abdicate its responsibilities to a referendum.

            If the difficult question of immigration is to be part of those negotiations let us at least have some facts instead of raw emotion. Is immigration really a problem, or is it a solution to Britain’s manpower and brain-drain problems? The time for a serious discussion on immigration is long overdue.

Brexit Was More A Coup d'Etat Than A Revolution

A very bright friend of mine cast his very, very cynical eye over the Brexit vote and, not surprisingly, came to quite different conclusions than the majority of the post-referendum comment. According to him, very little of any great significance will be changed. I give a brief summary of his views.

“Too many people view this vote as a revolt of the so-called underclasses against the domination of the elites. According to this narrative these underclasses felt very ‘hard-done-by’ because they saw the immigrants and the cosmopolitan people of London racing far ahead of them. Rather than make any effort to join the happy new world order they did the only thing they know how to do and threw the whole cart upside down. Worked in Paris in 1789. Should work in the UK in 2016. What these people forget is that sans culottes of 1789 enjoyed a very brief ‘victory’ before the elites re-established themselves. The exact same thing will happen here. This was much more a coup d'etat than a revolution.”

Is Brexit a revolt by the modern sans culottes?

“The usual doom-and-gloom commentators overlook the fact that the Leave movement was led by members of the very elite the underclasses thought they were overthrowing. It is very doubtful that those underclasses by themselves could have pulled off a Leave victory. No, it took the efforts of these highly educated, wealthy, mostly older members of the ruling establishment to accomplish that feat. What’s odd is that most of them have nothing against the hot button of immigration per se. Some of the immigrants, after all, provide very useful functions like serving a good gin-and-tonic at their golf clubs or maintaining their lush gardens. This section of the elite would never want to be associated with the near-racist rants of clowns like Nigel Farage.

“What does annoy them greatly is the urge by many European Union officials for an ever closer political union. They look back on Britain’s long political history and relative stability and shudder when they look across the Channel at the very confused political history and instability of many continental countries. ‘God forbid that ever comes our way!’

“For them, the EU is fine as a trading bloc, but no more. Their faces flush with indignation at every intrusion of EU courts into the long-established and respected British legal system. ‘Who the hell are those buggers to tell us when we can throw some bomb-throwing mullah into jail for the rest of his natural life? Or, better yet, hand him over to the Americans?!’

“This class of people enjoys going to the fine watering holes of the continent and going through the faster EU line at passport control. They enjoy loading up their cars and bringing home crates of fine French wines without the nuisance of duties. Many of them are multi-lingual and have homes in the garden spots of France, Italy, or Spain. It would be a major annoyance and inconvenience to them if these privileges were forfeited and they had to go through the longer wogs’ line at passport control.

            “What the assorted pundits are also forgetting is that the long and tedious negotiations with the European Union over the its new relationship with the UK will be led by that very elite the underclass thought it was rejecting. Just look at them. Michael Gove, Boris Johnson, various columnists for the Daily Telegraph. All of them are card-carrying members of the British elite. The out-of-work coal miners in West Yorkshire won’t get within shouting distance of the negotiating table. Maybe they should. But they won’t.

How clever are they?

             “The UK negotiating team will be dealing with like-minded people in the EU who are also nervous as hell about the right-wing mobs snapping at their heels. It is to everyone’s interest, even the bloody-minded Frogs, to get this thing settled with as little fuss and disruption as possible.

“My rough guess is that in the final agreement the UK will retain trading rights but will have to accept the EU principle of free movement of labor. London’s financial center may take a hit, but that would not bother Joe Blogs of Middle England. He never liked those ‘posh toffs’ with their fat bonuses anyway. The UK will not be subject to the EU legal system, and will not be part of the EU decision making process. It will also not be eligible for any EU subsidies for agriculture or clean energy. An interesting point is the UK’s role, if any at all, in a European defense system that is outside NATO. Also, will the French get testy and deny British companies any role in Airbus?”

“In short, there won’t be much in the new deal what will really please those members of tribal England who thought they had completely rejected the EU. The immigrants will still come, the EU will still impose some niggling little rules, and England’s football team will still fail to advance very far in international competition. The British elite really is quite good at negotiating, and the new deal won’t be terribly different from the old deal. The elite is even better at fudging the reality of any deal arrangement to make it seem something it is not. Plus ça change and all that.”

            We can only hope that the self-styled members of this very British elite are half as clever as they think they are and can control the powerful tribal forces they have unleashed.

Can The European Union And The UK Avoid A Complete Train Wreck?

After the UK’s slightly surprising referendum results, the ‘Brexiters’ are gleefully extolling Britain’s new found ‘independence’ from the perfidious European Union while most of the sober main-line newspapers are wringing their hands over the country’s descent into prolonged economic and political confusion. Both reactions are premature, at best.

While there are clear winners -- Vladimir Putin and real estate agents in Frankfurt and Dublin for example– and some likely losers such as Prime Minister David Cameron and London’s financial district, the full impact will take months if not years to become apparent.

The biggest loser of the UK's referendum

If, and I do realize it is an enormous If, both the UK and European Union officials exercise just a bit of imagination and some flexibility both sides could emerge from this mess with a semblance of order. There is precedent for the EU forging a new type of relationship with the UK, but other EU countries would first have to get over their collective anger and pique that someone could reject their over-engineered structure.

That precedent, something like a privileged partnership, has been on the table for several years with Turkey. While most of the EU countries reject the very idea of a country as large and autocratic as Turkey becoming a full member they have from time to time offered the idea of this privileged partnership. Essentially, such a partner would enjoy most of the benefits of the trade privileges of the EU, but would not be part of the decision making process. Turkey, with its exaggerated amour proper, always rejected this compromise as being beneath its dignity. What the Turks so indignantly rejected could be very usefully be offered to the UK.

While the exact nature of this partnership would take long and tortuous negotiations to hammer out it is far better that both sides work out a compromise rather than storm off in a huff of injured pride. Broadly speaking the UK would have to recognize that a complete rupture could do serious damage to the Western European economic and geopolitical structure that – while imperfect – has provided an unparalleled level of political and material security to its citizens since the end World War II.

It would be idiotic beyond belief to put this at risk just because of injured pride. A look at Vladimir Putin rubbing his hands in glee at the self-immolation of the EU should reinforce this point. How long does anyone think he would take to increase the pressure on the Baltic states or countries like Romania and Bulgaria to return to the ‘true’ fold?

The EU would have to realize that such a complete rupture would not be in its best interests. Free trade between the UK and the EU benefits both sides enormously. The ‘Brexiters’ in the UK will also soon find out that trade with the rest of the world without the EU behind it could be very difficult with all the new treaties that would have to be negotiated.

Most likely the cost of this trade relationship is the continued free movement of labor within the EU and the UK. Again, while the ‘Brexiters’ loudly condemned this free movement, it is very difficult to see how this free movement within the EU has hurt the UK. Quite the contrary, with the UK’s unemployment rate hovering around 5% it is clear this movement of labor has supported the UK’s growth.

In this new relationship, it is difficult to see the City of London retaining its pre-eminent position. Yes, London, even outside, the EU, offers much deeper financial services than any other place on the continent. But the EU may well insist as part of any deal that UK financial service firms can operate in the EU only if they are based in the EU. The only two EU cities that have any of the required financial infrastructure to handle such an influx of business are Dublin and Frankfurt.

In short, there is plenty of room for both sides to reach a compromise that does not threaten the geopolitical structure of Western Europe. But first, EU officials must recognize that the common perception of them as elitist, dogmatic, undemocratic technocrats out of touch with real citizens has led to this impasse. It is well past time for them to do a little soul-searching about their constant over-reach and intrusion into the life styles of member states.

It would also be nice if the ‘Brexiters’, for their part, recognized that no country has the absolute sovereignty they loudly proclaim. The world is simply too interconnected these days. A wrong word in London, Beijing, New York, Tokyo, or Berlin can have an instant economic and political impact. We will soon see if both sides are mature enough to step back from the abyss they have opened to reach a reasonable compromise.

          Then again, maybe nothing much has changed Britain's view of the European Union since the days of the famous comedy series Yes Minister.

The President of Turkey Is Angry -- Again

Turkish president Tayyip Erdoğan is unhappy and angry – again. What upset him this time was the German Bundestag vote labelling the massacre of Armenians in Ottoman Turkey in 1915 genocide. But this anger and unhappiness are pretty much his default position when dealing with any criticism from Western countries.

By now governments in Europe and the United States should be familiar with the outrage and shock, shock of the ‘hypocrisy’ and ‘double standards’ he accuses the West of applying to Turkey. They should also pay absolutely no attention to this act – designed as it is for home consumption to ‘prove’ once again that Turkey is the victim of dastardly, perfidious outside influences. This might play well in Sivas, but not so well in Berlin.

When confronted with demands that Turkey stick to the original terms of the migrant deal allowing visa-free access for Turks to most of the European Union, Erdoğan’s henchman respond with real or feigned umbrage, loudly proclaiming that Turkey has ‘other options’ than the EU. Such as??

There was a time when the ‘other option’  claim might have been true. But under Erdoğan’s bizarre foreign policy and over-heated rhetoric Turkey is left with no other options at all. The Arab League does not want Turkey. The other Islamic countries are not about to submit to Turkish leadership. The so-called Shanghai Five group of Russia, China and various Central Asian autocracies might once have been a natural home for Erdoğan. But, given the rift with Russia, even that loose alliance is out of the question. Ever persistent, Erdoğan has turned his attention Central African countries in hopes of boosting economic and political ties. Well, who knows, that might just work. And then he can claim close alliances with Uganda, Kenya, Burundi, et. al. to fill the gap left by the European Union.

Erdoğan's lack of international influence was hammered home at the recent funeral of boxing great Muhammad Ali in Louisville, Kentucky. Erdoğan gathered together a plane load of flunkies and hustled off to Louisville in an attempt to show the world what a major player he was. Instead, he wound up looking like a completely out-of-place yokel who was told in no uncertain terms that he would not  speak at the funeral and would not be allowed to place a cloth from the Kaaba over Muhammad Ali's coffin. The humiliation only deepened when Bill Clinton and Arnold Schwarzenegger were seen greeting people at the funeral while Erdoğan was ignored. Miffed at this treatment Erdoğan packed up his entourage and returned to Turkey a day early.

Does anyone recognize this man??

This impotence in the face of the EU and U.S. infuriates Erdoğan. But, for the time being at least, there is nothing he can really do about it. He has never learned the first lesson of problem solving – ‘when you’re in a hole stop digging.’ The lesson for the EU leaders should be that they can afford to ignore Erdogan’s tirades when they remind him that brutal force against all real and perceived domestic opponents has severe negative consequences for Turkey.

All the trade and investment data show conclusively that Turkey is economically bound hand and foot to the European Union and North America. The EU countries and United States dominate trade with Turkey. The lion’s share of the dwindling foreign investment originates within the EU. Turkey depends almost entirely on funding from Western sources to close its current account deficit. None of this reality, however, stops Erdoğan from slamming the so-called ‘interest rate lobby’ for all of Turkey’s financial frailties.

The economic costs of Erdoğan’s  approach can best be seen in the numbers for direct foreign investment.

Since the banner years of 2006 and 2007 when direct foreign investment totalled almost $20 billion each year, the numbers have been falling sharply. In 2014, foreign direct investment tumbled to $8.5 billion. Last year in bounced up slightly to $11.8 billion, but in the first three months of 2016 it dropped to $1 billion compared with $3.3 billion in the first three months of 2015. One of the interesting points of this data collected by the Turkish Central Bank is that more than 80% of the direct foreign investment originates from Europe and North America – the very countries that bear the brunt of Erdoğan’s rants.

Meanwhile, the level of investment spending by Turkish companies outside Turkey continues to grow. In 2014 and 2015 it was more than $5 billion, and figures for the first three months of 2016 show a similar trend. This trend was reinforced by a comment from a senior officer of a large Turkish company who said he had more than $100 million to invest, and that every dollar of this amount was going outside Turkey. “There is much less risk outside Turkey than inside these days,” he commented.

A logical person might conclude that it is time for Erdoğan to recognize a few economic home truths and tone down is vitriolic anti-Western rhetoric. But then, one is not quite sure just how big a role logic plays in his foreign relations.

The problem is not limited to foreign relations. Domestically, the country is sharply polarized and violence has increased sharply. Previously the armed clashes were limited to the south-eastern part of the country. No longer. Now those bombs and clashes have migrated to the nation’s largest cities. One immediate effect of this trend is on the once-strong tourism sector. Tourists are staying away in droves, and one tour operator told me hotel occupancy around the country has fallen below 50%.

The latest car bomb in Istanbul killed 11 people

Of course Erdoğan and his henchmen blame foreign forces rather than look to anything they themselves may be doing wrong. Favorite targets are the Crusaders, the Mongol invaders, the Sevres Treaty, of course the Germans, and now even the hapless Zoroastrians are being blamed for car bombs in Istanbul. The government media overlook the wonderful irony of blaming the Crusaders while dressed up in warrior costumes of the Ottoman Empire – a far more successful crusading enterprise than the Crusaders ever were.

Ah, the good old days when people listened to the Sultan

A decade ago Turkey was considered a rising star among the so-called emerging markets. Leaders praised it as an example the combination of democratic values and ‘moderate’ Islam, a country that could be a shining example to the struggling nations of the Middle East. Sadly, those days are long gone.

Is This A Tory Party Bun Fight Or A Serious Debate?

What should be a serious debate about Britain’s place in the European Union has descended fairly quickly into nothing more than a food fight in a rather exclusive secondary school. On one side you have Prime Minister David Cameron and the Chancellor of the Exchequer George Osborne lobbing day-old bread rolls across the dining room at other Tory party grandees who respond in kind with volleys of butter pats. Stewards at some of London's finer gentlemen's clubs aren't quite sure which members are no longer on speaking terms.

            Make no mistake. This is a Conservative Party issue. Most of the non-political population of Britain seemed perfectly happy muddling along in the bosom of the European Union with the ease of visa-free holidays overriding nebulous issues of ‘sovereignty’. There were a few dissenting voices, but they were largely relegated to some colorful fringe elements. Most of the rest of us are left with mouths agape at the finest example of British fratricide since the civil war in the 17^th century. The Labour Party can only marvel at this sudden turn of good fortune that has taken attention off its own internal problems. 

            Those Tory party members champing at the bit to leave make a great claim about regaining British sovereignty and ending the rule of faceless, unaccountable EU bureaucrats in Brussels. The problem is they haven’t really defined exactly what they mean by sovereignty and how much that perceived sovereignty has been curtailed by Brussels. They forget the considerable success that British diplomats have achieved in winning substantial concessions for Britain. One of the main British victories allowed London to remain the leading financial center in Europe.

In their more fevered moments some members of the Leave campaign sound as if they would like to re-fight the Battle of Hastings. And this time the good, solid Saxons would send the poncey Frenchmen scuttling back across the English Channel to Normandy. One forgets that it was the Plantagenet heirs of those poncey Frenchmen that won eternal glory for the English at Crecy, Poitiers, and Agincourt.

            The debate has divided the British cabinet with several members taking prominent roles in the Leave campaign. The ever-calculating mayor of London, Boris Johnson, has thrown his lot in with the Leave campaign by trying desperately to sound like his hero Winston Churchill during the Battle of Britain. Unfortunately for him his thundering denunciations of the EU make him sound much more like Basil Fawlty than Winston Churchill.

            The main fault of the Leave campaign is that it only speaks in vague generalities about what Britain would look like outside the EU. Oh, there are brave words about how the economy would flourish, trade would soar, British-made justice would rule the land, and the British lion’s roar would once more be feared. But there are precious few specifics about how all this would be accomplished. No answers to questions about British access to European markets. No answers to questions about Britain’s relationship with the United States. No answers to questions about the likelihood of another referendum for Scottish independence. No answers to questions about the willingness of companies to re-locate or even remain in an EU-less Britain. No answers to questions about how seriously an EU-less Britain would be taken by the rest of the world. We are supposed to take it on faith that all would be good in this best of all possible worlds. Right.

            One of the biggest victims of Britain’s withdrawal from the EU could well be one of the most important parts of the country’s economy – the financial sector. London is without doubt the financial capital of Europe, if not the entire world. This status could be crippled by Britain’s departure from the EU by eliminating the ability of London-based financial firms to ply their trade in the EU. It’s not just the financial firms at risk. Think of the lawyers, the accountants, insurance companies and others that underpin much of the financial world. How long would they stay in a City of London stripped of its ability to operate within the EU? That crunching sound you might hear could well be the price of London office space landing on the suddenly empty streets.

            The best argument the Leave campaign might use has nothing to do with the imagined loss of British sovereignty to a bunch of Eurocrats. The best argument may well be that the European Union itself is crumbling under the weight of its own internal contradictions. Is it a loose federation of sovereign states? Or is it the beginning of the United States of Europe? Rather than deal conclusively with these hard questions the EU leaders preferred to bask in the glow of good feeling – almost as if they were a bunch of campers holding hands around a campfire singing Kumbaya. Meanwhile the real issues like common monetary policy or common foreign policy were left in limbo.

            If the British referendum on EU membership does nothing else, it should sharply focus the minds of everyone in the EU about the future of the entire project.