All we need are the white flags

Last Sunday I read with mild interest a couple of defence stories in the mainstream newspapers, one on a new type of parachute and the other on the activities of the SAS in Afghanistan, both written in the breathless "Boy’s Own" style that we have come to expect from the dumbed-down approach to defence that we get from the MSM these days.

Not yet - and one wonders if ever - is any MSM journalist going to write intelligently – or at all – about the biggest single defence procurement project for the Army since the war, none other than the Future Rapid Effects System (FRES), estimated to cost taxpayers a cool £14 billion.

You would have thought that just the vast cost of this project – much less the revolutionary thinking it brings to armed warfare – might excite some media interest in the project but no – as we have remarked earlier, regimental cap badges have had more coverage.

Apart from the occasional reference in The Business, therefore, we are left to plod our solitary path, trying to track the fate of this project, which we last visited in April, with the news of a possible stitch-up in the making between French and German armoured vehicle manufacturers, each with an eye on the British contract.

As always, some of our highly informed readers pitched into the forum with their own comments, demonstrating that, when it comes to military matters, much of the expertise lies outside ambit of the conventional media.

Since then, however, there has been another development – once again courtesy of DefenseNews – which suggests that the MoD is in some trouble over the project and is undergoing a major re-think.

Thus does DN tell us that the Mod is "set to jettison a plan to create a high-tech armored utility vehicle" for FRES and instead is seek an upgraded version of an existing armored personnel carrier. This, we are told is because of the slippage in the programme, and the need to bring the effort back from 2016 to the 2012 delivery schedule.

What is particularly interesting is that this news was conveyed by a Defence Procurement Agency team to vehicle makers BAE Systems, General Dynamics, GIAT and Patria at a May 4 industry day meeting. Industry sources subsequently have told DefenseNews that the MoD is interested in several candidate vehicles, including a new version of General Dynamics Piranha IV, GIAT Industries' Véhicule Blindé de Combat d'Infanterie (VBCI) and Patria's AMV.

BAE is still in the picture though, and may offer a diesel version of the BAE Hagglunds-developed Splitterskyddad Enhetsplatform (SEP) electric hybrid vehicle, or a version of the Piranha, for which it holds a longstanding licence to market in the United Kingdom.

Thus, it seems, the MoD is looking seriously at a Swiss-designed (and built?) vehicle, the Piranha IV, a French vehicle, the VBCI, or a Finnish design, the Patria AMV. The only British contender, BAE systems, is offering a Swedish vehicle (SEP) or an older version of the Swiss design.

Interestingly, the US is currently fielding an enhanced version of the Piranha, re-named the Stryker, and regards this as an interim solution for its own advanced Future Combat System (FCS). The MoD, on the other hand, is at pains to insist that any platform chosen will be "the real thing". This suggests that Britain is opting out of the race to develop "next-generation" armoured vehicles and systems in parallel with the US, and is falling in alongside the Europeans and their own less ambitious plans.

This tends to confirm the contining trend towards the Europeanisation of British armed forces, with the bulk of their equipment supplied by European manufacturers. All we need now are the automatic white-flag dispensers and the take-over will be virtually complete.

COMMENT THREAD

How different from the political life we know

With the Polish coalition just about in place and the perspective of it collapsing within the next 6 months ever higher; with the two main parties neck and neck just a few days before the Czech elections and, thus, probably producing a result that will necessitate another election within a year; we can now look at what is happening in Lithuania.

To paraphrase “Guys and Dolls”: I’ll tell you what’s happening in Lithuania. The government that was set to run the country for a while has collapsed because of accusations of financial misdemeanour.

As Al-Jazeera put it:

“The crisis was triggered by allegations of the misuse of party and state funds by senior Labour party figures. The health minister told BNS on Tuesday he had spent party funds on repairing his car after a crash.

State investigators have also found that the culture minister broke ethics rules by paying family travel expenses from state funds.”

The Labour Party is having its party financing investigated and President Valdas Adamkus has said that he does not trust two of its ministers. So they took their bats home. Well, actually, they just resigned from the coalition government, just as the New Party had done in April.

“Valdas Adamkus, the Lithuanian president, said on Tuesday that he had lost confidence in the two ministers, both from the Labour party whose leader, Viktor Uspaskich (pictured above), a Russian-born businessman and former energy trader, was forced to resign from his post of economy minister last year because of a breach of ethics rules.

Uspaskich, who has investments in agriculture, is known throughout Lithuania as the Gherkin King.”

So Prime Minister Algirdas Brazauskas has announced that he can no longer carry on and the entire government has resigned. There will now follow weeks of negotiations and attempts at agreement, possibly even an election.

This is the 13th government of Lithuania since 1991. If nothing else, the new EU members are proving beyond any doubt that a country can function reasonably well without any government.

COMMENT THREAD

It's the sovereignty stoopid…

Given that there were two important judgements delivered by the European Union Court of Justice yesterday, it is perhaps inevitable that the media went into collective overload, most of the newspapers chosing to report only one of them. Faced with the alternative of the highly technical judgement on Sellafield, with equal inevitability, that choice was going to be the issue which had the highest personal interest quotient, hence the focus on yesterday's decision to annul the data sharing agreement with the United States.

Covered at some little length by The Telegraph and many others, the emphasis was on the potential for chaos on transatlantic flights. Thus did the Telegraph report that millions of tourists and business travellers planning to fly to the United States were left in legal limbo after the ECJ struck down the agreement on sharing the personal details of passengers with US authorities.

What does not come over with any clarity from the media reports, however (although it is mentioned) is that the ECJ found that the Council did not have an adequate legal base within the EU Treaty to concluded an agreement with the United States. It is that on which the Court ruled, but left aside another plea, brought by the EU parliament, that the transfer of personal data breached Community rules on data protection.

Aside from the immediate practical implications of the judgement, therefore, there are some profound constitutional issues. Firstly, it appears that 25 member state governments, when acting together within the EU institutional framework of the European Council, are not entitled to reach a decision unless its nature – and the procedure by which it is reached – conform with EU law. Secondly, although there is an option to consider a separate agreement under a different part of the treaty, it is by no means certain that any decision made would comply with Community law.

Neither, it would seem, can the individual member states act separately, collectively reaching a series of bilateral agreements with the United States, as those individual agreements might also be in breach of Community law.

What this effectively amounts to is a fundamental curtailment of the rights of sovereign nations to act, in respect of agreements with third countries. In this sense, there is some commonality between this and the Sellafield judgement.

Reviewing the Court's press release and the advocate general’s report last January on this issue, it seems that the argument rests on the assertion that, where Community law applies – which the commission argued did apply in the case of the Irish government's complaint about Sellafield – member states are obliged to resolve their disputes within the framework of the Treaty. They are not entitled to go elsewhere for their justice. There is, in effect, no higher authority than the ECJ.

That judgement, which rests on Article 292 of the Treaty, therefore also amounts to a fundamental curtailment of the rights of sovereign nations to act. This, our nation, and the other 24 member states, are subordinate to a higher power. We know this of course, but when we are asked why we have such fundamental objections to our membership of the EU, it is as well to remind ourselves of the basic reason – it's the sovereignty, stoopid!

COMMENT THREAD

It may be pedantic, but…

After the climbdown by the Toy Parliament last February over the "watered down" version of the contentious Services Directive, the plumbers of Europe are now on the march – or so we are told.

This arises from an agreement yesterday by the Council of Ministers on a draft of the directive, prompting headlines from multiple sources, effectively announcing that the new law was in the bag. Thus said The Guardian, "Workers given the right to ply their trades throughout EU", while the Financial Times proclaimed, "EU hails 'breakthrough' cross-border agreement" and the faithful BBC declared, "EU strikes deal on service sector".

But, actually, no… not yet, at any rate. Even the BBC headline is technically incorrect because only the Council of Ministers has reached a deal, not the EU as a whole. There are significant differences between the text agreed by the Council and that approved by the EU parliament, not least that lawyers were added to the Council's draft, despite the objections of the French.

What has happened, therefore, is that the Council has reached what is known in Community jargon as a "common position", as indeed did the EU parliament when it passed the first reading of the directive last February. Now, the draft law goes back for a "second reading" by the parliament, which has the option of amending its position to conform with the Council, or of sticking to its guns.

In the former case, the law goes though but, if there is no agreement, the draft has to go in front of the "conciliation committee", chaired by the commission, where the council and the parliament attempt to thrash out their differences. If there is no agreement, the law falls. Where there is agreement, this leaves the "third reading" in the parliament, which again offers and opportunity to reject what is by then a compromise draft, in which case the law falls at this hurdle.

Most likely, the parliament does not have the heart for another, highly public scrap with the member states, so the chances of a deal being stitched up are quite good. Nevertheless, it is premature to imply that the law is in the bag. As they say, there is many a slip twixt cup and lip.

COMMENT THREAD

We are the bosses now

In yet another extraordinary decision, the European Union Court of Justice has ruled that that Ireland violated EU law by taking a nuclear safety dispute over Britain's Sellafield nuclear reactor to a United Nations tribunal.

The court states that it has "exclusive jurisdiction" as the EU's highest court, and only it could rule on the long-running dispute between Britain and Ireland over the discharge of radioactive materials into the Irish Sea.

Originally, the Irish government has referred the dispute to the UN tribunal claiming that the UK had contravened the UN's Convention on the Law of the Sea (UNCLOS). But, said the ECJ, after the EU commission had complained to it, the convention was now also part of EU law and therefore the Sellafield dispute fell within the EU's competence.

Ireland has argued that if it was forced to take the case to the EU court, it would be limited in the possible remedies it could get from Britain, its objective being to get the Sellafield plant closed. When the case came before the tribunal in 2001, however, it ruled that the risks were not sufficient to justify the plant's closure, but still ordered Ireland and Britain to co-operate to prevent pollution of the marine environment that might result from the plant's operations.

Now, it seems, the two parties must deal with the commission, the judgement representing a significant victory for Brussels as it has been sniffing around the site since December 2004 in an attempt to extend its competence into nuclear issues where, strictly speaking, it has no power.

Now, by the inspired stratagem of calling in aid the UNCLOS, it has – once again with the aide of the ECJ – extended its power base that little bit further. Any which way you stack it, it is now increasingly clear who are our real bosses.

COMMENT THREAD

Talking about them… talking about themselves

A few days ago, rather unkindly perhaps, I equated the UK Independence Party with the European Union, pointing out that the two organisations had one thing in common – their obsession with talking about themselves. Nothing, it seems, excites them so much as their own internal affairs, which take precedence over much weightier matters.

If I was being unkind, however, it was in not emphasising that this characteristic seems to afflict most political organisations, and especially the Conservative Party. Its obsession with "self" is most evident from the activists' chatter on the Tory Diary site. Any number of issues are discussed but the comments section only really comes alive when party matters are aired. And even then, much of the issue-based discussion centres on how political advantage can be gained from whatever it is that is currently in the public eye.

Such observations become especially relevant when trying to understand why it is that the general public are turning away from party politics in droves, and why the European Union finds it so difficult to engage with the "citizens of Europe". The simplest explanation is probably the best – ordinary people are more interested in issues than they are politicians. If the politicians take a genuine interest in those issues, then people in turn will take an interest in them. However, as long as the politicos are mainly interested in "self", the people will disregard them.

What makes this especially topical – and relevant - is the growing humanitarian crisis being played out in the Canaries, about which we reported last Saturday, and which was picked up in a news report on BBC's News 24, in a longish item by their correspondent-on-the-spot, another of those witless hackettes, this one by the name of Martha Dixon.

With the essence of her report reproduced on the BBC website, readers can see for themselves that nowhere does Dixon mention that the proximate cause of the migrant exodus from West Africa is the depredations of the EU’s third country fishing agreements. Instead, today, we get another report from the BBC, subtly propagandising for the EU, telling us how the sharing, caring EU – in the form of nine member states – are rushing to the aid of beleaguered Spain, with offers of surveillance aircraft and patrol boats.

The point here is that while this drama is being played out, the mainstream political parties – and UKIP – are silent. Yet what is happening in the Canaries impinges directly on several key issues which would be of very great interest to British people – would that they were told of their relevance.

Firstly, there is that central issue of immigration. Although these people are flooding to the shores of the Canaries, as the news reports tell us, the law in Spain allows for them to be detained only for 40 days, after which they are let loose and are then free to travel anywhere in the European Union. The people whom we see on our television screens today, therefore, are potentially the next batch of arrivals at Dover.

Secondly, there is that vexed issue of African aid, about which so many people profess to be deeply concerned. Rarely, however, do we get such an egregious example of how the predatory policies of the EU directly impinge on the peoples of sub-Saharan Africa, or of such a direct link between those policies and enforced economic migration. Yet such is the abysmal level of reporting, and the lack of engagement by the political parties, that the bulk of people are unaware of the link.

Thirdly, there is the overarching issue of our membership of the EU. Behind the issue of the third country fishing agreements is a dark and dirty tale, in which successive British governments are shamefully implicated. As is known to but a few, these agreements are largely "compensation" to the over-large Spanish fishing fleet for being excluded from British fishing waters under the Common Fisheries Policy. Our governments have colluded with the European Union to finance these deals, simply to stave off the pressure from the Spanish for access to our waters, the effect of which would be highly embarrassing to our government.

Putting these three issues together, any political party which brought them to the attention of the public could have a field day, and reap significant electoral benefits through demonstrating that it was in touch with public sentiment. But, each for their own reasons, the parties are silent. Labour, of course, is the party in government, so is immediately tainted by direct involvement in the policies which give rise to this crisis. The Conservatives are compromised because they agreed to the third country fishing agreements in the first place and, in any case, they don't "do" Europe. The Lim-Dims are in favour of the EU, so they won't touch it anyway and UKIP is so burdened by its own introspection that it is probably unaware of what is going on. Thus does silence prevail.

But, if this crisis slides out of the public domain unremarked by the political classes, fishing as an issue is set to come back with a vengeance to haunt the Conservatives. Even as they immerse themselves in facile debates about the Boy King's "A-list", it could have a material effect on their electoral prospects.

This is brought home by a piece in this month's Freedom Today, by MSP Brian Monteith, which deserves wider coverage. Headed, "The sorry tale of a Tory U-turn on the CFP", Monteith charts how, without publicity or any open announcement, Cameron has reneged on the party's commitment, honoured by his three predecessors, to repatriate the EU's fisheries policy.

This, we actually reported in December 2005, while Booker reminded us of it only a few weeks ago. Yet nothing of this has percolated into the general public of political consciousness so the Boy King may well think he has got away with ditching a minor and politically inconvenient policy.

But what he clearly does not realise is that, while "fishing" might be a minor, boring item in the Westminster village, it plays very big in Scotland, which has two-thirds of what is left of the British fishing industry. Moreover, its importance far transcends its relatively minor economic contribution, not least because it is taken as evidence of how the English government gave away Scotland's wealth in pursuit of its own partisan agenda.

Thus, if Cameron is to hope for any political recovery in Scotland – which he must achieve is he is to be sure of victory at the next general election – then he must address the fishing issue. What he has done, though, is betray the Scots, yet again, and the Scots Nats will be quick to exploit the electoral potential of this faux pas, wrecking the chances of gaining any more Tory MPs in Scotland.

That brings us back to our original premise. This is an issue which is of vibrant importance to the people of Scotland and it is being ignored. Immigration, third world aid and the EU are also issues which are of great importance to many people – and they are being ignored, or treated in such a cavalier way that they do not reflect peoples' concerns and expectations.

All of that goes to demonstrate that the political machine is interested only in talking to itself, about itself. But if we, the people, no longer matter – if we are no longer important – the politicos should not be surprised if we walk away in disgust from their own, petty, self-indulgent obsessions.

COMMENT THREAD

Here we go again

This time it is not the spoilt youth of the Sorbonne and other universities, afraid that their supposedly cushy future might become a little less so through a very small reform, who are rioting. No, we are back with the banlieux.

Cars were burned yesterday at two Paris suburbs: Seine-Saint-Denis and Clichy-Sous-Bois. According to Reuters:

“The youths began burning cars in reaction to a police operation in which a young man was arrested several hours earlier. Officials said they did not yet know how many cars had been burned.”

The last time the banlieux indulged in carbecues there was a concerted rush by some politicians (de Villepin and Sarkozy) to make statements and propose solutions to the seemingly intractable social and economic problems.

As we know de Villepin’s solution, a half-baked piece of legislation, died in the subsequent demonstrations and genteel riots.

Sarkozy’s solution, a revamped immigration law, is still going through the legislative process but is, in any case, unlikely to do anything for those already in the country and unable to get jobs because of the existing high unemployment.

We shall just have to see whether this was little more than an extension of the usual week-end entertainment or the start of a long hot summer around Paris.

COMMENT THREAD

The enemy within

The two eminent gentlemen pictured here hardly fit the part of enemies of the state – and nor indeed do their cvs suggest that they might be anything other than upstanding members of the US political establishment.

Both, however, are members of the Centre for Strategic and International Studies (CSIS), an organisation which exhibits strong sympathy for the European Union. The first, by the name of Robin Niblett, is an executive vice president and director of the Europe program while the other, Pierre Chao, is Director of Defense Industrial Initiatives. Their cvs are as long as your arm. Crucially, both have testified "on a number of occasions" to Congress and are regarded as authorities on "US-European relations", where their siren voices are heard in favour of European defence integration.

Their influence, though, more is widely felt, not least in today's online edition of the Financial Times, where they offer a commentary on the recent agreement by president Bush to release to Britain sensitive technology on the Joint Strike Fighter.

This issue, though is not about "toys" – it is about influence, malign, insidious propaganda that insinuates its way into the political consciousness, disguised as rational analysis – and the FT piece is a classic example of the genre.

As analysis, it starts off well enough – as you would expect. Niblett and Chao tell us that the visit by Blair to Washington "confirmed the remarkable confluence between UK and US foreign and security policy priorities." They then add that, "it concluded by addressing an issue that is eating away at the transatlantic partnership. US-UK defence technology sharing is a technical and relatively obscure, but periodically explosive, issue."

That much, they have got absolutely right, which is why we have covered the issue so closely on this blog. The latest flashpoint, they say, is over technology access to the JSF but, they argue, rightly, that this is just the tip of a deeper problem.

So far, so good, but then the worm starts insinuating itself into the argument. In the past few years, we are told:

…the US has proved unwilling, in spite of repeated British requests, to overhaul the Kafkaesque maze of restrictions that hampers the exchange of defence technology between the two countries. This situation persists in spite of the long history of sharing information in highly sensitive areas such as nuclear deterrence, classified intelligence and joint military operations.

British representatives, including Mr Blair, have pointed out this glaring discrepancy to their US counterparts, and asked politely whether the US system could be adapted to reflect the close bilateral security relationship. The responses have sounded positive but little has yet happened. Why?

Having posed the question, according to the Niblett/Chao duo, the answers are all one-sided. Partly, the reluctance to share technology stems from the "US desire to maintain technological superiority over all adversaries", in which context the UK is seen as a potential source – like any other country – of leaks of sensitive US technologies to third countries or actors. Secondly, the exchange founders on a US export-control bureaucracy that has no incentive to change and, thirdly, a small clique in the US Congress that believes passionately in further tightening rather than easing the US defence export control regime.

That said, we are told that the status quo "is no longer sustainable". British politicians now believe that Washington is taking for granted UK contributions in Iraq and elsewhere; without closer co-operation on developing and building interoperable defence systems, the ability of UK forces to fight effectively alongside their US counterparts will be eroded over time and a central facet of the special relationship will be undercut; and the new UK defence industrial strategy requires that the UK government possess "operational sovereignty" over its key defence capabilities.

Thus, do Niblitt and Chao argue that the two governments should agree on a framework within which specific companies and individuals from the two countries can be certified to share defence-related information and technologies – from the mundane to the most sensitive – without restrictions, but under the condition that enforceable controls would prevent unauthorised release.

Then follows the punch line: the obstacle to this solution, they say, lies in the US, where some would rather see the Anglo-US relationship go down in flames than alter the US technology-control regime one iota. From this they conclude that, if Mr Bush is serious about sustaining a strong US-UK relationship, "he must put his personal authority behind a durable solution".

Taken at a run, this might not seem terribly objectionable, except that there is no mention, anywhere, of the UK’s growing engagement in European defence integration. As we pointed out in an earlier post - and frequently before that – Blair has made strong commitments to the EU on defence integration and is working closely with European nations which do not share the US view of the world. In fact, most often, they are hostile to it.

Not only that, but through the European Defence Agency and the Framework Agreement, the UK has committed to work closely on defence research and industrial projects which are competitive with US ventures, while the MoD and British defence firms are co-operating with European enterprises which in turn have agreements on technology sharing with strategic competitors of the US, namely China and Russia.

Any clinical and honest evaluation of the relationship between the US and Britain would, therefore, advise caution. The two countries may be friends, but the US national interest must prevail. As long as the UK is working with a cast of characters which are potentially hostile to US interests, the US would be mad to open its books completely.

But then, the CSIS has consistently supported the idea of European defence integration and, no doubt, from its lavish Washington office actively lobbies on the Hill and in the State Department in support of the project. Thus, with Nesbitt and Chao arguing for Bush to give the UK what it wants, without addressing the very real and sensible concerns about technology prevalent in the US, the CSIS is essentially playing the European game.

Certainly, the CSIS is not supporting the US national interest and, by arguing that the UK should have access to US technology despite its attachment to EU defence interests, it is not really assisting the UK, in helping defer the decision between the US and EU which must soon be made – making out that British attachments to the EU and the US are somehow compatible.

Thus do the siren voices speak, uttering their soothing words, concealing from and confusing policy-makers about the growing threat of European defence integration. They are the enemy within.

COMMENT THREAD

What a difference a year makes

A year ago today, with strong rumours of a "no" vote in the offing, we were waiting with bated breath to hear the outcome of the French referendum on the EU constitution.

That the vote, when it came, threw the "colleagues" into disarray is now history – even to this day they are struggling to come to terms with a defeat that was reinforced a few days later by the Dutch rejection of the constitution.

But, while we can take some comfort in this setback for the forces of darkness, the defeat, if anything, was more psychological than real. European integration proceeds apace – albeit at not quite the speed the "colleagues" would prefer – so nothing substantial has changed.

On the other hand, the "no" votes have proved a major reverse for the Eurosceptic movement, especially in Britain. From a time when interest in EU issues was building, when the UK Independence Party had an immediate goal, and where a number of "no" campaigns were setting up and obtaining significant funds, the impetus has virtually collapsed.

The movement has reverted to a low-grade war of attrition and, with no prospect of a referendum in sight, it has little in the way of an immediate objective, around which to rally the troops.

Perhaps more seriously – with the brief exception of the spat over the EU budget – the collapse of the constitution has legitimised a retreat from the subject by the mainstream media and, particularly, the main political parties. Certainly, the Conservative Party hierarchy must have heaved a sigh of relief at being spared a contest that could only have been highly divisive.

In a year, therefore, that could have been dominated by EU issues, we have instead seen that diminution of interest that has allowed the emergence of a new leader of the Conservative Party who is able to treat the issue with disdain, allowing the government itself to consign "Europe" to the margins.

Thus, while the "colleagues" were lamenting in Austria over the weekend that "Europe" was facing its "deepest crisis", they are perhaps being overly pessimistic. Shorn of its immediate rationale – the campaign for a "no" vote in the referendum – Euroscepticism is also undergoing its own crisis, which may be of greater magnitude than is confronting the integrationalists.

"Europe", at least, can survive the indifference of its "citizens", as long as it maintains the support of its political élites. It remains to be seen whether Euroscepticism can prove as enduring.

COMMENT THREAD

The joys of VAT

While it can be said with some confidence that no tax will ever be truly popular, it can also be said with equal confidence that the single most detested tax in the business community is Value Added Tax, or VAT.

But, not only should the business community have cause to resent this tax, everyone in the European Union should hold similar views for the very complexity that makes it so unpopular with business also makes it a thieves' paradise. And we are not taking about peanuts. VAT fraud accounts for estimated losses of at least €60 billion a year – or ten percent of all transactions – representing real losses which have to be made up through other taxes. Furthermore, this is money which helps finance organised crime and terrorism.

So huge is the scale of the fraud that it has even percolated into the corporate brain of the commission. Thus, next week, Laszlo Kovacs, the EU tax commissioner, is set to propose a series of options to the member state finance ministers in an attempt to remedy the situation.

Were this not an EU-devised tax, most if not all of the member states would have ditched it years ago, because of the fatal flaws in the system that make it so prone to fraud. But, national governments, of course, have no powers to abolish EU laws and the commission – which is the only institution which can set such a process rolling, is not about to scrap this tax.

Instead, Kovacs is propose that the tax is no longer refunded to suppliers when their products or services cross borders – through which means most fraud occurs. He wants refunds on cross-border goods and services to be passed directly between governments.

Needless to say, this will require con-ordination by the commission, to set up the cross-border payment system, thereby adding to its powers. It would also lead to increased pressure for harmonisation of VAT rates, as different national rates would be extremely difficult to administer. Thus Britain, Germany and Austria are suggesting the use of a "reverse charge" system, where VAT is paid only by the supplier at the end of the chain.

That is to be included as one of Kovacs' options, as is increased co-operation between national tax authorities, but the commission's preference is for the abolition of direct, cross border refunds.

Any changes, though, will have to be agreed by unanimity. But, since the last fundamental change to the VAT regime was in 1977, with the VAT Sixth Directive, and member states have failed ever since to agree any substantive reforms, the chances of securing change this time round are not good.

Thus, while the commission and the member states bicker and manoeuvre, the criminal fraternity will continue to enjoy its bonanza while the "citizens" of Europe will have to keep paying the bill. Such are the joys of membership of the European Union.

COMMENT THREAD

Ever hopeful

The China View news agency tells us that the

“Lebanese Progressive Socialist Party (PSP) urged UN Secretary General Kofi Annan to support Lebanon and put an end to Syrian interference”,

as reported in one of the local newspapers.

Syria, according to this appeal, continues to attack Lebanese troops, invade parts of Lebanese territory, arm Palestinian terrorists for carrying out proxy attacks and carry out smuggling (presumably of arms).

The letter went to GenSec Kofi Annan (father of Kojo), the Security Council, the Interanational Socialist Party, the European Union and other international human rights organizations.

Naturally enough, Syria is denying all accusations, though it has issued an arrest warrant, which, as the Lebanese appeal points out, violates international law, against the leader of the party, Walid Jumblatt.

The warrant was relayed to Beirut via Interpol and is demanding Mr Jumblatt’s extradition to face a military court in Syria on charges of “slander and inciting hatred against Damascus”.

What is so touching about this story is the faith Lebanese politicians seem to place in the tranzis. Their assumption that organizations that have shown themselves ready to negotiate with and fawn on terrorist organizations and dictatorships will lift a finger to defend Lebanon’s freedom and sovereignty.

Possibly, the PSP does not actually believe this but is trying to use every method to bring the situation to the world’s attention. The problems between Syria and Lebanon seem to be relegated below the ever growing Palestinian ones. Even so, the ploy has been less than totally successful. If it were not for the Chinese news agency …

To prove that the situation in Lebanon is volatile, we had (some) news of an attack with Katyusha rockets on northern Israel by Hesbollah and Palestinian Jihad groups. The subsequent “skirmishes” seem to have been resolved by UN negotiators.

(In Lebanon they seemed to behave better than in East Timor where all “non-essential” UN staff has been ordered to leave after renewed fighting had broken out. The Australians have remained and will soon be reinforced by other troops. One wonders who those “non-essential” staff was and why they were there.)

Meanwhile, our own Prime Minister has been sounding off about UN reform, a subject that has become the great political filler. As it happens, my colleague managed to find the only interesting story that came out of the Bush-Blair summit. I have been left to pick up a few remaining pieces, the most interesting of which is Blair’s speech at Georgetown University.

The speech seems to have been vintage Blair with lots of feel-good factors thrown in, a little bit of statesmanship – we cannot pull out of Iraq immediately, we know we have made mistakes but the world must unite in helping Iraq to build up its democracy – and a few rather tame ideas for supposed reform.

Blair, as we know, has always been rather enamoured of transnational organizations interfering a good deal more than they do, already. The long, painful and, ultimately, disastrous trek through the UN before the war in Iraq had been his idea with President Bush going along somewhat reluctantly.

So, having Blair pontificating about the need to reform the UN and other transnational organizations is not particularly surprising. Some newspapers round the world have suggested that he saw the speech as an interview for his next job, SecGen of the United Nations. (Well, Cherie should love that – all those freebies.)

But what did he actually suggest? Expanding the Security Council to include India, Japan, Germany, a Latin American and an African country is not a spectacularly good idea if you want the organization to work. Those of us who think that the UN has had it and the sooner it dies the better, would find the expansion of the Security Council extremely helpful: the bigger it is the more likely is it to get bogged down on every decision. But one must assume that Prime Minister Blair does not actually intend that.

The speech also suggested that the SecGen should be given greater powers over his personnel so that the UN can be made into an effective organization that reacted rapidly to world problems.

For the world, as Mr Blair presciently pointed out, has changed since the days the UN was set up. In fact, it has changed since most of the transnational organizations were set up and they should all be reformed. (One wonders if he feels that the EU belongs to a different era as well.)

The IMF and the World Bank, possibly, should be merged and even if they are not, “there is a powerful case for reform”.

“He also suggested that an international uranium bank held by the International Atomic Energy Agency should supply fuel to all countries with a nuclear energy program.”

In other words, there was very little new in his speech, even though it seems to have caught the journalists’ attention all over the world. As the Times put it in its editorial:

“The Prime Minister’s larger theme, one that has come to define him as a politician, is that the world must urgently get to grips with the consequences of interdependence (globalisation is not a word Labour politicians care much to use). When turmoil can spread like wildfire and even the powerful United States can be affected “at breakneck speed and fundamentally” by events beyond its shores, politicians need to understand that “the rule book of international politics has been torn up” and “traditional views of national interest” are perilously out of date.

“Intervention, far beyond our borders” will often be required. For such necessary activism to be acceptable, ways must be found to involve “the international community” in joint strategies to tackle global problems and promote democracy. This means much more than military action, and includes supporting a greater flow of information and education initiatives.”

Does this speech really matter? Well, yes and no. It could be that Mr Blair is looking for another job, not being all that interested in sitting at home and writing his memoirs whenever he or the electorate finally decides that he must go. And, of course, he has always mouthed platitudes about the need for international co-operation and well-meaning interventionism led by transnational bodies.

Other reactions, like the ones in Indian newspapers limited themselves to concentrating on what matters to them – a seat on the Security Council (though why any self-respecting country should want one, I cannot even imagine).

Then there is the Chinese reaction. China is vehemently opposed to Japan acquiring a seat on the Security Council and is equally vehemently opposed to a US-Japanese sponsored suggestion of a reform in payments into the UN kitty. At present China and Russia, both rather large and with permanent seats on the Security Council pay considerably less than Japan does, a state of affairs, they would obviously like to continue.

It was, therefore, interesting to read an article in the Chinese business newspaper, published in Hong Kong, the Standard, which managed to attack Blair without mentioning the real problem: his support for Japan acquiring a permanent seat on that Council.

According to Toby Harnden and Patrick Hennessy (familiar and unChinese names) Blair had been forced by the White House to water down his speech. Their evidence for this is somewhat tenuous and seems to consist of whispers from various officials who had briefed journalists in one way while the speech went differently.

There seems little of any importance that he might have said if Karl Rove or whoever had not locked him up and threatened to make him listen to endless repeats of David Cameron on Desert Island Discs if he did not do as he was told. Can’t blame the man for giving in.

“He also backed away from a planned demand for a major change in the running of the International Monetary Fund and the World Bank.

Blair had intended to spell out a plan for Europe and the United States to give up their exclusive rights to install their own nationals as heads of the bank and the IMF respectively. This would help persuade smaller nations to give up their effective right to choose the United Nations secretary general, in favor of a move to install a leading international figure. Instead, Blair's speech glossed over the issues, merely citing a "powerful case for reform."

Another planned section was intended to take a tough line on global warming and the Kyoto Treaty, which Washington still has not signed. In the event, Blair merely claimed: "We must act on climate change," but did not go into detail. At this point, as a mobile phone rang in the audience, he even made a joke about American interference. "I hope that's not the White House telling me they don't agree with that," he said. "They act very quickly, these guys."”

It seems Blair still knows how to play his audience. Or his speech writers do. But, as it happens, none of that is sinister. He has been known to go “soft” on Kyoto before. In any case, anyone who is not obsessed with the idea of Al Gore becoming President would have realized that the Kyoto signatories have not reduced their emission and there are serious and growing scientific doubts being cast on that agreement and the whole notion that global warming is getting worse or being caused necessarily by human behaviour.

As for China, it did not sign up to Kyoto and has no intention of doing so or of closing down any of its newly opened coal stations. No doubt Al Gore will add a few thousand more air miles and fly his private plane to Beijing to remind them of their duty. Or maybe not.

The really frustrating part of all this burbling, whether by politicians or journalists, is that all of it represents a lost opportunity. The world has changed and is changing very rapidly and some decisions need to be taken as to how we shall deal with those changes. Every speech, every article, every paper that prattles on about reform of existing transnational organizations avoids those hard discussions and decisions.

Somehow it does not surprise me that Tony Blair should make one of those speeches of avoidance.

COMMENT THREAD

Political schizophrenia?

I doubt if it would be possible to project two more different views of the Blair project than those respectively in the Sunday Telegraph leader and in the front page Column Seven article in The Business.

The former, accompanied by the cartoon illustrated (above), declares that, "Once again, Mr Blair puts America first", depicting the prime minister as a willing poodle of the American administration. The latter, written by this author and headed, "Euro defence market reform is integration by stealth", paints an altogether different picture – of the UK rushing, lemming-like into the arms of the European Union, as defence integration gathers momentum.

Confronted with two such diametrically opposed views and forced to chose between them, a causal observer – sated by the recent publicity on Blair's visit to Washington – might be more comfortable with the Telegraph view, especially as the continuing military adventure in Iraq constantly suggests an apparently close relationship between Bush and Blair.

However, to make the choice, it seems, is a flawed option. There is no reason why two apparently contradictory political ideas cannot co-exist simultaneously, each or either taking the headlines according to circumstances, as their advocates battle it out in less public forums. Thus, it is quite possible that, if not simultaneously, Blair can support both closer co-operation with the US administration and the idea of European defence integration.

In fact, depending on his appreciation of the two issues, and the nature of the advice he is being given, Blair may not even believe the two policy issues are contradictory. He might actually have convinced himself – or been convinced - that they are complementary, in the traditional manner of the United Kingdom forming a "bridge" between Europe and America, by keeping a foot in both camps.

On the other hand, it could be that Blair is one of those "Walter Mitty" characters who lives in a world of his own creation, detached from reality. Alternatively, he could be the sort of person that agrees with the last person who spoke to him, and chops and changes his mind with the prevailing winds or the expediences of politics.

Dealing with the apparent conflict between the Atlanticist and the pro-EU policies, one can certainly divine from Blair's speeches and behaviour in the United States, that he is avowedly pro-US (and, more specifically pro-Bush), but if you take a longer time frame, things can look very different. Read, for instance, Blair's statement on 5 February 2003 immediately after his meeting with French president Jacques Chirac at Le Touquet.

Here, the Mr Blair that The Telegraph would have us believe is Bush's poodle, happily listens to Chirac – without demurral - telling him:

We have discussed defence. Very often we have not seen eye to eye on this between France and Britain, this is a matter of history, but I remind you that it was in St Malo that we have started, Mr Blair and I, the idea of pooling our resources, having a defence pool, and we have convinced the 13 other partners in the European Union that this was a good move. We have now reached the point where the European Union has a common defence policy which is developing apace. We have progression and this must go on…

only for the prime minister to respond:

In the field of defence, it is as you know four years since St Malo and we had a difficult negotiation frankly to get the European Union and NATO in agreement together. But now that that has been resolved, I think this is the time to push that whole initiative forward, and we have agreed a number of things, as the President was indicating to you…

He then goes on, amongst other things, to talk about the development of a "comprehensive approach to defence capability" with the "establishment of a new agency" in order to make sure that we are matching the aspirations that we have in European defence with capability and efficient procurement. Blair then refers to the "concept of the rapid reaction capability", making sure that "we have the ability to act quickly and deploy quickly in circumstances where we need to".

For sure, this is over three years ago but, since then, Blair's fond expressions of fidelity to Chirac have been translated into the European Defence Agency, which is at the heart of the European defence integration process, while the development and equipment of the European Rapid Reaction Force proceeds apace.

With the aid of selective quoting, therefore, a case may be made for Blair being either or both an Atlanticist or pro-EU, in which case – as I have so often cautioned – when trying to assess politicians, you look at their hands, not their lips. In other words, it is what they do, not what they say, that matters.

Here, of course, Blair's Iraq policy is seen as the most tangible evidence of US support, but there is equal validity in suggesting that his attachment to the venture was driven more by domestic electoral considerations, with him seeking to replicate the Thatcher Falklands effect. Only since the perception has taken hold, that the rapid military victory has degenerated into a debilitating counter-insurgency effort, has the campaign become an electoral liability.

Similarly, the Afghan venture is seen by some as evidence of Blair's support for Bush, but again, this is not necessarily so. The British forces in the region are not in fact working alongside the US but are part of a multinational structure that includes European forces.

On the other hand, the progress of European defence integration is tangible, some of which has been charted by myself, and more yet in a recent report by Statewatch. So much of this, though, is administrative and technical - compared with the high profile operations in Iraq and Afghanistan – that it is largely unreported by the media. It remains "under the radar". People – including the Sunday Telegraph leader writers - may, therefore, be making their judgements on the highly visible, without appreciating the extent of the less visible.

And, if the media has very little idea or understanding of what is going on, all that begs the question as to how much the politician know. Few now believe that ministers are in control and know what their departments are doing – an idea is even less prevalent after the successive debacles in the Home Office. What confidence can we have, therefore, that successive defence ministers or fully in control of their departments, or even aware of what is happening in the administrative bowels?

Here, one of the most important articles in today's newspapers – and possibly least read – is by Katharine Raymond, a former government advisor. Under the heading Step aside, Sir Humphrey, she acquaints us with the "cold reality" that most politicians are helpless in the face of a civil service that can be reluctant or inept. "Between ministers and their civil servants," she writes, "lies an unspoken truth". Both know that the politicians have no real control over their departments. She thus remembers "one testy meeting":

…when a senior civil servant told a minister his opinion "would be taken into account when we make a decision". Fireworks ensued but they did not change the fact that this particular official believed that he was the boss. Most of the time he was.

In this context, we know that in the Foreign Office and indeed in Defence, there are senior civil servants who have strong Europhile loyalties, one such typified by Nick Witney who, after a spell in both departments, has gone on to head the European Defence Agency. These men – and women – undoubtedly have their own agendas and, with political leaders who have only limited control over them, are able to pursue personal and political ambitions that can be at odds with declared, headline policy.

Thus it is, without even Blair being schizophrenic - in a political sense, at least – the system itself can be, simultaneously pursuing diametrically opposed policies.

The shame is, when it comes to the Telegraph leader, its writer(s) see the need to assess the situation in such one-dimensional, black-and-white terms. They argue that the occupation of Iraq is likely to signal the end of the "Blair Doctrine" on foreign intervention, whence they look forward to Britain's international relations being "once again based on the solid foundation of national interest rather than the vapidities of international solidarity".

More probably, the absence of a countervailing pull from the United States will mean an even more decisive lurch in the direction of the EU. Instead of subsuming our "national interest" to the United States as some maintain Blair is doing, we could instead be dragged ever more into the thrall of our European "partners". And, whatever your view of the current situation, that could be considerably worse.

COMMENT THREAD

More reflections

I could not face writing another post about the self-obsessed navel-gazing (tautology, I know) in which the foreign ministers of the EU member states are indulging in Austria.

It comes to a pretty pass, though, when German foreign minister, Frank-Walter Steinmeier, claims that the EU is facing its "deepest crisis". Compare and contrast the petty little obsessions of the "colleagues" with what is going on off the coast of West Africa – and in many other places - and one can only suggest that it is time they "got a life".

Anyhow, the upshot is that they are going to have another year of "reflections", so we have offered our own, for them to be getting on with (pictured).

Not that Steinmeier needs to worry all that much. When it comes to defence integration, things are plodding on quite nicely (from the point of view of the "colleagues"). I will leave you with a link from today's copy of The Business, which sums up the state of play. You might recognise the author.

Enjoy.

COMMENT THREAD

To our eternal shame

Last Tuesday, we posted a piece on the illegal immigration crisis on the Canary Islands, retailing how more than 1,400 immigrant had arrived in Tenerife and Gran Canaria in the previous week, making 2,000 landing in the month, mostly from Senegal and Mali. We also conveyed the plea from the Spanish authorities, who call for help from other EU countries, declaring that it was "Europe's problem too".

What we should also have said, though, was that this problem was largely created by "Europe" in the first place, not least through the inadequacies of its trade policies and, in this particular instance, through the depredations of its third-country fishing agreements, the main beneficiary of which is Spain.

Our deficiency, however, is made up by Mike Pflanz in today's Daily Telegraph, who gets behind the headlines of the great exodus from Africa and describes how thousands are putting their lives at risk, seeking work in Europe as their own fishing industries have been devastated by EU (and other) fishing vessels.

Pflanz records that more than 8,200 West Africans have arrived in the Canaries already this year, but an estimated 1,500 have died attempting the crossing. But, he writes, for many young men in the village of Thiaroye, a poor seafront suburb six miles east of the Senegalese capital, Dakar, the lure of Europe is irresistible. Their plight is summaried by Abdou Ndoye Mbaye, 25, who says he had no choice but to attempt the crossing. "You people talk of these boats being dangerous, but for us, we would rather risk death to find a good job in Spain than stay here doing nothing."

Yet, it is hardly as if there was no warning of this problem. In November 2001, Kim Willsher fronted a graphic report on Channel 4, entitled. "Selling the Future", earlier trailed in The Guardian, when she recorded first-hand evidence of how EU fishing vessels were stripping the waters off Mauritania and running down local fishermen who got in their way. A list was produced of over 200 men who had been killed, either in this way or because they had been forced out into deeper, unsafe waters in their frail boats.

At the time, I recall writing a brief on the problem, to circulate to MEP in the EU parliament. Using then available statistics, I recorded that third country fishing deals with the EU were big business. Between 1993 and 1997 they had accounted for €1053 million from Community funds and in 1998 had accounted for five percent of the total Community external budget.

In December 2001 there had been a study from the United Nations Environment Programme which found that, "Developing countries which open up their waters to foreign fishing fleets may lose far more than they gain". It noted that over-exploitation resulting from such deal is "driving people into ever greater poverty" as well as "robbing the marine environment of a key link in the food chain".

Argentina was cited as an example of how devastating could be the economic impact, the report assessing that the then current EU agreement had actually cost the country $500 million whereas, had they developed their own fisheries, they could have made $5 billion. This had been reinforced by the Namibian experience, where the country refused to enter an agreement with the EU and had developed from scratch an industry worth $10 billion.

The UNEP report described the impact of the fisheries agreement on Argentina as "stark" and, of another agreement in Senegal, noted that it had had "a serious impact on local food supplies".

Yet all of this seems to have passed by the Commission. It sponsored its own report in 1999, which concentrated on the economic benefits to Community countries. This was a strange slant, considering that much of the funding came from the external (i.e. development) budget, but even then conceded that there were problems with the agreements. It noted that countries "did not always have sufficient means to enforce inspection arrangements" - something of an under-statement – and also recorded that, as regards the funds paid to third countries, "the destination of the funds paid into national budgets is not traceable".

In fact, this was (and remains) the biggest scandal of all. Most of the money paid from Community funds went (and still goes) goes to the political élites of the countries concerned. Very little of it reached the indigenous fishermen who were effectively robbed of their livelihoods. Essentially, money from EU taxpayers - including the poor - were being paid to the rich of third world countries - robbing the poor to feed the rich.

Despite this, the EU's third country fishing agreements continue, alongside periodic media reports, such as here, here and here.

Then, only last week we heard of the scandalous Morocco-EU fisheries agreement, whereby the EU is to pay €114 million to the Moroccan government to allow 119 European boats - mostly Spanish and Portuguese – to exploit the coastal waters. What made this particularly scandalous, though, is that the deal included the waters off Western Sahara, a land whose sovereignty is disputed, where the UN has refused to acknowledge Moroccan sovereignty over the land.

Not for nothing did Carl Mortished in The Times call this a "new rape of Africa", making the very obvious point that if the EU stopped taking the Africans' fish and assisted them to develop the resource, there would be considerably less of a migrant problem.

Instead of dealing with this, however, we – and that includes the British government – kowtow to the Spanish, plus the Portuguese and to a lesser extent the French, and cough up ever-increasing amounts of money for them to rape and pillage the African seas. Now, as increasing numbers of dead Africans are washed ashore, it is to our eternal shame that we have allowed this to happen.

COMMENT THREAD

A temporary setback

In a surprise move following the Bush-Blair summit yesterday, president Bush has agreed to agreed to step up Britain's access to sensitive technology in the F-35 Joint Strike Fighter. "Both governments agree that the UK will have the ability to successfully operate, upgrade, employ, and maintain the Joint Strike Fighter such that the UK retains operational sovereignty over the aircraft," the official statement read.

Conveyed by Reuters, via DefenseNews, The Times, Financial Times and others, this now makes it very difficult for the UK to dump the aircraft and buy alternatives for the UK's "super-carrier" programme.

This is against the background of UK manoeuvring and heavy spin, with the government cosying up to the French and even agreeing to consider the Rafale, following the Pentagon's attempt to cancel the second JSF engine, in which Rolls Royce have a forty percent stake.

Now that the second engine programme looks set to continue, the indications are that Bush has been listening to heavy lobbying from voices such as Liam Fox and The Heritage Foundation.

Bush has certainly been counselled that it would be politic to make a gesture towards Blair at this critical juncture in the Iraq venture and has been warned that refusal to allow the British access to JSF technology would strengthen the drive towards European defence integration that is already a well advanced feature of British defence policy.

In yesterday's statement, therefore, reference was made to the need to enhance US-British military cooperation, with both Bush and Blair stating that the two countries must "strengthen and deepen the relationship between their defence establishments, achieve fully interoperable forces and leverage the strength of their industries."

Interestingly, that very issue was raised this week in the House of Lords during a starred question by the Lord Hoyle on the JSF. The Lord Pearson of Rannoch asked:

My Lords, would it not be understandable for the Pentagon to be nervous of sharing stealth and other sophisticated technology with us, if it feared that we, under our EU commitments, might have to share it with the French and, through them, more widely? If that is so, does it not mean that the special relationship is pretty well over?

Defence procurement minister, Lord Drayson, predictably, dismissed the idea, stating that there was "absolutely no requirement on us, under British law or any EU treaty, to share technology related to this or any other defence-related project," a somewhat disingenuous answer given the 2000 "Framework Agreement" and Britain's commitment to the European Defence Agency (EDA) - to say nothing of last week's procurement agreement, about which The Business tomorrow will have some comment.

Thus, although the JSF contract is something of a litmus test in the progression of British integration into the European defence camp, the existence of the Framework Agreement, the EDA and other developments – all on the back of the Helsinki European Council of 1999 (when the European Raid Reaction Force was agreed) - demonstrate that nothing fundamental has changed.

Although the US rightly fears that technology passed to the UK will find its way to our gallant European "allies", the risk appears to have been judged worth taking – but it has the hallmarks of a temporary political expedient, calling the bluff of the "Europe firsters" in the British defence establishment who have been trying to engineer the cancellation of the JSF.

In many respects though, this is too little, too late. While it is currently "cutting edge" technology, the JSF is, in a sense, yesterday's project. Procurement decisions are made for ten and twenty years hence and the thinking is focused on unmanned aircraft.

Already, the UK has abandoned any plans to develop a new generation of manned aircraft, but has also pulled out of the partnership with the United States on the development of advanced UAVs in a programme known as FOAS.

On the other hand, the French-led programme, code-named "Neuron" is powering ahead. Although the MoD is being very reticent about publicly declaring an interest, if the UK does opt-in to this multi-national programme, continued British participation in the JSF programme will prove to be nothing more than a temporary setback for the promoters of European integration.

COMMENT THREAD

Transparency no, invisibility yes

The BBC website has picked up on the weekend meeting of the foreign ministers of the EU member states.

In a curiously flat week for EU events, it has little else to report - unless you want to get excited about the EU parliament discussing the taxation of sms messages. It thus makes the most of the spectacle of ministers meeting in the 900-year-old Klosterneuburg Abbey, "to debate ways of making Europe function better".

If you had any doubts that this is empty rhetoric, all you need to do is read our earlier post on the Restriction of Hazardous Substances Directive.

You really, really do wonder about these people. They bring out an insane law – this one which is estimated to add £50 to the cost of a desktop computer, while reducing its reliability – and then they closet themselves in some grand Austrian abbey to prattle on about how to "re-engage" with "European citizens".

Any how, it looks like Austrian foreign minister, Ursula Plassnik, prattler-in-chief want to sidestep discussions on the EU constitution, and wants everyone to focus on "steps that can be taken independently". These now include, "better crisis management, more consular co-operation, better lawmaking and more transparency... in the union's decision-making process".

The constitution, it seems, can wait until next month’s European Council, when another "road map" will be presented to the members. One hopes, for their sake, that they are not relying on Galileo for navigation.

For the moment, though, much is being made of "transparency". Personally, I would prefer invisibility, not like this, but the sort that comes when they shoot off to another planet, which is where the "colleagues" undoubtedly belong.

COMMENT THREAD

Negotiating with the Bear

It is hard to read the runes of the EU-Russia Summit that has just taken place in the pleasant holiday resort of Sochi. (I imagine it was not all that pleasant while the summit was happening but, luckily, it was not a long one.)

Let’s get out of the way the agreements first. The main purpose of the meeting was ostensibly the need to ease up the mutual visa regime, in turn to move, possibly towards a visa-free agreement. There has been some movement on that but as the BBC Russian Service points out on its website (not the English language article on the BBC World site), the new agreement will affect diplomats, personalities in the culture world and students. The rest of us will continue to have problems and pay over excruciatingly high sums (that is, assuming, we can get a visa at all).

Another agreement concerns illegal migrants. Russia has finally agreed to take back from EU member states illegal immigrants who had made their way from that country. Of course, as all matters pertaining cross-Continent and, indeed, any other migration, the practicalities of the problem have not been resolved.

There were also discussions about Iran, the Middle East and human rights, according to the English version on the BBC, though the article gave no details as to whose human rights. Not, one suspects, that of the Russians’ or other nationalities within that country.

“An agreement was also reached on co-funding of a European Studies Institute in Moscow, and an EU aid programme for the North Caucasus.”

There are already various institutes in Moscow that specialize in European Studies. Indeed, I recently took part in a discussion on the BBC Russian Service Moscow with a young man who was billed as an expert on European integration. He appeared to know a good deal more than many of our own so-called experts. So, the Russians do not lack institutes or experts but they might like a bit of EU money to subsidize them.

As for any aid programme for the North Caucasus, we must beg leave to doubt its efficacy. In the first place, the Russian authorities do not let foreigners into the North Caucasus most of the time. Therefore monitoring will be impossible.

In the second place, a recent Court of Auditors report looked at what happened to the money paid over by the EU to Russia under the TACIS programme. Alas, little if any of it reached the people it was supposed to help.

This brings us to the most important issue – energy security and dealing with Russia that is sitting on a very large amount of oil and gas, being quite prepared to use that fact in political battles with anyone President Putin perceives to be the enemy inside or outside the country.
It is on this subject that reading the runes becomes a little difficult.

Economic liberalization in Russia has receded with oil, gas, metallurgical firms and many other industrial firms gradually being taken back into state control, though in a somewhat round-about fashion. Not for Putin out and out nationalization. The process is done through enforced sale of shares, appointment of cronies to management positions and a creation of a new class of “oligarchs”, who are dependent on the state and on Putin’s personal favour to stay in the place they have been put or to advance.

This is of particular importance in oil and gas production, since the Russian economy lives off that to a great extent. At present the prices are high and Russia is doing its best to kept them there. Whether as a result of the renationalization or for some other reason, productivity in both spheres have fallen.

In the short term that is useful for Russia – lower productivity means higher prices. In the long term that is less clear, as the eminent economist and political writer Yegor Gaidar pointed out recently in the newspaper Vedomosti. [The article is in Russian but some of our readers might be able to make use of the link.]

Mr Gaidar’s points are straightforward: Russia has been using her wealth of natural resources to conduct an unnecessarily hard bullying policy towards her neighbours. He also hints that the wealth and the abnormally high prices have contributed to the gradual undermining of democratic freedoms and processes in the country itself.

Above all, he warns, this is not a solid foundation for an economy as the Soviet example of the 1980s proved. Prices fell and there was nothing the Soviet leaders could do. Of course, he adds, Russia now could diversify her economy with greater ease than the old Soviet Union did. It has to be admitted, however, that there is little sign of it happening, unless one considers the sale of arms diversification.

The EU was intent on making President Putin see the light in various ways. In the first place, they were hoping for some assurance that the episode of gas being cut off to the Ukraine (and, hence, Western Europe) early this year, will not repeat itself.

They got cold comfort from the Russian president, who said according to the BBC Russian Service:

“When Russia fights for her interests, she looks, just like other countries do, for acceptable ways of solving her problems. It is curious that anyone should have difficulties understanding that. We all know what sort of means and methods the United States uses when protecting its interests.”

There is no getting away from the fact that Putin is a Soviet apparatchik through and through. His language shows that beyond any doubt.

The truth is that Russia uses economic power to pressurize countries that are not, in any real way, a threat to her: Ukraine, Moldova, Georgia. As Putin’s former adviser, Andrei Illarionov put it in an article a couple of days ago:

“These countries have become the enemies in the new "chilly war" being waged by Russia's authorities. At the same time, new friends have emerged in the shape of the leaders of Belarus, Uzbekistan, Iran, Algeria, Venezuela, Burma and Hamas. A quite different G8.”

There is little the EU can do about it and the promise of a possible free trade agreement, dangled before President Putin by Commissioner Benita Ferrero Waldner is unlikely to work. Despite the rosy view taken by the BBC English language website, it is clear that Putin has stonewalled every proposal. The EU delegation (Barroso, Schüssel, Ferraro-Waldner and Solana) seemed pathetically grateful for his assurances that he was not intending to divert oil and gas to China. As there is no pipeline at the moment, they can rely on that promise for now.

At the time of the Ukrainian crisis in the first days of January, there was some talk in Germany of the need to diversify its sources of energy, not to be at Russia’s mercy. Those talks have died down. As all German governments seem to be completely beholden to the Greens, there can be no question of nuclear power. The country remains a major producer of coal but that seems to be insufficient for its needs. And renewables are unlikely to fill the gap.

Far from looking for alternatives, a move that might concentrate President Putin’s mind and one that he would appreciate as one of genuine realpolitik, Germany is a partner in the new Baltic pipeline that will bypass Poland and the Baltic states. (Former Chancellor Schröder, as we know, has taken an important part in the creation and, now, the running of that concern.)

This subject, too, came up during the Summit and, graciously, Putin agreed to a bigger role for the Baltic countries. But, he added, any share they will have, must come out of the German one.

Then there is the question of western investors in the Russian energy market. To that, President Putin gave a categorical negative, though he pointed out that, in order, for the West to be allowed into the “holy of holies” of the Russian economy, the European countries must give something in return.

One assumes that the references were to the possible flotation of Rosneft in London and the mooted acquisition of Centrica by Gazprom. Mr Illarionov had harsh words on both subjects:

“The former economic adviser to Russian president Vladimir Putin has warned that the planned flotation of state-owned oil giant Rosneft would see "the London Stock Exchange being used to distribute stolen assets". …

"This is a crime which will be investigated by a new government and reversed," he said in the latest salvo against the controversial initial public offering. His comments follow denunciations of the sale by investors including George Soros and Foreign & Colonial, which recently raised a warning flag over Russia's corporate governance practices.

Rosneft's assets include Siberian oil explorer Yuganskneftegaz, responsible for 11pc of Russia's oil output and forcibly "acquired" by the Kremlin in December 2004 after the arrest of Mikhail Khodorkovsky, the oligarch jailed last year for tax evasion. "We are dealing with a company with a very questionable history. We just don't know what happened," Mr Illarionov added.”

Nor was he too impressed with the notion of Centrica becoming part of President Putin’s armoury of weapons:

“Speaking in London, he also questioned why Prime Minister Tony Blair had apparently left the door open to a mooted takeover of British Gas-owner Centrica by Gazprom, the Kremlin-controlled gas producer.

"I'm puzzled. Many people have expressed concerns, but this is a very clear statement that it is ok for Centrica to be bought by a state-owned company. I do not hear anything similar from anyone else in Europe.”

It is not so much that Gazprom is state-owned but that the state is a hostile one, as seen through its own pronouncements, and always ready to use economic methods to achieve political submission.

Mr Illarionov has made it clear that he thought the G7 should boycott the G8, whose next summit will be in St Petersburg. Allowing for the fact that the G8 is a largely pointless organization and for the fact that Russia should never have become a member, a boycott at this stage seems unlikely and, probably, injudicious.

Nezavisimaya Gazeta (Independent Newspaper), one of the few Russian media outlets that is not either completely controlled by the state or has submitted to its instructions, points out in its detailed report of the Summit [again in Russian] that this was clearly a precursor of the July G8 meeting. The basic and, apparently, unbridgeable disagreements between the two sides are indicative of what is likely to happen.

NG also adds an interesting detail. Sochi is hoping to host the Winter Olympics of 2014. Thus, the EU-Russia Summit was intended to strengthen the city’s international image as well as Russia’s. To this end, the whole resort was washed and flower borders were planted along the roads. These, the local population has christened kolodyazhki after Viktor Kolodyazhniy, the Mayor of Sochi.

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The ultimate in fatuity?

For some months now, we have been following the increasingly surreal saga of the EU's "unintended" ban on lead organ pipes, through the combined effects of the Waste Electrical and Electronic Equipment (WEEE) and the Restriction on Hazardous Substances Directives.

While this saga seems to be coming to a messy end, with the likelihood that church organs will escape the ban – an issue which Booker will deal with in this Sunday's column – it has focused our minds on the broader impacts of these directives and, in particular, the Restriction on Hazardous Substances Directive (RoHS), about which, so far, we have written very little.

This, it turns out, has been a major omission on our part as, with the Directive coming into force on 1 July, only now is it emerging that this will be imposing billions of pounds in extra costs to industries throughout the world, to deal with a non-existent threat, and increasing the harmful impact on the environment. In short, while there is no shortage of examples of harmful EU legislation, this directive must qualify as one of the most, if not the most egregious example.

The particularly damaging aspect of this new law which, to give it its full name, is Directive 2002/95/EC of the European Parliament and of the Council of 27 January 2003 on the restriction of the use of certain hazardous substances in electrical and electronic equipment, is the ban on the use of lead in electronic equipment, thus prohibiting the use of lead-based solder.

It is transposed into UK law as The Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations 2005, linked with the WEEE Directive. And therein does the trouble start.

Although the WEEE Directive aims at increasing the amount of recycling of electronic equipment, the EU commission has decided that a significant volume of this waste will still be landfilled and some incinerated, while much will be handled in recycling centres. With the equipment containing metals such as mercury, cadmium and chromium, the RoSH Directive claims these, "would be likely to pose risks to health or the environment".

Thus, says the Directive, "the most effective way of ensuring the significant reduction of risks to health and the environment relating to those substances" is the substitution of those substances in electrical and electronic equipment by safe or safer materials." Restricting the use of these "hazardous substances", it adds, "is likely to enhance the possibilities and economic profitability of recycling of WEEE and decrease the negative health impact on workers in recycling plants."

So it is that the Directive bans the substances listed from use in a wide range of electrical and electronic equipment and while there may – and I stress may – be some justification in controlling the use of some of them, there is no good evidence that the use of lead-based solder in electronic equipment is posing any threat whatsoever to the environment or the health of workers, either during manufacture or recycling, or when disposed of in landfill.

What is surprising however – although it should not be – is that, despite the claims of health and environmental threats, the latter based on the risk of lead-contaminated leachate from landfill sites, at the time the directive was being discussed, that data were largely theoretical, based largely on US studies. It was only when a number of field studies were subsequently carried out – such as this one here - examining the actual amount of lead leaching from landfill sites, that is was realised that there was no problem at all.

Especially significant was a year-long study by the Solid Waste Association of North America (SWANA) Applied Research Foundation. Released in March 2004, this concluded that heavy toxic metals, including lead, did not pose an existing or future health threat in municipal solid waste landfills.

The foundation reviewed existing research and concluded that the natural conditioins in landfill sites, such as precipitation and absorption, provide chemical reactions and interactions that prevent heavy metals from dissolving into the soil. They concluded that out of 130,200 tons of heavy metals placed in municipal landfill in 2000 from electronics, batteries, thermometers, and pigments, almost all - 98 percent - was lead. Cadmium and mercury made up the remaining amount.

According to the authors, "The study presents extensive data that show that heavy metal concentrations in leachate and landfill gas are generally far below the limits that have been established to protect human health and the environment."

By then, it was too late – the "train had left the station" and the momentum for new legislation was too great. But, by 2005, the US Environmental Protection Agency had got its act together and produced a 472-page report, assessing the full, life-cycle environmental impact of banning lead solder.

From this work, it emerged that when the impact of mining and refining substitutes was taken in to account, the higher energy consumption in using the lead-free solders, which require higher temperatures, and all the other issues were factored in, the banning of lead – far from having a positive impact on the environment (and worker health) – actually had a significant negative impact. Amazingly, though, this work had never been done by the EU and the legislation was, by then, already in place.

It was then left to member states to justify the ban, which the UK attempted to do in a series of "regulatory impact assessments", which can only be described as a parody of the genre.

In the first attempt, in 2003, The authors plaintively note:

It is very difficult to quantify the precise costs of the Directive given its complexity and scope of impact. In addition there is currently limited information available about the extent and cost of substituting the banned substances. Research and tests, which are necessary to fulfil the Directives' requirements, are still ongoing and the results are uncertain.

In page after page, it was not to get any better, the report offering only the vaguest of estimates as to costs, although it did concede that Orgalime (a trade association of electronics manufacturers in Europe) had estimated a cost across Europe of €15 billion for "new investment to deal with required technological change". This, it said, "implies costs to the UK of the order of £1.7 billion", most of which were attributable to the use of lead-free solder. And that was just to deal with the changes needed to deal with new material, to which must be added to higher material and energy costs, estimated at around £200 million extra per year.

Small businesses were then considered and the view was that RoHS "could disproportionably" affect them "as they may not have the financial resources to undertake R&D projects to develop substitutes". Chillingly, the report added, "They may also find difficulty in absorbing the additional costs, to comply with the Directive." To this day, no one has the first idea of how many jobs will be lost.

As to the reduction of health risks, the official estimates were equally vague, the assessment noting that the ban "will entail a reduction in the use of certain hazardous substances in EEE and therefore should result in reductions in risks to human health and the environment." However, the report added, "it is not easy to quantify the resulting benefits."

By the time of the final assessment in 2005, the estimates had got no better, although the Department of Trade and Industry was now claiming that the overall costs in the UK would be £700 - £13000 million, with absolutely no figures attached to the benefit and no evidence offered as to whether they would be realised.

Nevertheless, the final document bears the signature box of the minister of state for energy, Malcolm Wicks, declaring, "I have read the regulatory impact assessment and am satisfied the benefits justify the costs".

On the basis of this charade, proprietors of firms not obeying this cretinous law can face unlimited fines and imprisonment yet, worryingly, there are still many serious doubts about the reliability and suitability of lead solder substitutes, so much so that military equipment has been exempted.

For the rest of us, though, courtesy of this utterly mad EU legislation, we are to pay more for less reliable equipment, with an overall greater harmful impact on the environment. There are no words sufficient to describe the utter, complete, total fatuity of a system that can allow this to happen.

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