The Great Debate UK

from Anatole Kaletsky:

It ain’t over yet: Last-minute promises to Scotland will scar the UK

Britain's Prime Minister David Cameron delivers a speech at the Aberdeen Exhibition and Conference Centre in Aberdeen, Scotland

Astonishing as it was to contemplate the breakup of Europe’s most stable nation-state threatened by last week’s Scottish referendum, we now have an even more extraordinary possibility. In the days since the Scottish voters rejected secession 55 percent to 45 percent, a new threat has suddenly appeared to blight Britain’s political and economic prospects for years ahead. It now looks like Britain may be dissolved by one rogue opinion poll.

The YouGov survey, released shortly before the referendum, found nationalists overtaking the unionists for the first time. (And, as it turned out, the last time.) This triggered total panic among Britain’s establishment politicians.

The outcome was a signed statement on the front page of the Scottish Daily Record by Prime Minister David Cameron, along with the leaders of Britain’s Labour and Liberal Democrat parties, promising immediate legislation to give the Scottish Parliament almost complete control over income tax, health and welfare policies -- on top of the autonomy it already enjoys. They also issued a permanent commitment to channel £1,700 more per head in government spending to Scotland than to England, despite per-capita incomes that are approximately the same.

Deflated "Yes" campaign balloons lie on the grass in George Square after Scotland voted against becoming an independent country, in GlasgowBy signing the statement, Cameron and the other party leaders opened a Pandora’s Box of political and economic controversies that are certain to destabilize British politics. Businesses and investors who have viewed Britain as the most politically predictable and stable nation in Europe are in for a shock.

from Anatole Kaletsky:

Why breaking up Britain could tear apart the EU, too

A bunch of 'Yes' balloons are seen as Scotland's First Minister Alex Salmond campaigns in Edinburgh, Scotland

While recent opinion polls have swung slightly back toward the "no" camp, there remains a distinct possibility that Thursday's Scottish referendum will trigger a previously unthinkable breakup of Britain.

If this were to happen, the biggest risks for global businesses and investors do not lie in the economic problems created by Scotland’s choice of currency or the inevitable arguments about sharing North Sea oil revenue and the British national debt. These are crucial challenges for Scotland and have been much discussed in financial institutions and think tanks. But the crucial issue for the world economy and financial markets is about the resulting impact on the European Union -- and especially on Britain, which would remain the world’s sixth largest economy even if Scotland departs.

from Anatole Kaletsky:

How EU politics pushed Merkel to lift Germany’s austerity policies

German Chancellor Merkel and Luxembourg's Prime Minister Juncker hold a joint news conference after a meeting in Luxembourg

Matteo Renzi, the prime minister of Italy who took the revolving presidency of the European Union this week, seems to be the sort of man that Napoleon was referring to when he reputedly said that the key qualification he sought in recruiting a general was good luck.

Renzi become prime minister without even needing to win an election because Silvio Berlusconi and all other rivals self-destructed. He took power just after Italy passed the lowest ebb of its economic fortunes. In May, he was rewarded for his good fortune by Italy’s voters, who anointed him with a strong democratic mandate in the same European elections that discredited almost all Europe’s other national leaders. Now he is taking the helm in Europe, as an economic recovery is starting and the European Central Bank is swinging decisively in support of growth.

from Nicholas Wapshott:

Fighting for the future of conservativism

Britain's Prime Minister David Cameron delivers a speech to placard waving Conservatives during an European election campaign rally at a science park in Bristol

Establishment Republicans have been delighted by the victory of Thom Tillis, their favored candidate in last week’s North Carolina primary. After expensive advertising campaigns by establishment bagmen like the U.S. Chamber of Commerce and Karl Rove’s American Crossroads, mainstream conservatives believe they have a candidate who can beat Democrat Kay Hagan to win a valuable Senate seat in November.

Some commentators see Tillis’s triumph as a sign that other impending GOP primary races will also deliver electable candidates. Having watched the Senate slip from Republican grasp in 2012, as Tea Party candidates such as Todd Akin in Missouri, Christine O’Donnell in Delaware and Richard Mourdock in Indiana depicted the party as too extreme, they say the Tea Party is in retreat.

from John Lloyd:

The UK’s paradox of faith

When David Cameron recently proclaimed in the Church Times -- the organ of the Church of England -- that he was a Christian, that his faith helped guide him through life and work and that Britain is a Christian country and should be proud of it, he was met with a wall of disapproval.

When a European leader says he's a Christian and that he lives in a Christian country, he's asking for trouble. The approved political position in Europe is that religion should be commended for its sterling values when it cares for the poor and condemned when it is used as a rationale for terrorism. Otherwise, politicians should steer clear and leave it to the clergy.

from John Lloyd:

On Syria, England defects

Thursday’s British House of Commons vote against Britain aiding in a Syrian intervention led me to center on one question: what will happen to the U.S.-UK relationship? Is that alliance now gravely weakened? Can it survive in a meaningful form?

Specifically, will Britain ever again be able to partner with the United States in any future military interventions? Without Britain, the United States will certainly carry on. It has a new best friend in France -- french fries top of the menu now! -- and maybe Turkey will be willing, too. In the UK, Prime Minister Cameron says Britain will remain committed to mobilising opposition to the Assad regime, delivering humanitarian aid, and deploring the use of chemical weapons.

from Hugo Dixon:

Cameron, UK hurt by Syria vote fiasco

Rarely has a UK prime minister done so much damage to himself in a single week as David Cameron has with his mishandling of a vote authorising military action against Syria. Cameron may cling onto power after his stunning parliamentary defeat on Thursday night, but he will cut a diminished figure on the domestic and international stage. In the process, he has also damaged Britain’s influence.

Cameron’s litany of errors began with his decision to recall parliament from its summer holidays in order to give the green light to British participation in a military strike designed to punish Bashar al-Assad’s murderous regime for its alleged use of chemical weapons against its people last week. The decision to get parliament’s approval was right, even if not constitutionally necessary. The mistake was to rush things before all the evidence of Assad’s culpability had been gathered and published. In France, which is also contemplating military action, the parliamentary debate is scheduled for next week.

from Nicholas Wapshott:

David Cameron takes on the tax havens

There is nothing more likely to spark anger than an unfair tax regime. The American Revolution was founded on it. So the discovery that some of the largest and most successful companies in the world -- among them Google, Apple, Amazon and Starbucks -- have legally minimized the tax they pay, sometimes to as low as zero, in many nations in which they earn the lion’s share of their revenue is causing considerable irritation.

The result was evident at the G8 meeting in Northern Ireland, where Britain’s conservative government, chairing the conference of the world’s richest nations, put making corporation tax fairer at the top of its agenda, after the civil war in Syria. David Cameron, who like most conservatives believes in low taxes, is in a bind.

from Anatole Kaletsky:

When illogical policy seems to work

It’s cynical, manipulative and hypocritical – and it looks like it is going to work. How often do you hear a sentence like this, to describe a government initiative or economic policy?  Not often enough.

The media and a surprisingly high proportion of business leaders, financiers and economic analysts seem to believe that policies which are dishonest, intellectually inconsistent or obviously self-interested in their motivation are ipso facto doomed to fail or to damage the public interest. But this is manifestly untrue. The effectiveness of public policies and their ultimate desirability is in practice judged not by their motivations, but by their results.

from The Great Debate:

For Russia, Syria is not in the Middle East

Russian President Vladimir Putin meets with (clockwise, starting in top left.) U.S. Secretary of State John Kerry, British Prime Minister David Cameron, next Israeli Prime Minister Benjamin Netanyahu and U.N. Secretary-General Ban Ki-moon. REUTERS/FILES

A string of leaders and senior emissaries, seeking to prevent further escalation of the Syria crisis, has headed to Moscow recently to meet with Russian President Vladimir Putin. First, U.S. Secretary of State John Kerry, then British Prime Minister David Cameron, next Israeli Prime Minister Benjamin Netanyahu and now, most recently, U.N. Secretary-General Ban Ki-moon These leaders see Russia as the key to resolving the Syria quandary.

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