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Brexit: The UK’s Four Options, All Tough

Mon, 2017-12-11 18:01

By Paul Goldschmidt

The Brexit agreement between the UK and the EU is full of contradictions.

The agreement reached under maximum pressure by the EU and the United Kingdom during the night of December 7th is full of ambiguity and hypocrisy.

The main, though not insignificant, merit is to avoid the premature interruption of the Brexit negotiations — as well as to offer the main protagonists peaceful year end celebrations.

Indeed, on the basis of this agreement, it appears that the UK must choose between one among four options:

1. Negotiate the withdrawal of its notification under Art. 50 and retain full membership of the Union.

The delivery of the withdrawal notice dated March 29, 2017 initiated an irreversible process of two years leading inexorably to the departure of the UK from the EU.

This process can, however, be modulated under the terms of two agreements covering respectively the “divorce” and the “future relationship” between the parties; both need the unanimous approval of the Council and a majority vote of the European Parliament.

Nothing, however, would prevent taking into account within this framework a request from the UK to withdraw its notification and remain a Member of the Union.

Such a procedure would void the need to “re-admit” the UK. It is nevertheless highly likely that the conditions of membership would be revised, demanding in particular that the UK forgo its budget rebate as well as the benefit of specific opt-outs such as membership of Schengen, of the EMU, etc.

This solution seems highly unlikely because it implies reversing the result of the “non-binding democratic” referendum as well as imposing new obligations on the UK.

It can only be seriously contemplated if an exit without an agreement became itself unacceptable to the British, a position that would need confirmation by new elections or by referendum.

2. Leave the EU but retain membership of the Custom’s Union and the Single Market (Extend the regime that is supposed to govern the “transition period”)

This option is in contradiction with previous undertakings of Theresa May.

While it is in line with the commitments of the “divorce” agreement, it implies the subordination of the UK to the rules of the EU (rule taker), the inability to negotiate separate trade deals with third parties, etc.

Such restrictions should be welcomed by Ulster, Scotland and Wales because the reversion of other EU powers would mainly benefit the British Government and Westminster.

3. Negotiate a Free Trade Agreement (CETA model)

This option implies instituting border controls either at all external borders of the UK or between Ulster and the remainder of the UK.

It is not possible to guarantee simultaneously the territorial integrity of the UK market including Ulster and the indivisibility of the market on the Irish island.

Regardless, any FTA cannot confer on the UK the same privileges as those enjoyed by members of the Customs Union and of the Single market.

4. Leave the EU without any agreement (WTO model)

Leaving the EU without an agreement covering the future relationship would be detrimental to both parties and carries with it the risk of judicial procedures which would jeopardize any harmonious future cooperation.

It should be evident that this option is particularly dangerous in the current instable geopolitical climate which should, on the contrary, underscore the mutual benefits of a European continent speaking with a single voice in order to provide joint security and prosperity to its citizens.

Insofar as the commitments contained in the divorce agreement are considered to be binding, there is little room left for accommodating the UK’s preferences within a “bespoke” deal.

This means that the UK should be prepared to face a series of new and unpalatable concessions as a result of the talks.

The situation is further dramatically complicated because the mere suggestion of reversing Brexit, however rational, will split the conservative party and bring down the government.

The spectre of a Labour government under PM Jeremy Corbyn would also be highly destabilising, reinforcing by default the likelihood of the UK exiting the EU with no agreement.

©2017 The Globalist

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Brexit: Michael Gove Moves to Center Stage

Mon, 2017-12-11 18:01

By Denis MacShane

The Irish issue is far from solved. Along with the rest of the many vexing Brexit issues, it is set to dominate UK politics for years ahead.

For all the hooray after the recent Juncker-May announcement about the Brexit negotiations between the UK and the EU-27 proceding to the next stage, it is high time for soberness.

The Ireland issue is far from solved. In this context, it is helpful to remember that Disraeli first used the term “The Irish Question” in the House of Commons back in 1844 — and it overwhelmed British domestic politics for the next 80 years…

Protestant England has long been frightened by any Catholic expression of Irish (=Catholic) identity. In the proper historical frame, it all goes back to the Irish Fright of 1688 which took place in England and parts of Wales in December that year, during the Glorious Revolution.

False reports that Irish soldiers were burning and massacring English towns prompted a mass panic in at least 19 counties, with thousands of people arming themselves and preparing to resist non-existent groups of marauding Irishmen.

Now that the Ireland issue has fused with Brexit, this new Brexit-Irish question will be with us for a decade or more. All we can say for certain that Brexit will continue to dominate British politics for years and years.

Very soon, the focus will turn to the “pedestrian” – but fiendishly complex – issues such as the need for customs clearance, work permits or getting permission from national regulators.

Thus, the cheery bit of the Christmas season for Tory politicians is now over. The easy part of the Brexit withdrawal negotiations lies behind them.

UK woefully unprepared

And, as recent admissions by David Davis have underscored, the May government is woefully unprepared for the next round. Contrary to oft-heard claims, no detailed sector-by-sector scenario and assessment planning has occurred.

Theresa May is nevertheless relieved. Never on top of events, at least she no longer seems headed for a No Deal crash.

However, the prime minister’s palpable sense of relief does not solve anything for the Tories. Britain’s Conservative Party is the party of business or it is nothing.

So far, it has shown remarkable disregard for the certainty of operations which today’s modern corporations need, regardless of whether they trade in goods or services.

Enter Michael Gove

The recent addition of Michael Gove to the May cabinet has helped somewhat, at least with regard to temporarily increasing the Tories’ sense of realism. He very much appears as the new strongman in May’s cabinet. At a minimum, he has emerged as its major Brexit strategist.

However, Gove is anything but all good news, whether for May or for Brussels. He maintains very close links with U.S. neocons and the neo-liberal right. Gove wants the UK to shed its linkages with the EU as much as possible.

His vision is one of an Americanized England – a country that shakes off all European ideas of social and ecological responsibility and doing such things as holding giant firms like Apple, Facebook or Google to account.

To get there, Gove has one recurring nightmare – that the British people might be allowed a second thought on Brexit. A second referendum, now that more and more facts are emerging of what the true costs of a Brexit are, may have a different result.

To head that off, he already insisted in a Daily Telegraph column last week that in a future election, voters would elect a party – presumably a Conservative Party with him as its then-leader – committed to fully breaking with Single Market and Customs Union obligations.

That way, he evidently hopes to close the door on any potential reconsideration of Brexit in his country.

©2017 The Globalist

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Emissions Control and Electric Cars in 2020

Sun, 2017-12-10 18:01

By The Globalist

The short-term prospects for electrification of light passenger vehicles globally are still small.

1. The IEA has projected that ownership of electric passenger cars will grow to slightly more than 10 million by 2020, just a few years from now.

2. However, the current size of the global electric car fleet is considerably smaller as of 2016: 2 million electric cars.

3. The Paris Climate Agreement reached in 2015 aspired to rein in global emissions by 2030, just 10 years after the world is likely to reach 10 million electric cars.

Electric Cars: A “Just The Facts” Series

Electric Cars: How Many Today Worldwide?

Electric Cars in 2040: Sustainable Development

Electric Cars in 2025 and 2040: New Policies

Emissions Control and Electric Cars in 2020

4. At the moment, even if every country met its nationally determined contribution (NDC) to reducing carbon emissions, the world is still not on track to hold emissions flat, let alone cut them.

5. Just to get to zero emissions growth, per the Paris Agreement, a projected further annual remainder of 160 million metric tons of CO2 emissions would need to be eliminated.

6. This would require the equivalent of replacing 60 million cars each year (!) with electric cars, and only if their electricity came from non-fossil sources.

Sources: The Globalist Research Center and the International Energy Agency

©2017 The Globalist

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You can join the conversation about this story on the original post on theglobalist.com.

Electric Cars in 2025 and 2040: New Policies

Sun, 2017-12-10 18:01

By The Globalist

With minimal policy intervention, electrification of cars is likely to remain too slow for the world’s climate action needs.

1. The International Energy Agency has multiple projections for future climate change policies and energy-related markets.

2. Their moderate forecast is called the “New Policies Scenario.” Under it, there would only be 280 million electric passenger cars on roads worldwide by 2040.

3. Electric cars would thus account for only 14% of the global passenger fleet of about 2 billion in 2040.

Electric Cars: A “Just The Facts” Series

Electric Cars: How Many Today Worldwide?

Electric Cars in 2040: Sustainable Development

Electric Cars in 2025 and 2040: New Policies

Emissions Control and Electric Cars in 2020

4. In that scenario, overall oil demand for cars would be lower by only 1.3 million barrels per day in 2040 than today – or 6% less.

5. By then, in China – already today the world’s largest car market – one in four passenger cars would be electric.

6. Over a shorter timetable, i.e. by 2025, less than a decade from now, the IEA projects there will be 50 million electric cars.

7. Broadly speaking, that would mean 5.3 million new cars a year would need to be electric.

8. The IEA assumes in the moderate “New Policies Scenario” that the unsubsidized cost for a fully-electric car’s battery will probably only decline by about half from 2015 to 2040.

9. The average battery costs in 2016 were less than $260 per kilowatt-hour (kWh) for plug-in electric hybrids and an estimated $200/kWh for fully electric cars.

10. That means a fully-electric car battery might cost around $12,000, although the price is declining.

Sources: The Globalist Research Center and the International Energy Agency

©2017 The Globalist

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Electric Cars in 2040: Sustainable Development

Sat, 2017-12-09 18:01

By The Globalist

Are we on course to electrify enough cars to meet climate change mitigation targets?

1. There could be as many as 875 million electric cars in the passenger vehicle sector worldwide by 2040.

2. This projection was made in 2017 by the International Energy Agency, the intergovernmental energy policy organization, in its most ambitious climate policy action scenario (the “Sustainable Development Scenario”).

3. However, astonishingly this 875 million projection would displace only a bit more than nine million barrels of daily oil demand.

Electric Cars: A “Just The Facts” Series

Electric Cars: How Many Today Worldwide?

Electric Cars in 2040: Sustainable Development

Electric Cars in 2025 and 2040: New Policies

Emissions Control and Electric Cars in 2020

4. In other words, it would displace less than 10% of the current total of 94 million barrels per day.

5. That means even such a large switch to electric cars would not dent global oil demand by much.

6. One reason is that the Sustainable Development Scenario assumes that electric cars would account for just 43% of the global passenger car fleet of 2 billion or so in 2040.

7. The bigger reason is that road freight, aviation, shipping and plastics production are expected to continue creating new oil demand.

8. To meet more ambitious targets that contain climate change’s damage better – such as the Paris Agreement’s 1.5 degree Celsius warming limit – three-quarters of that fleet would need to be electric (and charged by nearly zero-emission power) by 2040.

Sources: The Globalist Research Center and the International Energy Agency

©2017 The Globalist

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You can join the conversation about this story on the original post on theglobalist.com.

Electric Cars: How Many Today Worldwide?

Sat, 2017-12-09 18:01

By The Globalist

Electrification has been slow to convert the passenger automobile market, despite recent leaps.

1. The transportation sector accounts for 14% of total greenhouse gas emissions. That makes cars a key concern in climate change.

2. There are 7 billion people on earth and 1.1 billion light passenger cars.

3. The total number of electric-power passenger cars surpassed the two million level on a worldwide basis for the first time in 2016, nearly one-and-a-half times the level of the year before.

Electric Cars: A “Just The Facts” Series

Electric Cars: How Many Today Worldwide?

Electric Cars in 2040: Sustainable Development

Electric Cars in 2025 and 2040: New Policies

Emissions Control and Electric Cars in 2020

4. By the end of 2016, there were about 2 million electric cars, according to the IEA’s 2016 World Energy Outlook.

5. Still, 2 million is only 0.2% of the total fleet of cars around the world.

6. Any significant advance in the level of the electric cars penetrating the global car market first and foremost requires leaps forward in battery technology.

7. Absent that, electric cars will likely struggle to compete in list price against conventional cars since the battery is such a major cost.

8. An ordinary car battery for a gasoline-powered car usually costs around $100 in total.

9. By contrast, a fully-electric car’s much larger battery – powering the whole vehicle – currently is often two orders of magnitude (or $10,000!) higher in price.

10. The battery price is based on its kilowatt-hour storage capacity (kWh) and that capacity is often around 60 kWh.

11. The average battery costs in 2016 were less than $260 per kilowatt-hour (kWh) for plug-in electric hybrids and an estimated $200/kWh for fully electric cars.

12. That means a fully-electric car battery might cost around $12,000, although the price is declining.

Sources: The Globalist Research Center and the International Energy Agency

©2017 The Globalist

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Disinformation Campaigns: The Weakness Caused by Mistrust

Fri, 2017-12-08 18:01

By Andrés Ortega

Disinformation needs to be tackled by a troika – individual members of the public, the social media companies and governments.

We are not in a military conflict, nor even a cold war, but there is a profusion of so-called disinformation wars. Fake news – stories that are purposely fabricated – and its dissemination is part of this.

But in the face of these disinformation attacks – which have been waged in the United States, France and Germany and now also in the debate surrounding Catalonia – Western countries, both individually and jointly, are in a position of weakness. They lack the necessary instruments to defend themselves.

The importance of trust

First among these is trust. Mind you, the issue here is the spreading of fake news by conventional and social media. That is a different matter than Russian hackers stealing campaign information from the Democrats in the most recent U.S. presidential election, and then making use of it. Such actions clearly fall under the ambit of cybersecurity.

The same applies to the way in which the U.S. National Security Agency monitors foreign individuals and governments, or the collecting of secret information by companies and states, as well as cyber-attacks against critical infrastructure.

News manipulation and disinformation is quite distinct from this, whether the product of algorithms (bots) designed for such purposes or of people dedicated to these tasks. The security of the Internet of things is not the same as that of the Internet of ideas.

And if the West were at war, it would be able to respond with weapons similar to the enemy’s, as it has done in the past with other instruments. But we are not at war, even if all this turns out to be part of the theory of the Russian hybrid war, as Mira Milosevich-Juaristi has ably explained in referring to the “combination.”

The theory of inoculation – using disinformation to combat disinformation – does not work in peacetime. One of the strengths of the West is its media freedom, even if one of its greatest weaknesses is its citizens’ loss of trust in quality media outlets.

Asymmetrical conflict

The upshot is that the conflict is asymmetrical: Open societies pitted against more closed and controlled ones. Their capacity (whoever they may be) to influence us is greater than ours to influence them.

It is owing to the internet and social media that we live in information bubbles, in echo chambers. The fact that people isolate themselves within these bubbles and receive only opinions that fit their ideology or prejudices nurtures credulity and their vulnerability to manipulation.

It does not matter in that regard whether it emanates from within or beyond their countries’ borders, using manipulative media like the Russian RT, thereby achieving a greater impact.

Social media are more permeable to undesirable and directed influence, increasingly accompanied by visual images, whether real or fake.

This capacity is even greater given that lying has no cost on the social media; such media are now more prevalent than ever (just consider that 44% of Americans now rely on Facebook for their news), as well as a potential money-spinner. Many fake news stories are certainly lucrative for their creators if they reach a wide-enough audience.

The real impact of fake news is debatable, however. They may be effective, but not decisive. Nevertheless, what is undeniably true is that they stoke anger.

Denouncing fake news

One line of defense against fake news stories consists of actively denouncing them. Russia and its Foreign Ministry are highly energetic in reporting what they deem to be fake Western news.

The EU has a unit geared essentially towards Russia (East StratCom), but it is not enough. NATO’s Allied Transformation Command, based in Norfolk, Virginia, has developed new strategies in this regard, and by the end of 2018 is due to propose a Communications Strategy.

It is worth recalling that Alexander Hamilton was already warning about the need to protect the American electoral process from foreign interference in The Federalist Papers. Not everything is new, even if the instruments and the speed of operations may have changed. The age-old arts of deception have gone digital.

Disinformation needs to be tackled from below, by individual members of the public, by the social media companies themselves, like Facebook and Twitter, which have not yet managed to rise to the challenge, and by governments, despite their lack of credibility.

It involves improving the culture of social networks and the security that is wanting in our societies, where everyone is competing for that scarce commodity that is users’ attention.

The importance of high-quality journalism

Disinformation is a phenomenon that needs to be studied more in journalism training courses, and even at the level of basic education where future citizens – not simply users – may be taught to be prepared for such potential manipulation.

Another part of the answer is high-quality journalism. But such outlets, regardless of the platforms they use, suffer their own problems. Almost all are beset by a lack of money and a lack of credibility, fewer specialists, fewer correspondents, less capacity for investigative journalism and fact-checking, as well as less independence.

Conclusion

The debate about post-truth, fake news and manipulation favors the manipulators. Mistrust cannot simply be offset by more information.

As the German philosopher of Korean extraction Byung-Chul Han says, “an accumulation of information cannot generate truth.” He adds that “transparency is only required as a matter of urgency in a society where trust no longer exists as a value.”

In other words, our weakness resides in our own mistrust. And, as already pointed out, we find ourselves in a time of general distrust, distrust in the institutions and in the media, which is exactly what the manipulators are exploiting.

©2017 The Globalist

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How the UK Always Plays Ireland

Thu, 2017-12-07 18:01

By Tom Clifford

The Brexit episode is but the latest historical episode proving that the UK’s political rhetoric is just self-serving when it comes to Irish matters.

Growing up in Ireland, I always found it puzzling that the most northerly part of Ireland geographically is in the south politically. The most northerly part of Ireland is in Donegal, which is in the Republic of Ireland, not in Northern Ireland.

The paradoxes don’t end there. The “Irish Troubles” – so called because the Irish proved an unruly bunch when faced with British oppression – were actually the British Troubles, though never referred to that way in the British media.

It was bizarre: Those that claimed that Northern Ireland was as much a part of Britain as Somerset and Yorkshire were always quick to say that the violence was an Irish problem, not a British one.

This underscores that the Irish situation was always good at highlighting selective thinking in Westminster, the citadels of political power in the UK.

“No hard border”

Little surprise that it should be so with the Brexit vote. There may have been reasons for it, but consideration of Ireland was not one of them. And it shows. “No hard border” was the refrain. A classic case of having your cake and eating it too.

Hard Brexiteers claimed they could ditch the single market and customs union. Still, there would be no hard border and no hard feelings.

Utter tosh. Brexit means Brexit. This day has been coming. Northern Ireland looks set to remain in the same customs and regulatory regime as the Republic of Ireland.

The Republic of Ireland is staying in the EU. Northern Ireland will leave the EU when Britain does but not in the same manner. You see, it isn’t the same as Yorkshire and Somerset.

There is of course a supreme irony here. Some British politicians claimed falsely that Brexit would restore Westminster sovereignty. Britain never actually lost sovereignty in the EU, nor more than it did in NATO or other trade alliances. In actual fact, it is the EU which is protecting Irish sovereignty.

Forget the formulation of words such as “continued regulatory alignment.” The CRA means simply that countries trade under the same obligations and regulations.

Only two scenarios are realistically possible

The first: Northern Ireland stays in the customs union and Britain leaves. This means an internal UK customs border, between Northern Ireland and British ports. A border in the sea, not on the island of Ireland.

The second: The UK stays in the customs union.

For one of the combatants, this fight is almost unfair. A small island being bullied by a larger neighbor. But this is not a row between perfidious Albion and Ireland. This is the first post-Brexit row.

An Ireland backed by other EU members against an isolated Britain. It can only have one outcome. The Tory press will have a go at “ungrateful Ireland.” It has already told the Irish Taoiseach (prime minister) to shut his gob.

Hard Brexiteers and their Tory press allies need headline fodder. Ireland is Britain’s best friend in the EU. Dublin will miss Britain and while it is against Brexit it wants a successful and easy departure for London. Ireland wants to continue to trade with Britain.

This dispute is not a resurrection of ancient tribalistic rivalry or enmities. Quite the opposite. It is the first political scrap of the post-Brexit era, taking place pre-Brexit. Ireland is in a stronger position because of the EU. Britain needs trade partners but it also needs allies.

©2017 The Globalist

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Germany and the Return of the Holy Roman Empire

Wed, 2017-12-06 18:01

By David Marsh

There are similarities between today's Europe and the patchwork of around 300 territories and principalities which comprised the Holy Roman Empire of the German Nation.

The laborious process for forming Germany’s next government brings to mind the remark attributed to Charles de Gaulle, France’s foremost post-war president: “How can you govern a country that has 246 varieties of cheese?”

The increasingly mixed, heterogenous nature of German politics indicates that Europe’s biggest economy, at least according to de Gaulle’s mindset, is growing ungovernable.

Germany will not suddenly become unstable. Belgium and the Netherlands have famously endured long periods – 589 and 208 days respectively – in forming governments in recent times. Their economies have not suffered significant setbacks.

However, the rest of Europe, led by Emmanuel Macron, France’s new president, will have to wait a long time for Germany to answer some pressing questions, particularly over deepening integration in the euro area.

There are some similarities between today’s Europe and the patchwork of around 300 territories and principalities, all with varying governance and sovereignty, which comprised the medieval Holy Roman Empire of the German Nation.

As Voltaire said, it was ‘neither holy, nor Roman, nor a nation’ – but it did stick around for 1,000 years.

Germany’s political fragmentation

The election of 24 September laid bare Germany’s growing political fragmentation.

The two main parties which had formed a “grand coalition” in Berlin since 2013 – Chancellor Angela Merkel’s Christian Democratic Union and Christian Social Union, and Martin Schulz’s Social Democrats (SPD) – slumped to 54% of the votes, the lowest since the Second World War.

When Merkel established her first coalition with the SPD, in 2005, the two parties scored a combined 69%. Up to German unification in 1990, the CDU/CSU and SPD accounted for 75%-90% of votes.

Four weeks of tortuous negotiations on forming a so-called “Jamaica coalition” between the CDU/CSU, the Green ecology party and the liberal Free Democratic Party juddered to a halt shortly before midnight on 19 November.

Ideological differences among the disparate quartet proved unbridgeable, particularly for the FDP, keen to rebuild identity after winning back seats in the Bundestag following four years of absence.

The divide was especially strong on all the big issues affecting Germany – climate change, dealing with immigration and creating new institutions and funding to safeguard the future of the euro.

Holy Roman Empire-style complexity

The coalition wrangling demonstrated Holy Roman Empire-style complexity. The Berlin talks broke down after 55 delegates from four parties laboured for four weeks yielding a 61-page policy draft with 237 points of discord.

Merkel has called on all sides to bury differences. She wants to avoid new elections next spring which could bring an even bigger swing to the anti-euro, anti-immigrant Alternative for Germany (AfD).

With 12.6% of the votes on 24 September, the AfD is now a strong force in the federal parliament, the first far-right party in the Bundestag since the early 1950s.

Merkel has reminded politicians that the Weimar republic fractured in 1930 when failed coalition talks provided an opening for Adolf Hitler’s Nazi party.

Merkel wants to reforge a “grand coalition.” She is backed by Frank-Walter Steinmeier, the German president, who summoned CDU/CSU and SPD leaders for coalition talks on 30 November.

Potential drawbacks

However, there are three potential drawbacks. First, each of Merkel’s alliance partners in her 12-year rule – twice with the SPD, once with the FDP – has slumped to post-war lows in elections following their coalition experiences.

The SPD will lay down stringent conditions in terms of policies and ministerial seats as the price for re-entering power with Merkel.

Second, Germany’s coalition politics are so complicated that there is no set working model for another conservative-SPD coalition. Fifteen coalitions run Germany’s 16 federal states, with 10 different models.

Third, even if a “grand coalition” proves realisable in the first few weeks of 2018, it will enshrine the unruly AfD as the formal opposition party in Germany – giving it status and disruptive influence unimagined even a few months ago.

Whatever happens, Germany in coming months will not be a place for smooth policy-making.

©2017 The Globalist

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The Republican Crime Syndicate Takes Control

Tue, 2017-12-05 18:00

By Richard Phillips

The Republican Party has become a Racketeer Influenced Corrupt Organization (RICO). As with other criminal organizations, its purpose is to rape, pillage and plunder America.

It should have been evident to all that something was afoot when the first order of business for the GOP-controlled 115th Congress was to try to abolish the Office of Congressional Ethics. After all, why let a little thing like ethics stand in the way of the Republican agenda?

And quite an agenda it is! Rapacious from every aspect, it constitutes nothing less than a hostile takeover of the United States of America by an economic elite bent on financial gain for financial gain’s sake alone.

The most recent manifestation of Republican corruption is its tax bill, which is nothing other than a massive giveaway to the GOP donor class. It does some good things, like cutting the corporate tax rate and getting rid of the Alternative Minimum Tax, but fails to do much of anything else right.

While the tax bill gives one multi-million-dollar break after another to the donor class, including the elimination of the inheritance tax, it doles out nickels and dimes to the United States’s working and middle classes.

Here are the crimes

In order to pay for the giveaways to the wealthy, the bill takes away key deductions, including the deduction on mortgage interest and deductions for state and local taxes (SALT). These deductions have promoted a stable middle class in the United States since the end of the Second World War.

Importantly, the elimination of the deductions for state and local taxes is perhaps the most cravenly partisan act since post-Civil War Reconstruction. Its effects are almost entirely concentrated in “Blue States” (i.e., those often run by Democrats), including New York, California, Illinois and Massachusetts.

Trump’s broken campaign promise

In a nausea-inducing demonstration of pay-to-play politics, the bill doesn’t touch the carried interest deduction. This tool is used by hedge fund operators to pay taxes at significantly lower rates than the average U.S. worker. Significantly, repeal of the carried interest provision was a ubiquitous Trump campaign promise!

But there’s more. The tax bill contains provisions that will raise medical insurance costs, eliminate deductions for the interest paid on student loans and eliminate deductions for certain urgent health care costs.

Can anyone be really surprised that the tax bill fails to remove any corporate tax loopholes? Instead, it pays for the sweeping reduction in the corporate tax rate by increasing taxes on the middle class and blowing up the federal government’s deficit.

There is more twisted logic contained in the [Republican] tax bill, but there’s no need to go deeper. Suffice to say that the tax bill is merely part of an agenda that perpetuates and strengthens oligarchic structures in the United States.

It turns tax policy upside-down by facilitating massive transfers of wealth from the lower classes to the very wealthy.

Assault on the tax code just the beginning

The tax reform effort does not stand alone in the Republican crime spree. The first major attempt to rake the American working man over the coals by this Congress was the ill-fated effort to repeal the Affordable Care Act, otherwise known as Obamacare.

The replacement bills put forth by the Republican Congress were acts of medieval cruelty, denying 30 million Americans health care and literally putting in place the mechanism needed to toss Grandma out of her nursing home. (Yes, it actually did that!)

A couple of GOP stalwarts balked at this travesty and the whole scheme went down in ignominious defeat, tarnishing the GOP in the process. But a bad aftertaste remains, like the taste of bile that one might sense following a failed bank robbery.

The tax bill and Obamacare repeal are merely the most obvious crimes that the Republican Congress has attempted. Other nefarious activities are afoot, the result of Congressional confirmation of Cabinet and Department heads bent on plundering the American patrimony.

One big crime scene

The U.S. Capital has in fact become one big crime scene. Take, for example, the Environmental Protection Agency, which in one short year has reversed decades of progress in improving environmental conditions across the United States.

Under the GOP-led EPA, mining companies are now permitted to dump tailings into America’s rivers and streams unchecked. These tailings are loaded with lead, arsenic and other toxic minerals — some radioactive.

Similarly, the EPA has all but eliminated restrictions on coal ash storage. This allows toxic coal ash to be stored without oversight in close proximity to U.S. waterways and population centers.

These are but two of over forty actions taken by the EPA aimed at doing away with environmental regulation and regulatory oversight. Make America Polluted Again!

And this of course is before the outright repudiation of the whole concept of global warming, which involved the muzzling of hundreds of concerned government scientists and the rejection of the Paris Climate Accord.

3 Ps – Raping, pillaging and plundering America

This environmental agenda is a pay-off to Republican donors in the extraction, materials and utilities industries, who use their wealth and influence to commit rape against the American landscape.

These actions rob future generations of their patrimony and leaves the United States with a looming public health crisis. This could very well turn into a replay of the environmental degradation of the 1950s that ended up advancing the cancer epidemic of the last 30 years.

To make matters worse, the U.S. Department of the Interior has been hard at work to sell off public lands, again to Republican donors. It tries to shrink national parks in order to give donors important mining and woodland franchises. It is trying to open up the Alaska National Wildlife refuge to drilling.

And not content to destroy the tax code, health care, the environment and public lands, Republicans want to end a large number of key regulatory measures. They want, for example, to do away with the concept of “net neutrality” and in so doing turn the internet over to the highest bidders, often Republican donors.

They also want to expedite the approval of new drugs by the FDA, even as the pursuit of class action lawsuits based on pharmaceutical companies selling drugs that cause physical damage have become more than just a cottage industry.

Last, but certainly not least, Republicans want to do away with consumer protections designed to help guard against the rapacious behavior of the banking industry that brought about the financial collapse of 2008.

A Racketeer Influenced Corrupt Organization — RICO

The GOP has abandoned its core principles and has become a Racketeer Influenced Corrupt Organization (RICO).

This law, passed in 1970, provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. Unfortunately, the RICO Act doesn’t apply to political parties.

Otherwise, it would certainly be applicable as the Republican Party has ceased playing a constructive role in improving the lot of its constituents and instead has become a racket, rife with corrupt practices.

With each passing day, a new crime is perpetrated against the American people that concentrates wealth in the hands of a group of oligarchs that exert greater and greater control over how the wealth of America is distributed.

This oligarchy pays off Republican politicians with donations that underpin their political careers. Without these nefarious donations, these paid predators would be out of a job. The donations are nothing other than bribes aimed at securing the financial well-being of their recipients.

And the voters that put GOP politicians in charge! GOP supporters tend to be poorly-educated and under-informed, gullible to the magical thinking that is the very basis of modern Republican ideology.

And for those who suggest there is even a semblance of moral equivalency between Republicans and Democrats, they should keep solidly in mind one important distinction: Democrats want tax cuts for the middle class, health insurance for all, a decent and protected environment, net neutrality and food for poor kids.

The truly perverse thing about this crime spree [via the new tax bill and the many other measures] is that it constitutes a full-on attack on Trump’s core supporters, who are being betrayed at every turn. All anyone can hope for is that voters wise up to what the GOP has been up to.

©2017 The Globalist

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Will Trump’s Tax Victory Lead to Historic Defeat?

Mon, 2017-12-04 18:01

By Chris Kutarna

The U.S. government already spends less on education and science than at almost any other time in history. Trump’s tax plan will cut those investments even lower.

Donald Trump and the Republican Party are pushing a hefty ($1.5 trillion) tax cut through the U.S. congress.
Democrats are up in arms because it will make the rich richer at middle class households’ expense.

Deficit hawks are up in arms because it could add $1 trillion to the U.S. national debt over the next decade.
Parliamentarians are up in arms because, despite the bill’s awesome implications, there’ve been no debates, no public consultations and no hearings on the Hill.

Trump is triumphant, because it gives him a big win to gloat about on Fox & Friends and a legislative legacy for the history books.

They’re all missing the big picture. Society and the economy are transforming in ways that make the Left vs. Right debate about the proper size and role of government pointless.

Higher taxes won’t save the middle class from automation. And lower taxes won’t save today’s corporations from obsolescence.

The big picture

The world is shifting out of the Industrial Age and into the Knowledge Age. Granted, the shift is happening at different speeds in different places, but it is happening.

The purpose of the economy is shifting from growth to sustainability. The nature of money and markets is shifting from centralized to distributed.

The basis of national economic competitiveness is shifting from production to learning. And data is becoming a basic input of economic growth, alongside land, labor and capital.

Trump’s bet, apparently, is that the best thing the U.S. government can do is stand idly by (or, better, play golf).

The U.S. government already spends less on education and science—i.e., on the future—as a share of the economy, than at almost any other time in history.

His tax plan will cut those investments even lower. An unfettered U.S. private sector, Trump implies, will figure out fastest how to re-assert American Industrial leadership in a Knowledge Age.

Private sector path-finding

Maybe he’s right. Exhibit A for private sector path-finding: Elon Musk. Driverless cars. Space travel. Energy storage. Hyperloops. “A blend of financial laboratory, corporate labyrinth and buttock-clenching thrill ride, Musk Inc has pushed the boundaries of what was thought possible,” noted The Economist.

But Mr. Musk is by far the exception. The vast majority of today’s companies, American and otherwise, have dropped anchor rather than brave the biggest storms in living memory.

One data point: investment in IT as a share of GDP, after rapidly rising between 1950 and 2000, began to fall in the early 2000s (as the authors of a pessimistic new book I’m reading at the moment, The Innovation Illusion, point out).

Most companies will not invest their Trump tax windfall into building a brave new future. Their habit, rather, is to hoard the cash or give it back to shareholders.

Betting against Trump?

The alternative view is that to shift a country’s economy out from the Industrial and into the Knowledge Age will require collaboration—and leadership—from all sectors of society, including government.

That is the bet China is making. China has recently announced Made In China 2025, a $300 billion government stimulus aimed at helping Chinese industry to leapfrog past the United States in ten high-growth, high-technology industries.

These include new energy and electric vehicles, new information technology (like 5G cellular), industrial robots, wide-body aircraft and space vehicles, autonomous ships and agriculture, bio-pharmaceuticals and next-generation medical devices.

The knee-jerk critique from free-marketeers is that government shouldn’t “pick winners.” But that critique oversimplifies how China decided its 2025 agenda.

Policy-czars in Beijing consulted extensively with academics, experts and private companies to finalize a list of ten high-growth, high-profit, high-leverage opportunities in science and technology.

Beijing’s moonshot

This is Beijing’s moonshot. The country’s political leadership is signaling to Chinese university and private sectors: Here is the agenda to make sure that China sets foot first in the Knowledge Age. Help us get there, and you can expect strong policy and financial backing. And those sectors are quickly aligning behind the bold vision.

Beijing’s argument is that these technologies aren’t simply commercial opportunities—they are key to China’s ambitions for global leadership in the 21st century future.

Global leadership in artificial intelligence may become a “master technology” to accelerate scientific, economic, and social progress.

Leadership in electric cars will dramatically reduce air pollution. Leadership in agriculture science could improve living standards and food security for billions of persons. Leadership in genomics and bio-sciences could improve population health and worker productivity, and lower public health costs.

Better transport technologies will speed up the domestic economy and help China control major global trade routes.

Who will win the future?

Will Trump’s $1.5 trillion tax cut (which shrinks federal funding for science and education) help American science and industry to achieve similar goals—faster?

Such policy seems less like leadership, and more like fatalism. I won’t be surprised if, when the history of the 21st century is written, those with a bold vision for a new world surpass those without one.

They usually do.

©2017 The Globalist

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Transition in the Middle East: Transition to What?

Sun, 2017-12-03 18:01

By James M. Dorsey

In the Middle East and North Africa, the transition toward equitable economic development and transparent and accountable rule of law will take a very long time.

Transition is the name of the game in the Middle East and North Africa. The question is transition to what?

Dominating the answer is an Arab autocratic push for a Saudi-led regional order that would be based on an upgraded 21st century version of autocracy designed to fortify absolute rule.

To achieve that, autocrats have embraced economic reform accompanied by necessary social change that would allow them to efficiently deliver public goods and services.

It is an approach that rejects recognition of basic freedoms and political rights and is likely to produce more open and inclusive political systems that ensure that all segments of society have a stake.

At the core of the volatile and often brutal and bloody battle that could take up to a quarter of a century is the determination of Arab autocrats to guarantee their survival at whatever cost.

Geopolitics plays a major role in Arabic autocratic ambition. To compensate for their inherent weakness and lack of the building blocks needed for sustainable regional dominance, Arab autocrats (except for Egypt, the one Arab state with the potential of being a dominant, long-term regional player) need to contain first and foremost Iran, and to a lesser degree Turkey.

It is a geopolitical struggle, dominated by the rivalry between Saudi Arabia and Iran, which has enveloped the Middle East and North Africa for almost four decades and progressively undermined regional stability.

Fueling extremism

This has fueled the rise of extremism and jihadism. It has also encouraged supremacist, intolerant and anti-pluralistic tendencies far beyond its borders in countries like Pakistan, Malaysia, and Indonesia. And it is also what has turned it into the most volatile, repressive and bloody part of the world.

Littered with the bodies of the dead and the dying, countries like Syria, Iraq and Yemen have been scarred for generations to come. They are struggling to ensure territorial integrity against potential secessionist ethnic, regional and religious challenges.

Possible U.S.-backed Saudi efforts to destabilize Iran with attempts to stir ethnic unrest carry the clear risk of the Islamic republic and Pakistan becoming the next victims. Countries such as Lebanon already teeter on the brink.

Restive populations hang in the balance, hoping that their continued surrender of political rights in new social contracts unilaterally drafted by autocratic leaders will bring them greater economic opportunity.

In some countries like Egypt, expectations have been dashed. In others such as Saudi Arabia, expectations are unrealistic and poorly, if at all, managed.

The successful and brutal Saudi and UAE-led counterrevolution has killed hopes and popular energy that exploded onto the streets of the Arab cities during the revolts of 2011 and produced tyrants and mayhem.

For now, it has all but erased popular will to risk challenging autocratic rule that has failed to deliver or that has created expectations that may prove difficult to meet.

Autocratic regimes riding high

Autocratic regimes in the Middle East and North Africa are, for now, riding high. They are buffeted by five potent facts on the ground.

First, the ability to divert public attention with promises of economic change. Second, the specter of Iran as a foreign threat. Third, U.S. support for regional autocrats and, fourth, the related containment of Iran. The fifth factor is the fueling of ethnic and sectarian tension.

At best, that strategy buys Arab autocrats time. The risk is festering and new wounds that are likely to come to haunt them. Four decades of global Saudi propagation of Sunni Muslim ultra-conservativism has turned Arab Shiites and their militias into potent political and military forces.

The specter of the Houthis organizing themselves on the border of Saudi Arabia on the model of Lebanon’s Hezbollah is but the latest example.

Autocratic self-preservation and the Saudi-Iranian rivalry, coupled with disastrous U.S. policies, including the 2003 invasion of Iraq, have wracked countries across the region.

This has fostered a generation of Syrians and Yemenis that is likely to be consumed by anger and frustration with their human suffering.

Equally troubling, this translates at best into a slow rebuilding of their shattered countries. After all, the very existence of these countries in their current form and borders is quite uncertain.

Conclusion

In short, transition, in the Middle East and North Africa has deteriorated into a battle for retention of political control. It constitutes a struggle for the future of the region.

With near certainty, it will produce more conflict as well as black swans that could create even more havoc long before it yields sustainable solutions.

The transition toward equitable economic development and transparent and accountable rule of law will take a very long time.

©2017 The Globalist

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India’s Winter of Discontent

Sat, 2017-12-02 18:01

By Gurcharan Das

India’s improvement in The Ease of Doing Business index is the first tangible proof of Modi’s election promise of “maximum governance, minimum government."

In this winter of Indian discontent—as we try to cope with a toxic smog enveloping the northwest, declining growth, job losses and a cumbersome tax reform — there is finally some good news that should lift our spirits.

India has risen thirty points in the World Bank’s global ranking in “The Ease of Doing Business” index (EoDB). More significantly, it has improved its score on all ten criteria.

No other country has achieved this. Reading this report gives tangible grounds to believe that attitudes of the lower rungs of India’s bureaucracy may have finally begun to change.

A bottom-up success

India is a bottom-up success and stands in contrast to China which is a top-down success. The Chinese state has built the most amazing infrastructure at breakneck pace and converted China into a middle-class nation within a generation.

India’s story is one of private success and public failure. India’s rise is due to its enterprising people. Red tape and an obstructive bureaucracy break the spirit of small enterprises that create the most jobs.

The World Bank has been pointing this out for the past 15 years, but every Indian government till now had ignored the Ease of Doing Business results, preferring instead to pick holes in the index’s methodology.

The World Bank pointed out this week that this is the first Indian government that has taken EoDB seriously. When Mr. Modi set an ambitious target to reach a rank of 50 from 142, everyone thought it was a pipedream. His goal now appears achievable.

Once the glitches in the GST tax reform and the insolvency law are overcome, India’s ranking should improve further. Two main reasons for success is the gradual shifting toward online interactions of the state-citizen interface and the competitive spirit engendered between states.

The top performers

In India’s 2016 State Assessment, Andhra/Telangana shared first place, followed by Gujarat, Chhattisgarh, Madhya Pradesh. The five worst performers were Delhi, Kerala, Assam, Himachal and Tamil Nadu.

The area where the biggest catch-up has to occur is in the Indian judiciary. India still ranks among the lowest-ranked countries in the world in enforcing contracts.

A market system is based on honoring contracts. If people can renege, business becomes risky. Contract enforcement in China takes less than one-tenth of the time than in India. India currently still lacks district commercial courts manned by judges with commercial training.

Fighting corruption

The Ease of Doing Business index is also a great corruption fighter. Corruption is like malaria–you need to clear the swamps to prevent it.

It is better to prevent corruption than to catch crooks. Not surprisingly, the top ten countries in the Ease of Doing Business index have little or no corruption.

This matters not only to business. It can also improve poor people’s lives. After all, the same administrative process change that reduced the time to issue a construction permit by Delhi’s municipality (MCD) has also resulted in reducing the number of days to get a birth certificate.

Renewing a driver’s license in Delhi now requires half an hour without a pay-off and one receives the new license by post within a few days. This is why Mr. Modi says, “the ease of doing business is the ease of living your life.”

Maximum governance, minimum government

India’s improvement in the Ease of Doing Business index is the first tangible proof of Modi’s election promise of “maximum governance, minimum government.”

In upgrading India’s rating, Moody’s has also underlined that only through institutional reforms will India realize its potential.

At rank 100, India still has a long way to go. Most enterprises are still not aware that their states now offer single window clearances.

Employment-intensive sectors still have to put up with corrupt labor inspectors. Land acquisition is still mired in red tape.

Imagine if more far-sighted Indian governments had implemented the EoDB reforms in 1991! India would be twice as prosperous today, with far less corruption.

The cost of this delay is a tragedy. It also reminds us that India’s socialist era which claimed to deliver growth with social justice, delivered neither.

Only when the Indian economy’s growth rate crosses the 8% threshold and jobs come in droves will the bright days truly arrive. Meanwhile, this is a great step towards that.

©2017 The Globalist

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Japan’s Looming Imperial Abdication

Fri, 2017-12-01 18:01

By Tom Clifford

Japan’s succession will provide the country with symbols of its past, though some will try to hijack them as markers for the future.

The Japanese government is preparing for a rare event, an imperial eclipse, an emperor’s abdication and ascension. April 30, 2019, is the date set for the abdication, clearing the way for his eldest son, Crown Prince Naruhito, to become the 126th occupant of the Chrysanthemum Throne.

Akihito, who turns 84 on December 23rd, has had heart surgery and treatment for prostate cancer. He has highlighted his desire to step down last year when he said that age might make it hard to fulfil his duties.

Since the Meiji Restoration of 1868, when the shogunate collapsed and the emperor was plucked from relative political obscurity in Kyoto to reside in Tokyo, there have only been four emperors.

Symbols of the past

The succession, when it comes, will provide Japan with symbols of its past, though some will try to hijack them as markers for the future.

This is especially the case as the country grapples with the issue of changing the war-renouncing Article 9 of the constitution to allow the Japanese army to be deployed in battle if allies or the country comes under attack.

Akihito’s retirement and the engagement of his granddaughter Princess Mako to a commoner, have reignited debate about the shortage of male heirs and a possible succession crisis in an imperial line some claim stretches back 2,600 years.

Abe the traditionalist

The Prime Minister, Shinzo Abe, has resisted opposition pressure to include a clause allowing princesses to establish their own branches within the imperial family after they marry commoners.

Once Mako marries, the imperial family will have just 18 members – 13 of whom are women – and only four heirs to the throne: 57-year-old Naruhito, his younger brother Akishino and his son, 10-year-old prince Hisahito, and the emperor’s 81-year-old brother, prince Masahito.

Concern is growing that Japan’s imperial line will be broken if Hisahito fails to have any sons.

The Imperial House Council will hold a meeting on December 1 to present proposals for Abe to consider regarding the abdication date from the heads of both Diet chambers as well as imperial family members.

The government intends to seek cabinet approval as early as December 8 for a government ordinance to officially set the abdication date.

A law enabling the emperor to abdicate specifies that the abdication should take place within three years from the law’s promulgation, which was in June this year.

The world’s oldest hereditary monarchy

Japan’s royal family claims lineage back to the first emperor, Jimmu (about 650 BC), and is the world’s oldest hereditary monarchy.

Despite this long lineage, succession was never a problem, due mainly to the system of concubinage which was only abolished in 1926, the year Akihito’s father, Hirohito, became emperor.

In 1945, the Americans realized that this system had produced a number of possible competing claimants to the throne. This fear resulted in the Imperial Household Law, introduced in 1948, which limited the succession to male descendants of the emperor, Hirohito.

For many Japanese, the only succession they recall was Akihito’s in 1989. The country was severely disrupted in the months before the death of Hirohito. Cabinet ministers cancelled meetings overseas, television programs were curtailed, festivities called off and the media portrayed the situation in reverential tones.

Japan in 1989 was a far different place. When Hirohito died, mourning for his passing aside, there was an air of unbridled optimism, the foundation of which lay in the country’s phenomenal economic power.

The Japanese phoenix

From the debris of war, the country had rebuilt itself, joined the economic superpowers and was challenging the United States for pre-eminence.

Today, the country is frustrated at its lost economic opportunities and troubled that the post-bubble remedy has seemed so elusive to its leaders. And the rise of China has led to a sense of vulnerability that was missing in 1989.

The imperial family, the only institution in Japan not beset by scandals, have been portrayed as the last bastion of ‘good, traditional values.”

In any country with a monarchy, succession is a time for rejoicing, to reaffirm the country’s values and to give the people a sense of identity and hope for the future. But there is a dark side to Japan’s succession.

Rightists groups will portray the Shinto rituals, especially the rite of enthronement where the new emperor is in symbolic communication with deities, as evidence of the “real Japan.”

This will be taking place against a backdrop of Japan changing the status of its military, a sensitive issue in the region.

©2017 The Globalist

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Why Saudi Arabia’s Lebanon Gamble May Pay Off

Thu, 2017-11-30 18:01

By James M. Dorsey

Hezbollah may choose to focus on its all-important goal of securing Lebanese-Syrian relations, at the expense of the Houthis in Yemen.

Saudi Arabia’s gamble to pressure Hezbollah — the Iranian-backed Lebanese Shiite militia — by forcing the country’s prime minister Saad Hariri to resign, may be paying off. This is all the more surprising as there is a widespread perception that the Saudi maneuver backfired.

This perception is based on broad international support for Mr. Hariri following a speech in Riyadh in which he denounced Hezbollah as an Iranian proxy. Harari argued that Hezbollah was wreaking havoc in the Middle East.

In particular, it was the prime minister’s decision to put his resignation on hold once he returned to Beirut to a rock star’s welcome that reinforced the belief that Saudi Arabia had overplayed his hand.

Opening the door to backroom negotiations

In reality, Mr. Hariri’s decision opened the door to backroom negotiations. Hezbollah, a major political force in Lebanon, is finding that it may have to compromise to avoid a political breakdown in the country. Otherwise, it may fail to secure its most immediate goals.

Mr. Hariri is believed to be demanding that Hezbollah halt its support to Houthi rebels in Yemen. He is also thought to be demanding that it withdraw from Syria.

There, Hezbollah’s fighters support the regime of President Bashar al-Assad. That, however, conflicts with Lebanese government policy not to become involved in conflicts raging elsewhere in the region.

Hezbollah wavering

Hezbollah signalled a willingness to compromise by urging Mr. Hariri to withdraw his resignation. It is calling for calm and advising its supporters not to take to the streets. It also announced that it was withdrawing some of its units from Syria and Iraq, where they supported Shiite militias in their fight against the Islamic State.

Mr. Hariri, who signalled this week that he may withdraw his resignation, put it earlier on hold. This move came at the request of Lebanese President of Michel Aoun, a Christian ally of Hezbollah. Aoun had allowed the militia in recent years to outmaneuver the prime minister.

Much is in play

At the same time, Hezbollah charged that Mr. Hariri had not announced his resignation of his own free will — but that he had been forced to do so by Saudi Arabia.

Mr. Hariri, who blames Hezbollah for the 2005 assassination of Rafik Hariri, his father and Lebanon’s prime minister at the time of his death, agreed to Mr. Aoun’s election as president.

Bruised by his inability to force Hezbollah’s hand, Mr. Hariri appears to have reversed his slide in popularity with his threat to resign. This has enhanced his prospects in forthcoming parliamentary elections.

Mr. Hariri’s newly found popularity and leverage, despite Saudi Arabia’s zero-sum-game approach to its proxy wars with Iran in Lebanon and elsewhere, may enable him to cut a deal. This would allow Hezbollah to focus on its all-important goal of securing Lebanese-Syrian relations at the expense of the Houthis in Yemen.

Complicating life for Saudi Arabia

To be fair, Hezbollah and Iran primarily view the Houthis as an opportunity to complicate life for Saudi Arabia in the kingdom’s backyard – and not as a strategic priority.

What is far more crucial for them is to ensure that Lebanon maintains close ties to the government of President Assad. Curbing the Houthis, who recently fired a ballistic missile at the international airport of the Saudi capital Riyadh, is at the top of the kingdom’s agenda.

Hezbollah, Syria and Iran need Lebanon to have normal, if not close ties to an Assad government once the guns fall silent. After all, international and U.S. sanctions against Syria as well as Assad and his associates are likely to remain in place. Lebanon has long been Syria’s vehicle to circumvent the sanctions.

China’s Belt and Road initiative

That becomes even more important against the backdrop of China suggesting that it would contribute to post-war Syrian reconstruction. China could see Syria becoming an important node in its Belt and Road initiative.

That initiative intends to enmesh Eurasia in a web of infrastructure, transportation and telecommunication links that would link Europe and much of Asia to China.

Like so often in recent years, Saudi Arabia could prove to be its own worst enemy in its effort to curb Iranian influence. Saudi players often opt for tactical victories which have not always thought through.

The Saudis must hope for a positive outcome, given that their ill-fated intervention in Yemen has not only sparked a massive humanitarian crisis, but also cost Saudi Arabia enormous reputational capital.

©2017 The Globalist

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China’s Belt and Road Initiative Hits a Wall

Wed, 2017-11-29 18:01

By James M. Dorsey

Pakistan concerned about a neocolonial Chinese effort to extract the country’s resources.

In a rare challenging of Chinese commercial terms that underlie the country’s ambitious Belt and Road initiative, Pakistan and Nepal have withdrawn from two dam-building deals.

The withdrawal coincides with mounting questions in Pakistan, a crown jewel in Chinese geo-strategic ambition, about what some see as a neo-colonial effort to extract the country’s resources.

The withdrawals and questioning call into question China’s economics-centred approach to geopolitics based on the long-standing win-win principle of Chinese policy, the notion that all parties benefit from Chinese investment and largesse.

China wins twice

Critics have charged that the principle boils down to China wins twice, a notion that is supported by Chinese plans for Pakistan’s agricultural sector; the extraction of Pakistani onyx, granite, and black gold marble; the disagreement over the dams; and the debt traps that forced countries like Sri Lanka to surrender control of key assets.

Pakistan and Nepal announced their withdrawals last week in separate statements. Pakistani Water and Power Development Authority chairman Muzammil Hussain charged that “Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests.”

China and Pakistan were also at odds over ownership of the $14 billion, 4,500 megawatts (MW)-hydropower project on the Indus River in the country’s problematic region of Gilgit-Baltistan near disputed Kashmir.

Nepal’s Deputy Prime Minister and Energy Minister Kamal Thapa announced his government’s decision to scrap a US$2.5 billion deal with China’s Gezhouba Group to build a hydroelectric project on the Budhi Gandaki River in the west of the country two days before the Pakistani decision.

With India’s National Hydroelectric Power Corporation (NHPC) waiting in the wings and expectations that the incumbent, Nepali Congress (NC) will be returned to power in elections scheduled for November 26 and December 7, the project plays into Eurasia’s Great Game for regional influence.

China-Pakistan Economic Corridor

The Diamer-Bhasha project was intended to be part of the China-Pakistan Economic Corridor (CPEC), a key node on the Belt and Road. With planned investments into infrastructure, including the port of Gwadar in the volatile province of Balochistan; energy, telecommunications and information technology, of more than $50 billion, it constitutes China’s largest financial commitment to any one country.

The Pakistani withdrawal takes on added significance because it was included in CPEC after the government had failed to secure funding from international institutions like the World Bank and the Asian Development Bank (ADB) because of Indian objections that it was in disputed territory.

The government has broken ground on the project five times in the past 15 years. Mr. Hussain said that the government now has a five-year funding plan for the project that would be completed in 2026.

Chinese analysts suggest that the Pakistani and Nepalese withdrawals could set a precedent.

“It will not be a big surprise if similar problems happen in China’s future overseas projects. And that would not change the big picture. There is a common misinterpretation internationally that the Belt and Road is something China would want to push forwards at all cost.

But in fact, all projects are commercial so they have to be justifiable economically, and agreed mutually,” said Zhao Gancheng, a South Asia expert at the Shanghai Institute for International Studies.

China is likely to encounter greater resistance not only on its financial terms, but also regarding assessments of what economic benefit investment target countries can expect.

Pakistan’s marble industry

A State Bank of Pakistan study concluded that exports of marble to China, Pakistan’s foremost rough-hewn, freshly-excavated marble export market, and the re-export to Pakistan of Pakistani semi-processed marble was “hurting Pakistan’s marble industry to a significant extent.”

Pakistani marble exporter and retailer Shakil Khan told Asia Times that “the Chinese buyers go for the square slabs, while the local quarrymen tend to excavate oval-shaped blocks which reduce to smaller bits” and are only of interest to the local Pakistani handicrafts and tile market. The Chinese approach discriminates against mines with cracked marble.

“The Chinese pick only the rare and quality stuff like onyx, black gold marble and high-quality granite from the market. Local processing units don’t have the high-tech processing equipment here to treat these costly marble products,” added Zahid Shinwari, president of the Sarhad Chamber of Commerce & Industry (SCCI), in Peshawar.

Economic domination

The Pakistani marble industry’s experience strokes with the overall suggestion of the leaked long-term plan for CPEC that projects risks of economic domination, the creation of a surveillance state and would allow China to shape Pakistan’s media landscape.

It projected an approach that has already sparked popular resistance and setbacks in countries and regions such as Sri Lanka, Myanmar, and Balochistan.

The plan envisioned Chinese state-owned companies leasing thousands of hectares of Pakistani agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology.

The Chinese companies would be offered “free capital and loans” from various Chinese ministries as well as the China Development Bank.

Effectively turning Pakistan into a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry, the plan sees the Xinjiang Production and Construction Corps in China’s troubled north-western province of Xinjiang, as the vehicle for the introduction of mechanization as well as new technologies in Pakistani livestock breeding, development of hybrid varieties, and precision irrigation.

Added value would be produced in Xinjiang as part of China’s bid to quell ethnic unrest among the Uighur population.

Pakistani textiles for Xinjiang

The plan envisaged the Pakistani textile sector as a supplier of materials such as yarn and coarse cloth to textile manufacturers in Xinjiang.

“China can make the most of the Pakistani market in cheap raw materials to develop the textiles & garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said.

Chinese companies would be offered preferential treatment regarding “land, tax, logistics and services” as well as “enterprise income tax, tariff reduction and exemption and sales tax rate” incentives.

Pakistan and Nepal’s withdrawal from the dam projects suggests that for China to secure economic dominance in Eurasia, it will have to ensure that win-win amounts to equitable terms and distribution of benefits among those that need the investment.

“China needs to nurture better understanding of its intentions and visions…to prevent unnecessary suspicions about its geopolitical ambition,” The Jakarta Post said earlier this year in an editorial that acknowledged that “we badly need the huge infrastructure spending that China is bringing.”

©2017 The Globalist

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Trump’s Playing Loose with the Law: A Global Perspective

Tue, 2017-11-28 18:01

By Joshua Kurlantzick

Trump might seem pro-business, but he could do great harm to U.S. corporations and their worldwide interests.

Throughout his first ten months in office, President Trump has portrayed himself not only as a champion for workers – a debatable claim – but also an important friend to American business.

Trump’s moves

He has stacked his cabinet with former executives. He has repeatedly vowed to cut through tangled regulations to help a range of companies including financial firms, energy firms and many others. His plans to slash regulation may have powered a continuing Wall Street bull market.

Perhaps most important, Trump now has made corporate tax reform a top priority. Working with several top congressional officials, U.S. Secretary of the Treasury Steve Mnuchin and Trump’s chief economic advisor, Gary Cohn, have sketched out a plan that would dramatically lower corporate taxes.

Such a reform, which is being debated in Congress now, would likely be a boon for shareholders and corporate executives. It may also spark more business investment in the United States, although some tax specialists question whether this will occur.

Tax reform: The big play

And indeed, despite CEO resignations from various Trump consultative councils, as CEOs balked at being associated with some of Trump’s comments on cultural issues, the business community still has high hopes for his administration.

The Business Roundtable, a group representing leading CEOs, has run a major ad campaign promoting tax reform.

Grover Norquist, a leading conservative activist, told reporters that, despite Trump’s controversies, big companies are getting “100 percent support behind” the president’s tax reform plans.

Are populists good for business?

But in the long run, Trump could actually do significant damage to U.S. business – and many corporations are not fully cognizant of the dangers he poses.

Dangers lie just over the horizon – and can be seen by studying how other, Trump-like populists around the world have seized control of and damaged their economies over time.

Trade deals in the firing line

Although Trump has made deregulation and corporate tax reform central to his economic agenda, the potential risks of his administration to businesses are emerging. He has publicly mooted ending the U.S.-South Korea trade deal.

Trump has, of course, already pulled the United States out of the Trans-Pacific Partnership. He used a major speech in Vietnam earlier this month to denigrate trade deals in Asia. The White House could pull out of the North American Free Trade Agreement as well.

If American companies have only partly factored in that Trump may not align with them on immigration and trade, they are even less prepared for other potential dangers posed by his administration.

Democracy no longer central

The Trump administration has made clear that it views rights and democracy as no longer central to U.S. foreign policy. Secretary of State Rex Tillerson this year did not present the State Department’s annual country reports on human rights.

In addition, he is reportedly thinking about removing democracy promotion from the State Department’s mission.

Rights abuses might seem immaterial to some businesspeople — but they shouldn’t. They raise a bigger concern. If countries believe that the United States is no longer interested in enforcing human rights and the rule of law, those nations’ disregard of laws could easily be extended.

And once this slide in legal standards concerns property rights, intellectual property protection and other areas investors care deeply about, U.S. corporations will immediately feel a steep price to pay.

Ease of doing business

Indeed, there is a close correlation between countries that uphold human rights and those that uphold the rule of law on business-related issues. Most of the nations ranked in the Top 20 in the World Bank’s most Ease of Doing Business report also would score well on protecting human rights.

Trump’s see-no-evil policy emboldens autocrats. Cambodia’s autocratic prime minister Hun Sen, who recently outlawed his country’s opposition party, as well as other authoritarian leaders are already citing Trump’s demonization of the news media approvingly, for instance.

This Trump effect will help undermine the rule of law in many more nations, including ones where U.S. companies are invested heavily.

The Trump presidency cannot be viewed in isolation. Some of the populist nationalists – from Putin and Berlusconi to Chavez, Orban and Erdogan – are also reported to use their power, and their ability to weaken the rule of law, to boost their own bottom line.

This is the type of self-dealing that does not seem out of the question in the United States now.

Worrying examples

The results in other economies where populists have ruled for extended periods of time are not encouraging for American businesses. Berlusconi badly wrecked the Italian economy. He left the country in worse shape than he inherited it. (According to The Economist, Italy’s economy performed worse during much of the Berlusconi years than any country in the world other than Zimbabwe).

Chavez and Maduro have left Venezuelans starving to death; the rule of law in Venezuela before them has been totally shattered, not only crushing democratic politics but also making the country a nightmare for investors.

And while Russia was hardly a capitalist paradise before Putin took over, his favoring of state firms has badly hurt Russia’s entrepreneurial activity.

In a country packed with tech-savvy potential entrepreneurs, young Russian inventors and financiers now flock to London, Berlin or Silicon Valley. U.S. businesses, which have so far been backers of the president, might well heed these examples.

©2017 The Globalist

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Governing Germany: More of the Same?

Mon, 2017-11-27 18:01

By Holger Schmieding

Germany’s current political contortions will likely end with a fourth term for Merkel.

A renewed “grand” coalition between chancellor Merkel’s CDU/CSU and the SPD now seems to be the most likely outcome of Germany’s political turmoil.

After the heavy pressure which German president Steinmeier exerted on the centre-left SPD last week, and amid some soul-searching within the SPD, the threat of new elections next spring has receded somewhat.

The big tanker ship SPD is not well suited for immediate U-turns. It can thus take a while for the SPD to complete the move from the immediate “no” to a new coalition with Merkel last Monday to detailed talks about renewing the CDU/CSU-SPD alliance for another four years.

Major stepping stones towards coalition talks could be the joint discussion to which president Steinmeier has invited the leaders of the CDU, CSU and SPD for this Thursday and the SPD party congress on 7 December.

Of course, a grand coalition is no foregone conclusion at all. For example, the SPD is also considering to offer no more than occasional support for a Merkel-led minority government.

Risk of repeat elections

A serious risk of repeat elections remains, for instance if a potential agreement between the CDU/CSU and the SPD were to be voted down by SPD members who seem to be torn between a desire to sharpen their party’s brand in opposition and to shape policies while they can.

In any case, it may take months before the political limbo is finally over.

Major parts of the SPD believe – probably rightly so – that a renewed co-operation with a weakened Merkel would give them the opportunity to implement even more of their own policy agenda than before.

Four years ago, the SPD pushed through a minimum wage and an early retirement scheme for some workers at the age of 63 as a price for entering the government.

What a CDU/CSU-SPD alliance would mean

Relative to a Merkel-led Jamaica coalition with the Greens and the FDP, the option that fell flat a week ago as the FDP pulled out at the last moment, a renewed CDU/CSU-SPD alliance would probably mean:

• less emphasis on income tax cuts

• a modest further increase in government spending, including more generous pension entitlements for some workers

• a further partial rollback of labour market reforms, for instance by tightening rules for temp agency employment

• a slower phasing out of coal power stations

• somewhat stronger support for some of French president Macron’s European reform initiatives

Veto power in the Bundesrat

Regardless of the precise shape of the government Merkel may eventually lead into her fourth and probably final term, most key policy initiatives will have to be agreed in the end between the CDU/CSU, SPD and the Greens as all three parties can wield a de facto veto in the upper house of parliament, the Bundesrat.

In this sense, the major result of the FDP’s decision to walk out of coalition talks a week ago is that the FDP will once again have no impact on policies for the time being. The FDP is not represented in enough state governments to have a veto in the Bundesrat.

The FDP decision to avoid the messy compromises of a coalition with Merkel and the Greens may or may not be good for the future electoral prospects for the party itself. But it means that Germany will pursue economic and social policies that are further away from those for which the FDP had fought its election campaign.

Berlin finds itself in an unprecedented political situation. The outlook is not yet settled enough for firm conclusions.

Looking much further ahead, the current contortions on the way towards a likely fourth term for Merkel do suggest that, if a new government lasts a full four-year term, both the CDU/CSU and the SPD will be led by a new generation of leaders at the next regular vote in 2021.

As in Austria, a long period of a “grand coalition” between a country’s two major parties can give way to a period of surprises.

©2017 The Globalist

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The Canadian Rohingya

Sun, 2017-11-26 18:02

By Colin Boyd Shafer

Canada hosts several hundred stateless Rohingya people who have fled persecution in Burma.

The Rohingya are arguably the world’s most persecuted people.

Aside from their formal exclusion by Myanmar’s military government, there are a myriad of less evident ways the Rohingya, an ethnic, linguistic and religious minority have been marginalized, specifically in relation to the color of their skin, their religion, and their identity.

Many other ethnic minorities have suffered at the hands of Myanmar’s oppressive military regime, but the Rohingya’s very existence is threatened. Recently thousands have fled by boat, hoping to land safely in neighboring countries, only to find themselves facing death as they are pushed back out to sea.

For too many years the international community has been, for the most part silent – and in spite of recent international attention to their plight, the Burmese authorities have showed no sign of changing their ways.

In 2006, five families of Rohingya were selected by the Canadian Government to resettle here. This made us the first country to formally resettle Rohingya, and many other developed countries have followed this lead.

Today there are over 300 Rohingya living in Canada and over a third of them live in the Kitchener-Waterloo area of Ontario.

Nur Hashim, who heads the Canadian Burmese Rohingya Organization, came here in 2007.

“We will always be thankful to Canada. We have no words to give thanks. Still we are very sorry for our people in Myanmar. Here we can buy fish and meat, and there they have nothing.”

Click on any photograph to enlarge.


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Nur Hashim

“I continue to work for my community here and in Burma. I try to be an ambassador and advocate for our cause. It is important that Canadian society knows what is going on.”


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Nazma Hasim

“I love drawing and playing dress up. My dream is to be a doctor and have a big house.”


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“Why is it that in Canada many religions can coexist but not in Burma? In my country the call to prayer is banned, religious schools are banned, Arabic school is banned, and they can’t build new mosques nor can they renovate the many that have been destroyed.”


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“Saa (Tea) is important to our culture. We like hospitality, and serving guests. It is a sign of respect.”


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Rabia

“1992 is when I fled to Bangladesh with my family. After three months they started forced repatriation back to Burma. They arrested my husband and my five year old started crying for Dad. The police hit him with his gun, and later my child died.

I had to sell the few belongings I had to pay for my husband’s release. But when I went to the prison he wasn’t there. The rumour was that he was dead.

At the Nayapera refugee camp they again wanted me to go back to Burma. I pleaded that I was waiting to see if my husband was alive. They gave me two weeks, and then I was forced back to Burma with my forty day old child. In Burma I had nobody… everyone I had was in refugee camps. After six months I travelled three days back to the border with Bangladesh and crossed.

While at the Gondun refugee camp with my sister in law, my situation was reported to the UNHCR and they gave me support, while I waited there patiently for my husband. Finally, after almost two years, I discovered that he was alive.

Now we have seven children. My eldest is 24 and youngest is 6. I hope one day they will be police officers and lawyers.”


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Boduzana

“If I was in Myanmar I would have been killed by now. Here I am safe. My only hope is that my brothers and sisters can join me here someday.”


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Rifiqul Nur

“I want to be a soccer player.”


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“I keep my great grandfather’s family list document safe because it shows that we are Rohingya, Muslims and Myanmarese from Arakan State.”


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Mohamed

“Aside from my ambition to become a successful businessman, I want to live a life where I get involved in helping others… not just our people.”


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Tasmin

“I love playing soccer and basketball. FC Barcelona and the Chicago Bulls are my favourite teams. When I grow up I would love to be some type of doctor or maybe a fashion designer.”


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Kalim

Mom: “He likes Candy… He was born here, so he’s our Canadian!”


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Yonus

“We feel like our people are caught between two big liars. If we go to Bangladesh we are told we are Rohingya from Myanmar, and if we go to Myanmar we are told we are Bengali. Here in Canada I’m trying to develop a life here with my wife and children. My one son is still in a refugee camp in Bangladesh, and that brings me a lot of sadness.”


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Sajida

“My favourite thing is family dinner. My favourite foods are fries and ketchup.”


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“Abul Bosher was a Member of Parliament and Parliamentary Secretary in Burma from 1901 – 1991. He is a symbol of the Rohingya and proof of our history in Burma.”


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Ayasa

“On the one hand I am happy to be here in Canada, and happy to see my four kids alive and getting a good education, but on the other I am so concerned for the people dying… in the street, jungle, seas. I have been depressed since I was young.. I’ve seen so many atrocities.

Here I can express my opinion regarding the story of our people freely. My family were victims of forced labour: poor people doing labour for free. My father and my brother would be taken away in the night and made to carry rations, construct buildings or do the night watch. Many people died.

Still today my family has to give rice to the authorities for free just to keep their property. Even if our people are educated, they are jobless. My cousin graduated from university, but he has no job.”

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Will Ireland Sink Brexit?

Sun, 2017-11-26 18:01

By Denis MacShane

How Irish politics interfere with Brexiteers' desires.

Can Ireland sink Brexit? It does not augur well that, ever since the 1998 Good Friday agreement, the London political class has lost all interest or knowledge in Irish politics.

As a result, London has lost touch with the deep currents of Irish politics. Few UK papers have correspondents in Dublin or columnists who know the current politics of the island.

The one exception curiously is the current Labour leadership. Jeremy Corbyn has long been interested in Ireland. At the time, he was much criticized by the tabloid press because he held talks with Sinn Fein leaders as long ago as 1984 who were elected as British MPs even if they never took their seats.

John McDonnell, Corbyn’s No 2, with his Irish background is also more aware of the Irish dimension of Brexit. He understands Irish politics better than most Tory ministers.

“News” in British newspapers

In British newspapers, the news that the Irish government in Dublin needs assurances is seen as a shocking last-minute development.

Irish leaders want assurances in writing, signed by the UK Prime Minister, that the Peace Deal in Northern Ireland must not be jeopardized by re-introducing customs controls on the border between the six counties of Ulster under British control.

That this should be considered news at all is all the more astonishing as Michel Barnier has been making this clear all year. He has stated numerous times that, if the UK leaves the Customs Union, there would have to be customs posts on the Northern Ireland border.

Barnier told me back in spring when I was researching a new book on Brexit that he had told the French government they had to create customs clearing posts on all French ports that can take in vessels from the UK assuming the UK leaves the Customs Union.

The idea that the EU27 would allow free passage of meat, milk, whiskey and manufactured goods not made under enforceable EU norms and regulations, including rules of origin, goes against all legal norms governing trade between countries that belong to two different sets of customs rules.

The UK as a “Third Country”

After all, with Brexit, the UK becomes a so-called “Third Country.” Trade then flows between the EU and the (non-EU) UK.

The high hopes that the Tories maintain about finding a “bespoke” form of a different deal is impossible to envisage.

All it needs is, for example, an outbreak of some animal disease. The health-conscious Germans, as well as other Northern European nations would never allow free passage of animals or meat any longer because it is not covered by enforceable EU rules. The French also would not go along for sure.

There are 2.4 million vehicle crossings every month through about 200 roads (most tiny) between the UK’s Northern Ireland and the EU’s Ireland. The idea there should not be any custom controls between two completely different trade blocks is a smuggler’s idea of paradise.

The history of Fine Gael — the minority party in the Dail, the country’s national parliament, that forms the national government – also needs to be considered.

The party, currently headed by the media-savvy but loose-lipped Leo Varadkar, the Irish Taoiseach, has its origins in the party that accepted temporary British dominion status after independence in 1922.

For that reason, Varadkar dare not be seen as caving in to British insistence that the UK can be simultaneously in and out of the EU in Northern Ireland.

Irish politics matter

Fianna Fail, the strong opposition party hoping to seize power, is pushing for an early election and with the help of other parties in the Dail may get their way.

In the north, the stand-off between the Democratic Unionist Party (DUP) and Sinn Fein refusing to share power in a joint government means that there is no government in place in Northern Ireland with any leader that is capable of thinking beyond internal party politics or personal political survival.

Varadkar and Dublin can veto all of London’s hopes next month even if the EU plans to agree to move ahead to trade talks in 2018 in order to avoid crashing over the Brexit cliff.

Varadkar has to deliver a “no border” deal in order to survive in power — he leads a minority government after all. For that reason, he has no flexibility regarding the demand that Mrs. May pledge in writing that today’s border arrangements will be maintained.

And if an early election is called in Ireland, the prospects for the Tories to overcome the Ireland hurdle don’t become any better. In a campaign, both of Ireland’s main parties will be forced to step up their anti-London line on Brexit in order to defend the Peace Agreement.

The only logical way out is for the UK to drop the ideological insistence among hardline Brexiteers on leaving the Customs Union.

The issue was barely raised in the Brexit debates before the referendum and certainly did not feature on the ballot paper. The UK can leave the EU, but still stay in the Customs Union.

British politics interfere

But here English politics, like Irish politics, enters the story. May has given Liam Fox a brand new department for International Trade. It has delivered nothing except air miles for Fox.

This department should logically be merged with the Department of Business or even the Foreign and Commonwealth Office (which sees its income cut from £2bn to £1.2 bn over next 2 years under the new budget).

Liam Fox should be given some other cabinet post so as not to lose face.

Mrs. May also depends on Northern Ireland’s homophobe creationist DUP – ultra-hardline Protestants who are enjoying being in the limelight as the 10 MPs who give Mrs May her working majority.

Of course, the DUP is dead set against any concessions to Dublin. Left to its own devices, it wants to use Brexit to unmake the Peace Agreement.

Labour to the rescue?

Can Labour work to save the Peace Process which will take a fatal hit if border control check points return to re-create a physical border in Northern Ireland?

Can Labour press Mrs. May to send a signal that would be universally welcomed by business in all corners of the British Isles?

What is needed, not just for companies’ sake, is that — whatever final form Brexit takes — the UK will stay within the Customs Union for at least as long as Brexit-related passions between Leavers and Remainers die down and a common-sense solution can be found.

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