Crisis? What Crisis? How to Save a Debt-Drowning Planet

In late 1979, with the public service unions on strike and with the national debt spiraling out of control, Britain began to resemble a toilet. Prime Minister Jim Callaghan returned from a ‘summit’ in Guadeloupe (they never seem to hold summits in Rotherham or Detroit). The Sun, one of Britain’s Murdoch tabloid newspapers, famed for their restraint and balance as well as the correct use of the telephone, suggested to sun-tanned Jim on his return that there might be just ever such a teeny tad of a problem. "Well”, Jim thundered, “that’s a judgment that you are making. I promise you that if you look at it from outside, and perhaps you're taking rather a parochial view at the moment, I don't think that other people in the world would share the view that there is mounting chaos." Next morning The Sun ran the now infamous headline, “Crisis? What Crisis?” Enter Margaret Thatcher stage right!

What crisis indeed. Thanks to utter political ineptitude by those we collectively employ to lead the mortgage crisis, banking crisis, sovereign and debt crisis, and probably climate change as well, have now merged into what looks like the great mega-collapse of the twenty-first century. Thought you had savings? Thought you had a pension? No, if you are a western European you will soon be offered the compulsory ‘chance’ to ‘invest’ in stellar sun-drenched opportunities in Italy, Greece, Spain via the new Euro-Debt. Not only will you have miraculously acquired this debt ‘opportunity’ but you will be reassured to know that your former savings will be administered by the incredibly open, honest and efficient European Onion. If you are American, leave now. You are about to discover true cost of pork in DC and it ain’t cheap.

So, where are our collective ‘leaders’ (I used the word advisedly because ‘leading’ they ain’t). Well, David Cameron is on holiday in Tuscany. Good idea! Italy is cheap at the moment and probably will be for the next millennium or so. He did at least have a chat with the Governor of the Bank-rupt of England, which did huge amounts to calm the ‘markets’. Meanwhile, his buddy, President Barack Obama has taken decisive action to reduce America’s debt, but not until after he has been re-elected in 2012. Well, this seems fair enough. By then in addition to America losing its triple AAA credit rating, the Dollar will no longer be the world’s reserve currency and the global financial structure will have collapsed. That will teach the Chinese a lesson they will never forget.

The good news is that the French and Italians have taken decisive action by together calling an emergency meeting of the finance ministers of the G7. The words ‘deckchairs’ and ‘Titanic’ come to mind. France has of course called the meeting because the French always like meetings. Italy has called the meeting because having cooked the book for years they are about to be found out and want to get their denials in first. So, how can we help the French and the Italians save the planet?

First, the G7 should consider its membership and turn itself into a consolidated debt. The Group of Seven today comprises the world’s leading seven debts; Britain (utterly broke but pretending not to be by talking loudly at others and showing the world a stiff upper lip), Canada (a mythical land somewhere near America which has huge natural resources, no people and therefore little value), France (soon-to-be broke but with big ideas they are keen for the Germans to pay for), Germany (not broke but terminally selfish and determined not to pay for the French, Italians and the rest of the southern Onionistas), Italy (don't even go there), Japan (destroyed by an earthquake and broke beyond repair), and, of course, the United States (the richest, biggest and most powerful debt on the planet). Noticeable by their absence are the Indians (noticeably not broke and being paid for by the British aid budget.  This is OK because the British Government is using its debt to fund everybody else but the British these days) and the Chinese (very noticeably not broke and buying everybody else’s debt so that they can still afford to attend G7 meetings).

Second, the so-called ‘market-movers’ should be shot. Did we really defeat communism to create this morally, politically and financially bankrupt chaos? Now, I am no Socialist – heaven forbid, but is the future of the world and its seven or so billion inhabitants really dependent upon a small bunch of headless and heartless chickens who apparently panic every time Mrs Ohio maxes out her credit card? Abolutism leads to mayhem – be it over-mighty states or under-regulated markets. Indeed, markets by their very nature exaggerate extremes – both positive and negative – because they screw the rest of us simply by moving the markets. Some form of control has to be re-asserted by states to prevent the currency speculators switching from one market to another to trigger runs on currencies. The so-called ‘money men’ should be left in no doubt that if they continue to threaten the financial futures of millions through short-term speculation they too will face consequences.

Third, political leaders of the greatly indebted and the greatly owed must agree a proper plan. They must now move decisively to put their financial houses in order even if this takes years and even if it means southern Europeans paying their taxes and working a little harder. Even working a bit would help. China can no longer be permitted to keep the Yuan artificially low simply to entrap others in debt. The West must together to get its debt under control.

Above all, it is time for the real political leaders to get off their well-upholstered back-sides in their well-upholstered villas to demonstrate a collective will to deal once and for all with what is now meltdown financial contagion.

Fail and the ensuing disaster would not only destroy bank accounts. This is the stuff world wars are made of.

We do not need G7s or G20s, just G bloody do something! Crisis? What crisis?

Julian Lindley-French

The Lamps Are Going Out All Over Europe

The German-Belgian border. 3 August, 2011. Ninety-seven years ago to the day Sir Edward Grey, the British Foreign Secretary, looked out of his palatial, imperial London office and said, “The lamps are going out all over Europe. We shall not see them lit again in our time”. A few hours later two German armies smashed into Belgium. The First World War had begun. 8 August, 1918, four years and millions of dead later on what German generalissimo Ludendorff called “the black day of the German Army” the British Army crushed the Germans at the Battle of Amiens. At the spearhead of the Allied thrust the British Army battered Germany into such a comprehensive defeat that in November 1918 the British held a victory parade in Cologne. Britain and France had prevailed but at a cost evident even to this day in every town and village across both countries.

Even as the British and French seemed to be at the very peak of their power those four years of struggle had in fact begun Europe’s long decline. Indeed, Grey was looking down on the apogee of British and European power in the world. And yet, even Grey could not have understood that his fears would not only come true but mark the beginning of a century of European retreat, much of it self-inflicted.

For many years following that ‘war to end all wars’ Europeans of various persuasions rallied to ideologies and nationalisms to mask the fact of decline. America rapidly retreated into isolationism from its brief and belated foray into the struggle between democracy and authoritarianism that was the essence of the First World War. Britain and France were left to soldier on as the great hollowed out world leaders. For Europeans the Second World War and the Cold War only hastened the decline and the further retreat into a myth deemed ever more central by elites unable to bridge the gap between power and paucity - paucity of strategy, paucity of capability, and paucity of ambition.

With Europeans effectively denuded of financial power the myth that has sustained European democracies these hundred years past is now revealed for what it is – a theatre de l’absurde. Europe and Europeans are thus faced with the most profound of choices.  Does Europe accept its precipitate retreat from influence and enslave itself to the policies and strategies of the newly enriched but less ‘enlightened’? Or, does Europe finally, collectively and realistically take stock of its perilous strategic position and begin the slow and purposeful return to a credible ability to shape the twenty-first century?

Diplomatic and military power are today no less important than in Grey’s day. And yet, the great European defence depression is apparent across the length and breadth of the Old Continent, whatever the strategically-challenged or insanely optimistic like to pretend.

Today, the UK House of Commons Defence Committee has just published a damning report to which I gave evidence (http://www.publications.parliament.uk/pa/cm201012//cmselect/cmdfence/761/76102.htm) on the relationship (or rather lack of it) between stated British national strategy and Britain’s ability to realise such a strategy given the swingeing cuts taking place in London's diplomatic and military instruments of power. Britain is not alone.  Such folly is evident across a Europe that continues to treat strategy like a No 8 London double-decker bus of old – something slow moving that one can hop on and off at will.

There are a range of solutions being offered by the think-wonk community to close the gap between strategic myth and defence reality, all of which are well-meaning, but all of which essentially miss the essential point: one can never create strategy through management. Some call for more effective and streamlined institutions. I am all for streamlining both NATO and the Onion, both of which too often resemble armed pensions, but the solution will not be found there. Some call for more pooling of equipment and specialisation of effort. This is all well and good but in the absence of a shared strategy and strategic culture such initiatives will fail. Indeed, it is precisely the absence of shared strategy that neuters the trust upon which such ideas flourish.  Can European solidarity survive danger? The evidence of the past decade would suggest not.

Equally, the status quo ante is no option either. The nature and pace of change in the world as we enter the instable Asian century reveals to the strategically insightful three verities that politicians on both sides of the Atlantic seem unable to grasp. Strategic, i.e. global, influence will be dependent on a) more of the transatlantic West; b) much more and closer European collaboration; and c) new partnerships with the likes of Australia, India and Japan. All three of which demand strategy and leadership.

Back to Britain and France. A European defence strategy worthy of the name and credible in this dangerous century will only be realised if America gets over its sulk about European ineptitude and Britain and France begin to take real steps towards creating a European defence strategic cluster. Leadership informed by strategy won the First World War. In 1914 the Entente between Britain and France was the key to victory. In 2011 the Franco-British Security and Defence Treaty is equally important as a down-payment on a strategic future for Europe, but only if it is imbued on both sides of the Channel with strategy and leadership, as opposed to spin and pretence.

Churchill writing of France at the end of World War One could have been writing of Europe today. “Worn down, doubly decimated, but undisputed masters of the hour, the French nation peered into the future in thankful wonder and haunting dread. Where then was that security without which all that had been gained seemed valueless, and life itself, amidst the rejoicing of victory, was almost unendurable”?

Sir Edward is still looking for a lamp that will lead Europe out of the trench into which it has fallen.

Requiescat in Pace.

Julian Lindley-French

Fiddling Whilst the West Fails: The Great Globalisation Disaster

“Forget these frivolous demands which strike a terror to my fading soul”. So Mephistopheles beseeches Marlowe’s Dr Faustus. With American politicians not so much debating whether or not to sell America’s soul, but for what price, the most profound of strategic questions is now apparent. For how long does the West support a system of globalisation that is clearly no longer working in its favour?

The United States has a budget deficit of $14.3 trillion. 9.2% of the workforce is unemployed and for every dollar the US Government spends 43 cents is borrowed. Much of southern and eastern Europe is mired in debt with states being propped up either by a small group of western European taxpayers or selling their indebted souls to China for who knows what future strategic price.

The West fought a long and just struggle to defeat the extreme statism of Soviet communism. Now the West must face up to one of the uncomfortable consequences of its victory; extreme free marketism allied to sovereign capital is rapidly destroying Western influence. The system is in crisis and the West is trapped in a rapid spiral of self-induced decline.

For too long Western leaders have stuck to the mantra that globalisation is westernisation. This is now patently wrong. Globalisation has no inherent values and eschews structure. There is patently no inherent link to the open, liberal model of government and governance the West espouses. No, globalisation simply enables those with the most (and most liquid) financial clout to access and influence societies. In that sense extreme globalisation works much likes a computer virus.

Furthermore, globalisation might indeed work as once envisaged as a vehicle for the promotion of wealth and freedom if all the key actor played by the same rules on a level playing field. That is clearly not the case. Asian powers such as China are manipulating the naïve openness of many Western states by demanding access to markets that they deny others. By such an approach China is constructing a huge network of sovereign influence over Western states. Put simply, the trade imbalance between China and the West is leading to a power imbalance that unless addressed soon will permanently eclipse the West.

Unfortunately, it is a mark of the shallowness of political leaders on both sides of the Atlantic that they cannot see beyond their immediate and respective debt crises to the bottom-line strategic reality. The real question is thus not how much is owed, but rather to whom and at what price? The current debt crisis is the symptom not the cause.

To some extent America‘s debt is a deterrent to China as an American default would be devastating for those holding the dollar, even though such a move would effectively destroy the Bretton Woods system of global financial governance. Europe has no such Armageddon option.

But perhaps the most pernicious aspect of this disaster is the steps taken by Western political leaders to mask their own incompetence. The consequences of extreme globalisation are explained away either by pretending to deal with the symptoms (they are not), either by ignoring the problem all together, or by pretending it is a good thing. In fact, Western governments lost in the vacuum between ideology and impotence have effectively lost control over all borders – informational, financial, economic and even physical. They simply cannot bring themselves to admit that extreme openness is as dangerous as extreme protectionism or statism. As such they have lost any sense of the balance in and of government needed to manage international relations in all is forms.

History is full of many lessons but one of the most consistent is that when governments give up their power and responsibilities the results are as dangerous as when governments attempt to control everything.

Since the end of the Cold War there has been a collective dereliction of duty by Western leaders – American and European alike. They have collectively failed to see either the implications or dangers of extreme globalisation. They have collectively demonstrated mind-boggling complacency about the implications of extreme globalisation. Prevailed upon by too many narrow vested business interests they have collectively failed to realise that they have lost control of globalisation and in so doing we the people are now vulnerable to the savagely acquisitorial – both states and businesses.

Balance is the key. Western governments must move collectively to re-assess globalisation and begin to re-assert control over money, markets and mayhem. Indeed, globalisation in its purest form is mayhem and anarchy. The whole point of government is to prevent such. Otherwise, life will indeed become as Hobbes would have it “nasty, brutish and short”. If that means some form of macro-protectionism whilst new rules are established then so be it. But to continue with the current system of wilful vulnerability would be to damn the West to destruction and far more quickly than feared.

Western politicians are fiddling whilst the West fails. At least something unites American and European politicians. A plague on both their houses.

Julian Lindley-French

Up the Blades!

Bill Shankly, a famous manager of Liverpool Football Club once said that 'fitba', he was from Glasgow where they speak a language beyond the register of most humans, was not a matter of life and death...it was far more important than that. Given the tragic events in Norway such a statement seems fatuous in the extreme, but I know what he meant.  

For the record, I am not going to dignify that Norwegian monster with any consideration.  It was an act of evil pure and simple and he should be cast with his views into the dustbin of history.  My heart goes out to the victims and their families and the people of Norway...of all colours and creeds. End of matter.

No, today as a new seasons beckons I am going to admit to an obsession that has been with me since birth and which I will take with me to the grave.  I am a football fan - yes, real football. I am not only a football fan I am a sad, mad, obsessed fan of Sheffield United Football Club.

Americans amongst you may offer oblique sympathy because you are still prone to a version of this obsession, even if your so-called 'sports' are by and large silly. Europeans amongst you will fully understand and no doubt share this particular obsession for a game that was to all intents and purpose invented in my home town - Sheffield - and which is now played far better across at least 99% of the planet.  Bill, you are excused at this point (you know who I mean).   The only thing that can really be said for this obsession is that it channels the national, patriotic and local zeal from one entirely violent field of European endeavour onto another marginally more peaceful.  

 

Known as the Blades 'we' (note the depth of the obsession) are renowned for 'our' blunt edge in front of goal.  In fact, last season we not only lost the ability to score a goal, but were by and large unable to locate the goal itself.  And, all this whilst a large neon sign was illuminated over our own goal with the words 'Score Here For Free' emblazoned.  Excessive defensive largesse led of course to much gnawing of teeth amongst the faithful and much departing of managers whose grasp of  tactics seemed by and large to be limited to offering excuses for defeat before a ball was kicked.  We were awful. 

Consequently, having been but three years ago amongst the gods of the Premier League, playing the likes of Manchester United, Chelsea and Liverpool we are now cast asunder amongst the weeds that make up League One.  Note, I have not mentioned Arsenal as they are not really a club, more an up-market north London beauty salon run by and for the French.

Now, being English nothing is what it seems.  League One is of course the third tier of English football - of course it is.  This morning I received the fixture list from the Sheffield United Supporters Club of which I am a proud member.  Indeed, me and the other bloke see ourselves as the gritty back-bone of supporterdom and jealous guardians of our club's anthem - the chip butty song. 

Next season far from attending the glitzy grounds of the great - such as Old Trafford and Stamford Bridge - we will travelling to those very symbols of post-imperial industrial decline such as Walsall, Tranmere and Huddersfield.  These are teams that have managed not only to avoid a golden age, but are probably more proud than we are of being truly and utterly dire.  If they ever had a future it is now so far behind them as to constitute ancient history.  Solid folk all!

Still, there is one saving grace.  Sheffield Wednesday - the enemy and known justifiably by we Blades as the Wendies - are also in League One.  This means there will be two so-called local 'derbies' at which some 40,000 people will pay very good money - well, pounds - to cram into two fading grounds to watch complete and utter rubbish for ninety minutes - twice!  Worse, I will travel all the way from the Netherlands to watch what is probably the worst football on the planet.  And, I will enjoy it.  Is that obsession or what?

The facts are these.  Both clubs are broke.  Both clubs are rubbish.  In a sense both Sheffield United and Sheffield Wednesday reflect the great city of Sheffield from whence I hail.  The steel city of an empire now long gone Sheffield is a great city that struggles to avoid relegation into history.  

Some years ago I allowed my strategic head to rule my supporter's heart and wrote to the Sheffield Star, our local paper, suggesting the two clubs merge with Sheffield F.C., the world's oldest.  Then, I argued, the city of Sheffield would have a club that could compete with the best.  Interestingly, my email address was placed at the bottom of the letter by an editor clearly possessed of a strong sense of humour.  Being born no more than 500 metres from Sheffield United's ground, Bramall Lane, I thought I knew most of the words that make up Sheffield's distinct dialect.  Clearly not!

And that is of course the point.  As yet another season approaches you can forget the Champion's League, the Premier League, the World Series (oh, please!) and even the World Cup (bunch of overpaid prima donnas - just like academics, without the overpaid bit).  Most fans support rubbish clubs and are proud of it.  So, spare a thought for me and the millions like me as we watch the 'lads' yet again snatch defeat from the jaws of victory on some cold, dark night in front of a few cold, sad people in a dark mood in some cold, dark place. It is the true mark of the human spirit, the triumph of hope over experience and proof if ever needed that we are all in need of a little insanity.

Football is not a matter of life and death, but it matters to me.  I am a football fan, I support a rubbish team and I am proud of it!

Up the Blades!

Julian Lindley-French

   

  

Lions led by Donkeys?

Brussels, 18 July. German First World War Generalissimo Ludendorff reportedly said of his British enemies: "The English Generals are wanting in strategy. We should have no chance if they possessed as much science as their officers and men had of courage and bravery. They are lions led by donkeys." That strategy word again. When I rule the world it will be banned. At the very least I can write to my publisher, Oxford University Press, and insist ‘strategy’ is re-defined in the Oxford English Dictionary to mean leading without due care and attention.

Today in Parliament, Secretary of State for Defence Liam Fox announced the findings of Strategic Defence and Security Reviewette 2 (SDSR): The Further Reckoning. There is good and bad news. Let me give you the bad news first. On the face of it this reviewette smacks of that unholy alliance of end-of-the-world Treasury accountants and beautiful world soft power disarmers who came up last November with the rather silly Strategic Pretence and Impecunity Review. Prime Minister David Cameron showed real chutzpah when he rose in the House at the time to claim that the review would be see no shrinkage of Britain’s strategic footprint. He had just amputated a foot!

So, in this ‘we clearly did not get it absolutely right reviewette’ a further £5bn of ‘uncosted spending’ has apparently been uncovered, on top of the £38bn that had supposedly been missed by the previous and equally strategically illiterate mob.

The British Army will be cut by some 19000 personnel by 2020 reducing the force to 82000, the smallest regular British Army since 1901 (and in those days Britain still had a navy!). The remaining 20000 personnel stationed in Germany will be bought home (that should please Ludendorff). To offset the cuts to the Army the reserves will be increased from around 30,000 to a bit more than 30,000 with a focus on the creation of a fighting force, rather than a support force. The equipments budget will be increased by 1% between 2015 and 2020. This will ensure major projects, such as the Royal Navy’s two super-aircraft carriers can be completed and more Chinook helicopters bought for the Army, although given the planned draw down in Afghanistan the words stable, doors, bolt and flown horses comes to mind.

The ‘strategic’ (aaaargh!) objective remains; to ‘balance the books’ by 2020. Clearly, balancing these infamous books still comes an awful long way before the balancing the force and there still seems little relationship apparent between the fantasy National Security Strategy and the dreaded SDSR – versions one or two. By the way, has anyone ever seen these ‘books’?

Now the good news. Alright, the less bad news. Buried deep in the Sir Humphrey speak there may be just a semblance, a smidgeon, a smearing of strategy and science peeking over the parapet into the no man’s land of Whitehall policy-making. Ludendorff pay attention.

First, some strategic (aaaargh again!) thinking is apparent. Or, rather, the Government has imlictly acknowledged there may be life after financial Armageddon. Reserves can either act as technical support, which has been the traditional British approach, or provide a surge capacity for the fighting force. Hitherto, the British assumed that European allies would provide the surge in the event the British armed forces were doing the heavy fighting during the initial stages of a conflict. It is sad to say that given the sorry experience of Afghanistan and the duplicity of European allies therein, that hope has all but evaporated. With the exception of the French London has no confidence whatsoever in European allies who have proved themselves all too adept at giving their excuses at critical moments in the campaign. They talk solidarity, but never fight it, which helps to explain Britain's veto of an EU strategic (aaargh - ditto!) headquarters which would inevitably involve more cost for London. Indeed, it is noticeable from Secretary of State Fox’s announcement that only the Anglosphere was mentioned – the Americans, Australians and Canadians. 

Second, the move to create a US-style fighting force 120,000 strong with a 70/30 ratio between regulars and reserves will not only reinforce a surge capacity, but also begin to re-embed the British military in civil society. The British like to believe they are casualty tough and there is some truth in that given the three hundred and eighty or so British dead in Afghanistan. One more today sadly. However, having been the first major state to abandon conscription in 1960 one of the reasons for such ‘toughness’ is indifference and ignorance in large segments of British society. Put simply, the massive majority of British citizens have had virtually nothing whatsoever to do with the armed forces, and for a very long time. The military has become a virtual ghetto. Whilst efforts such as Help for Heroes and the Military Covenant raise awareness the gap between the defenders and the defended is dangerously wide.

Even given the ‘goodish’ news there remain profound question-marks that the 2011 reviewette fails to answer. Why, for example, has a professional Army of over one hundred thousand found it so hard to maintain a force of ten thousand in Afghanistan? Such a low level of deployability would suggest that Britain’s hire purchase military has been suffering for too long from an imbalance between personnel and capability – too many boots, not enough weapons and stuff. How, for example, can the management-led approaches to defence reform and procurement reform which have or are about to see the light of day lead to better strategy? Will Liam Fox’s version of Kitchener’s Army be an army on the cheap? If so can it ever really be used for fear of failure?

Certainly, the government does not have the answers. July is the month a British government on dodgy ground makes announcements.  This marks yet again the yawning gap between the self-obsessed governing class and the poorly governed. When will the Whitehall Village learn that it is not clever to announce such a review when it thinks most Brits are turning unmentionable shades of sun-burn on some corner of a foreign beach that will be forever Basildon. It simply reinforces the contempt too many Britons have for their government.

The British Government has made a complete Horlicks of security and defence strategy during its first year in office. Governments are of course like popes – infallible. They never admit mistakes. The 2010 SDSR was indeed a profound mistake. But maybe, just maybe, in what is a very muddled British approach to strategy, corrections are beginning to be made and yes, strategic common sense will eventually prevail.

So, one hundred years on from his caustic commendation some re-ordering of Ludendorff is justified. Until proof is apparent to the contrary the British politician is wanting in strategy. The British could make a real difference and generate real influence if the political class possessed as much vision as their officers and men have of courage and bravery.

Military lions led by political donkeys? That is probably unfair.  It gives donkeys a bad name.

Julian Lindley-French

Euro-Crunch: The Grim Banker is Calling

“If there is no relief, we are going straight into the abyss”. So says, Romano Prodi, one-time Italian Prime Minister and President of the Onion’s European Omission. As European Onion finance ministers gathered in Brussels to disagree about what to do over the deepening Eurozone crisis the sheer scale of the crisis and its potential consequences are now apparent. The Euro-crunch is upon us and Onion leaders face probably the most fateful strategic decision in modern European history – break the Euro up or move to a common fiscal policy, which effectively means the creation of a federal European state. This catastrophic failure of both policy and strategy, the result of many years of irresponsibility by all European leaders of all political hues, now brings us to the edge of Prodi’s abyss.

Greece with a government debt some 143% of the size of its economy will soon default. Italy, led by a buffoon of a prime minister, and with a debt some 120% the size of its economy, now looks like going down the same Mediterranean plug-hole. The debt contagion long feared by Onion leaders is now fact as the cost of borrowing soars for governments that have resolutely refused to make the reforms necessary to balance the books. The European Stability and Growth Pact established to ensure fiscal and budgetary discipline at the creation of the Euro has been derisively and now disastrously ignored. Indeed, governments have routinely lied about their level of debt; and complicit western European leaders have for too long pretended to believe them.

There are of course many lessons from this unfolding fiasco but perhaps the most telling is this; if a political project such as the Euro is not established from the outset on stable financial and economic fundamentals then disaster will sooner or later ensue. There are of course several reasons why the European citizen has been deliberately kept in a state of suspended uncertainty over the Euro. First, the Euro has indeed been first and foremost a political project, designed to foster ‘ever closer union’ in the words of the Treaty on European Union.  Profound, structural weaknesses have thus been ignored. Second, confidence in a currency is the pre-requisite for a stable single European market and of course the very basis for a sound banking system. European banks are still reeling from the 2008 global crisis and are thus deeply vulnerable to shock. Third, information is power; the retreat of democratic oversight in the Onion has fostered a patrician belief in Brussels that we the little Europeans should be kept in the dark for our own good. This noblesse oblige tendency of the Brussels Euro-Aristocracy is as dangerous as it is arrogant.

So, what are the implications? First, it is unlikely that France and Germany will give up on the political Euro until the cost of supporting the financial Euro is so great that over-taxed citizens begin to revolt. Second, if there is a decisive move towards fiscal union, which may be needed given the refusal of southern European states to fulfil their obligations under the Stability and Growth Pact, then the very real prospect will emerge that the United Kingdom and possibly other non-Eurozone member-states could leave the Onion. Third, much more power will be transferred to an opaque, secreacy-obsessed Brussels wholly unfit to exercise strategic sovereignty over the money of European citizens. This will not only render any hope of effective democratic oversight meaningless, but could also break the centuries-old and fundamental link between the European nation-state and its citizens – tax-raising authority and accountability.  Fourth, Europe's precipitous decline will be confirmed and with it any chance to influence a challenging world. 

The paradox? Far from curbing the appetites of avaricious southern European states, it could well stoke further dependency obesity as the gap between the western European payee and those accountable will become so wide as to be in effect broken. And, all of this whilst we the little Europeans slumber on beaches safe in our induced ignorance. By the time summer is over a fait accompli could be fact.

Whatever happens – break-up or state-up, the sorely-tried western European taxpayer will have to pick up a bill that the European Omission suggests could need paying at least until 2030. The alternative?  Sell Europe's debt to China, with all that entails.  Clearly, the political institutions of southern European states long undermined by venal politicians and their assorted hangers-on are simply too weak to cope with the austerity packages needed to bring government debt back down to manageable levels. There will of course be much empty talk of European ‘solidarity’. Sadly, if there is one thing I have long understood about the Onion it is this; whenever I hear talk of ‘solidarity’ it is going to cost me money.

Make no mistake, Europe, the grim banker is calling.

Julian Lindley-French

Talking with Benazir

The American decision to ‘punish’ Pakistan by withdrawing some $800m of a $3 billion military aid package demonstrates Washington’s nuanced approach to dealing with Islamabad that is to be commended. Clearly, the Pakistani Government knew exactly the whereabouts of Osama Bin Laden at the time of his death in May at the hands of American Special Forces. There are no doubt several other senior Al Qaeda and Pakistani Taliban figures being quietly supported by the ISI, Pakistan’s Inter-Service Intelligence agency. And yet, the ‘punishment’ is measured, enabling Islamabad to insist it is only the routine withdrawal of men and equipment; the removal of which they had themselves sought. It is a diplomatic Pas de Deux, and so it must be.

Why are the Americans being so careful with Pakistan? Quite simply, America and the West are a very long way from being able to leave that troubled region. Indeed, the West will need to support the Pakistani state against the anti-state for the foreseeable future. Fail and nuclear-armed Pakistan will provide the space for Al Qaeda and its cohorts to reconstitute and re-group. This struggle is far from over. Indeed, the Americans, unlike their European allies, most of whom have tuned out, understand that any strategy that draws down in Afghanistan must necessarily draw up in Pakistan.

Why are the Pakistanis so ‘difficult’? A couple of years ago I was briefed by the ISI at the Pakistani Army Headquarters. The briefing was what one would expect; a justification of Pakistan’s uneasy relationship with the Americans and their western coalition partners. Above all, whilst an ungoverned or Taliban Afghanistan may be a threat to the West, Afghanistan is only important to Pakistan in the context of its struggle with India over the future governance of Jammu Kashmir. To understand Pakistan, a Pakistani view is thus always essential and years ago I had the best.

Back in the 1970s I had a conversation with Benazir Bhutto in the Oxford Union. As I recall our chat was shortly before her father, Zufikar Ali Bhutto, then Prime Minister was overthrown by a military coup so it must have been late 1976 or 1977. Two years later Prime Minister Bhutto was executed on what are still widely held to have been trumped up charges. This striking, beautiful woman had the poise of an aristocrat and spoke like one, albeit with an alluring taste of the Punjab. What she had was star quality, and I was star struck.

She was inordinately proud of her country, but despaired of it; she loved her people, but despaired of them. She told me that whilst Pakistan wanted to be governed, its needs were so great that it was virtually ungovernable. Pakistan would always be a compromise between tyranny, democracy, society and community because the relationship between the state and the people was like no other on earth. Sadly, she too met an untimely end fighting for the country in which she so passionately believed.

She also took a sophisticated view of her country’s troubled relationship with India. Whilst she could be as populist as the next Pakistani leader when it came to India (she rather infamously once urged a crowd to cut an Indian governor to pieces), she also sought to break out of the sterile cycle of distrust that so still haunts these two nuclear neighbours born out of the British Raj.

The Americans clearly understand that any adjustment to strategy can only take place if the US a) acts as an honest broker between India and Pakistan; and b) convinces India and Pakistan that Jihadists are as much a threat to them as to the West. Fail and the status quo ante will be rapidly re-forged, with previously fragile states even further discredited in the popular mind. In such circumstances India will seek to increase its influence in southern Afghanistan to keep the region instable. The Pakistani Army will be forced to look two ways, south over the green line in Kashmir at the Indian Army, and north at an instable border along its entire north-west from Nimroz, through Helmand, Kandahar, Zabul and beyond. To counter India’s stratagem the ISI will continue to destabilise Kabul to prevent and constrain Indian influence in Afghanistan. At best two weak states, Afghanistan and Pakistan, will be left to handle a complex and disruptive Pashto space – the very conditions that spawned the Al Qaeda threat to the West.

Had Harvard-educated Benazir lived and risen to power, which seems likely, she may well have provided a more consistent partner to Washington. It would have been risky but she was no stranger to risk. She could well have insisted in return on the de-militarisation of America’s strategy in the region, which Washington is now moving towards. There would still have been a big ‘if’. New Delhi would of course have been critical both to her strategy and that of the Americans. The sadness for me is that Indian politicians have seemed so lacking in vision and thus unable to move beyond the domestically factional. Would they have made the leap of faith required?

Forty one years ago, on the eve of the 1970 war the relationship between India and Pakistan may have been one of competing equals. No more. Today, it is the relationship between a failing nuclear-armed Islamic state and an emerging world power. If anyone can change the regional-strategic dynamics it is the Indians, but to do so they will need to start acting like the world power they claim to be. And yet we wait.

America is thus right to tread softly with Pakistan. However, since the premature demise of Richard Holbrooke momentum has been lost (for all the Ambassador's heavy-handedness).  American attention to strategic detail only makes sense if India is properly engaged so that the conflicts in southern and eastern Afghanistan and that in Jammu-Kashmir are once and for all ‘de-conflicted’, to use the ghastly jargon of the strato-wonk.

I could not say I knew Benazir Bhutto, but I did meet her and talk with her and being very young and naive at the time I was utterly star-struck, like so many. She had her faults. She could be haughty and imperious and too easily forgive those around her less noble, but she never lacked for a ready smile and a keen wit. Had she lived Pakistan’s future would have been brighter, as would Afghanistan’s and India’s futures. This is because she had something I have so rarely seen in the region – an ability to rise above the factional and see a truly strategic future for her country, her people...and her region.

America must therefore honour her legacy and stick close to Pakistan, for all its many failings. There is simply no other strategic option open – not today, not tomorrow, nor the day after.

Talking with Benazir – I only wish I had had more of a chance.