CRISIS - WHAT CRISIS?

The last time there was a great economic collapse, some major political and economic changes followed it. Now this was a combination of the legacy of failure to deal with the political, economic, and social consequences of the economic collapse, combined with a desire not to return to a grim pre war world and the positive legacy of the combined effort to win the war and defeat fascism. This 'economic revolution' was established or perhaps enshrined at the Bretton Woods conference (in 1944) and lasted until the late 1970's.

This time around following the greed and stupidity induced banking crisis which triggered economic collapse there has been no 'economic revolution', there appears to be no collective desire to make sure the same mistakes does not happen again – at least amongst the political elite. We are collectively stuck with the same old deeply flawed unregulated 'free market' theories that helped to contributed to the banking crisis in the first place - there is apparently 'no alternative' but simply to hope that the failures of the past don't come back to haunt us in future years.

Yet, the version of 'free market' unregulated capitalism, where the big banks pretty much hoovered up their smaller competitors in the years before the collapse (the one legacy of Thatcher that's never talked about is the eradication (with a few exceptions) of our building societies). The same thing happened with the electricity and gas companies, which were rapidly smothers and absorbed to leave us with the unpalatable, untouchable 'Big 6' cartel members - who continue to squeeze their customers and monopolise the so called 'free market'.

Somehow, while Westminster and Washington were distracted or disinterested we ended up with privately owned, privately funded institutions that had become 'too big to fail'. Their financial misdemeanours largely went unchallenged, un-investigated and unreported (save by a few honourable individuals at Westminster who did their level best to shine a light on the nefarious activities of an increasingly unregulated banking sector).

One take on this is that the Westminster elite (elected and non- elected) have for far too long been far too closely involved with the pernicious influence of the city. It has always been too easy for the Westminster elite to flit back and got into and out of lucrative employment in the City (and back again) with little beyond half-hearted ineffective scrutiny.

This was as true under the long Conservative period of governance between 1979 and 1997 as it was under the New Labour governments between 1997 and 2010 and to a great extent remains largely unchanged if not unchallenged. The questionable privatisations under the Conservative, New Labour and Con Dem governments certainly provided plenty of opportunities for cosy well salaried non executive jobs on the board. 

This combined with the blending of private capital with the public sector, begun under John Major, accelerated by Blair / Brown and continued by the Con Dens blurred the boundaries between the public meant that when the crash happened there was real panic, followed by the handing over of significant amounts of public money to private business (banking) concerns pretty much will little regulation of what was done with it (hence the continuance of the business as usual banking bonus culture even within those banks that ended up effectively under public ownership).

After the current crash, unlike after the crash in the 1930's there has been no period of reflection of reform and very little legislative or regulatory action to try to ensure that the circumstances that led to the crash don't happen again. The speed with which the current unrestrained Conservative government has moved to lighten the tax load on the big banks and to reduce corporation tax - something that a former New Labour government would have probably done - reflects the continued unhealthily close relationship between the City and Westminster.

When the crash happened governments and internal financial institutions stood blinking like rabbits gazing into the headlights of an oncoming car - the hard impact that followed left the rabbits stunned and in shock rather than dead. There has been no fix beyond collective wishful thinking that it won't happen again and perhaps a silent hope that some other financial rabbit will take the head on impact next time.

The 'free market' ideology that we have got lumbered with is perhaps the adoptive child of all those other financial experts who were proved so wrong by John Maynard Keynes (back in the 1940's). Certainly the 'free market' economists have re-shaped (shattered) or shaken our world since the late 1970's and unleashed a ‘free market unregulated capitalism' onto the developed, the developing and the former communist worlds - with some pretty dire consequences.

Whether you live in Russia or the old West by and large (although with a few healthy exceptions) former state / publicly owned enterprises and assets are largely no more. They were depending on how you see it, privatised (on the cheap) or plundered by a new class of carpet baggers who enriched themselves at our collective expense. In the East the process was more brutal and profits of the oligarchs larger and even more unregulated. Embedding and developing democracy was always secondary to making a profit - something that has not helped ordinary people very much at all – but has made the city traders very happy!

NATO'S NEW WORLD ORDER?

There will be plenty to discuss in early in September at the Celtic Manor Resort (close to Newport) and I suspect that we not talking about the NATO summit related chaos or the noisy protestors outside the fence. Perhaps unconsciously echoing the former US President George Bush, the  NATO secretary-general Anders Fogh Rasmussen, has warned that the “world order is at stake” and that the 28 state alliance faces “the biggest challenge since the end of the Cold War” as the Ukraine crisis continues.

Part of that particular fence...

The ‘World Order’ reference is interesting particularly as we  are living through ‘a period of significant anniversaries’ at the moment of events one hundred years ago that led to the fall of one particular type of world order and the emergence of a different and much grimmer new world order. On 31^st July 1914 Imperial Russia’s publically declared full mobilization (actual mobilization had begun one week earlier) this was a key event in the drift to war.

One hundred years on (31^st July 2014 ) the House of Commons Defence Committee published a report part of a review of Security and Defence. The report argues strongly that recent events in Crimea and Eastern Ukraine should be a wake-up call for NATO (and the UK). The report further argues that NATO is unprepared when it comes to facing the new threat posed by Russia.

Drawing imperfect parallels with 1914 only goes so far, as the secret diplomacy (mostly British) that was contributory factor to the drift to war in 1914 is now a thing of the past. We need to remember that this is not 1914, its 2014, and collective ‘publicly declared’ security commitments have tended to work. Clearly articulated public security commitments and agreements, which bring independent nations together, are on the whole a good thing, perhaps one of the reasons why the SNP has stated that an independent Scotland would join NATO.

Scotland and NATO

As for NATO itself, the report (here in html / and in PDF) says, has flagged up deficiencies in NATO’s command and control structures, in its ability to predict and its abilities to detect and give adequate warning of any potential attack.  The MP’s have identified weaknesses in the readiness of NATO forces and perhaps equally as important the fact that NATO itself may lack the collective political will to take concerted action to deter attack.

This lack of collective political will may be a combination of different developments. The consequences of the long term deployment in Afghanistan which was in response to an attack on a NATO member (Article 5) which took the security organisation into unknown and increasingly unstable territories. And the fact that an older Europe may be reasserting itself, as France and Germany develop their on-going (gas fuelled) relationship with Russia, which may result in questions being be asked about the on-going need for a Trans-Atlantic alliance and it’s perceived adherence to what are increasingly perceived as US interests.

The Russian Federation’s recent actions in the Crimea and eastern Ukraine have flagged up the possibility, admittedly unlikely, of a potential non direct Russian attack on a NATO Member State. A conventional attack on a NATO state remains a low probability, but, the report has flagged up the risks of unconventional attacks which NATO would find hard to counter. Unconventional means a combination of cyber attack, information warfare, the “ambiguous warfare” tactics (the use of irregular militias) as deployed in Ukraine, Georgia, Moldova  and elsewhere  all of which tend to be backed up with rhetorical threats about the need for protection for ‘Russian minorities’.

The MP’s have stated that NATO needs to reorder, train and exercise its capabilities to be able to defend against both eventualities. The Committee has called on the UK Government to take the lead at the NATO Summit in Wales (in Newport, in September) to ensure that NATO is ready to face such threats. The House of Commons Committee’s has produced some specific recommendations, which call for:

• The pre-positioning of military equipment in the Baltic States;
• A continuous presence of NATO troops on training and exercises in the Baltic;
• The re-establishment of large-scale military exercises including all NATO Member States and involving political decision makers;
• Improvements to the NATO rapid reaction force and the possible establishment of a new Standing Reserve Force for NATO;
• Improvements to processes for warning of imminent attack;
• Radical improvements in Russian expertise in the UK government, allowing for real analysis and assessment of the Russian threat;
•  The development of new tactics to respond to the threat of “ambiguous” attacks from Russia - including how to counter threats from cyber, information warfare, and irregular militia; and
• A reconsideration of Article 5, to allow response to less conventional attacks.

The committee has concluded that the threats to UK security are increasingly dynamic in their scale, complexity, uncertainty and urgency and for NATO to undertake radical reform to be able to anticipate, plan and respond to these threats. Hand in hand with this problem, the threats from terrorism and failed states will continue to increase, change and develop. The MP’s say that events in Ukraine and Crimea represent the re-emergence of a real state on state threat to NATO’s eastern borders.

Certainly those ‘Brits’ who since Suez blindly tailored their foreign policy and national strategic interests to mirror those of the USA regardless of the cost, may find themselves increasingly isolated. The bigger problem for NATO (and increasingly for the EU) comes not from the ‘Brits’ (who are perceived to be increasingly euro sceptic and too close to the US) but from the smaller countries of eastern Europe who have a less warm relationship with Russia but whose interests may end up being sacrificed for French and German interests.

Last week the UK announced that it will send a "full battle group" of 1,350 military personnel to take part in NATO manoeuvres in Poland to support allies in eastern Europe. This will be the UK's largest such commitment to the region since 2008. The party formerly known as New Labour stated that the report underlined NATO’s position as the "cornerstone" of UK defence policy and the "sole organisation for collective defence". On the basis of that sentiment there probably won’t be any constructive dialogue in Westminster about how NATO finds itself on the cusp of yet another confrontation with Russia. 

We may also wonder just how the West managed to get Russia so badly wrong. A few years ago Russia was publically humiliated over Kosovo by the US (and NATO). Before that Western help during the painful transition from a collapsed Soviet Union to the post Soviet economic reality was pretty minimal, rather than help, support and assistance all Russia got was bad advice in relation to a brutal rapid privatisation process that shattered the old Soviet economy and paved the way for the rise of the Oligarchs, not to mention wrecking the prospects of the emergence of a stable democratic Russia in the process.