Diary

Bipartisanship on the economy

30 September, 2008

I have just listened to David Cameron’s emergency statement to the Tory Conference on the state of the economy. He struck the right kind of note for the occasion with his bipartisan approach to solving the economic crisis. He offered the government support to pass emergency legislation on new banking regulation but stopping short of offering a blank cheque. His words were strong but his tone was measured, dignified and statesmanlike. This was not the moment to attack Gordon Brown and Labour. We are where we are and no amount of political bickering will save jobs, mortgages or pensions.

What a contrast with Washington yesterday. The decision of Congress not to proceed with the bank bailout was accompanied by toxic political rancour. Nanci Pelosi slammed the Republicans for the current mess, other Democrats condemned McCain’s intervention while leading Democrats blamed Pelosi (rather improbably) for losing the Bailout vote.

It has been suggested that Congressmen had their eyes on the November 4th election and cast their votes accordingly. In particular, Republicans sensed that if they voted for the bill, they would suffer electoral wipeout if they faced a Democrat who had voted against the bill. But they need not have worried. The Republicans already face wipeout on judgment day in November, given that their President’s reputation is as toxic as those American sub prime loans.

Vicious political partisanship must not cloud the urgent need to save the financial system from meltdown. A bailout (as long as it ensures that irresponsible banks pay for any losses incurred due to falling asset values) should be accompanied by an earnest attempt from across the political divide to restore some stability to the turbulent financial scene. Even with this package, some economies will suffer as recession hits and unemployment surges. But the alternative to a deal will be too awful to contemplate.

Footnote: The logic behind the bailout is clear enough. Banks are not lending money to each other because they are suffering from a lack of trust and uncertainty. They are unsure if the money they are offering will be repaid by other institutions because some of those institutions are infected by bad debt (i.e. bad mortgages, particularly from the sub prime loans). Thus removing those bad debts will free up the credit markets and bring some stability to the banking sector. Moral hazard is an ethical objection. But it is trumped by the need to prevent global economic meltdown.

There is an argument that Congressmen have to listen to the concerns of voters above anything else. Voters mostly hate the bill; ipso facto, politicians have a sacred duty to vote it out. But that is a populist conception of democracy in which politicians slavishly adhere to focus groups and opinion polls rather than act in the greater interests of the country. It should not be the job of politicians to act as weathercocks, flapping in whatever direction the political winds happen to blow. They have to make the argument for why an unpopular choice is politically necessary and vote accordingly. That too is democracy.

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Marching for freedom

29 September, 2008

On Sunday, I joined a counter demonstration in London to the annual Al Quds march. 'Al Quds' was organized in 1979 by the Islamic Republic of Iran in order to celebrate its own radical terrorist agenda. I joined Iranian pro democracy supporters in Piccadilly Circus who were campaigining for an end to Iran's clerico-fascist regime with its appalling abuses of human rights and violations of sexual and religious freedom. Some of these students had been detained by the Iranian authorities for their 'dissenting' activities and were passionate about confronting the threat of the country's current regime. Some were also happy to espouse a variety of pro Israel views. It was genuinely inspiring to see such a passionate defence of Western values in the face of Islamist intimidation.

It is worth reminding ourselves that democracy, religious pluralism and individual freedom do not belong to the West alone. They are the birthright of all peoples and they are passionately sought by nations across the globe. They are superior to any other set of political values and must be defended with the same zeal shown by these students. On the eve of Jewish New Year, and amid the unprecedented economic turmoil we are witnessing, let us hope that these values prevail across the globe.top

On their knees before tyranny

26 September, 2008

The UN has never hesitated to demonstrate its grotesque admiration for tyrants and murderers, particularly from the Third World and the Middle East. Thus it was no surprise that Iranian President Ahmadinejad was invited to address the General Assembly this week. In a rambling speech, which included a defence of Iran’s desire for ‘peaceful’ nuclear energy, he launched into a diabolical anti semitic diatribe that would once have been worthy of Der Sturmer. In his desire to explain ‘the main reasons behind the conditions ruling the world’ he had this to offer:

‘The dignity, integrity and rights of the American and European people are being played with by a small but deceitful number of people called Zionists. Although they are a miniscule minority, they have been dominating an important portion of the financial and monetary centres as well as the political decision-making centres of some European countries and the US in a deceitful, complex and furtive manner…This means that the great people of America and various nations of Europe need to obey the demands and wishes of a small number of acquisitive and invasive people. These nations are spending their dignity and resources on the crimes and occupations and the threats of the Zionist network against their will.’

When you substitute the word ‘Jews’ for Zionists, you can see what the Iranian leader is getting at. A small Jewish clique, he argues, is in control of the world’s financial system and is therefore responsible for its current turbulence. This clique is playing havoc with the lives of Americans and Europeans who stand helpless before Jewish conspiratorial power.

Of course, this perverse diatribe against world Jewry has a resonance across the centuries. It is simply an update of the notion, espoused in the notorious forgery, ‘Protocols of the Elders of Zion’, that a small Jewish cabal controls the world for its own nefarious purposes. For political (and politically correct) reasons, it is the Zionists who are now the cabal. The tentacles of Jewish power, for the anti semitic Ahmadinejad, extend further than control of the economy. When he considers the recent conflict over Georgia, he has this pearl of wisdom to offer:

‘The lives, properties and rights of the people of Georgia and Ossetia and Abkhazia are victims of the tendencies and provocations of NATO and certain western powers, and the underhanded actions of the Zionists.’

So what did the members of the General Assembly do after hearing such base demonology? Did they storm out half way through? Did they demand that this odious man never again address such a prestigious gathering? No, they applauded him. Just as they applauded the 2001 Durban conference ‘against racism’ in which Zionists were compared to Nazis and Israel accused of genocide. Just as they voted for endless anti Israeli resolutions in the name of human rights while ignoring real tyranny around the world.

The UN was founded in the aftermath of the worst racial crime in history. Now it chooses to abase itself before a select clique of tyrants, murderers and dictators. Little wonder that this once venerable institution is being brought to its knees.

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Gordon Brown’s speech

24 September, 2008

Gordon Brown’s speech yesterday was all about short term survival. He tried to silence his party critics by presenting himself as the wise old man of English politics, a rock of granite amid the turbulence of the global economy. He was the figure who could be trusted to deal with financial instability, unlike the ‘apprentices’ of Cameron and Miliband. What was noticeable was how Brown promised to protect people from the current economic woes, despite his own very sizeable contribution to them. The man with the ‘moral compass’ had this to say to his fellow struggling Britons:

‘So when people share with me stories about the hard time they're having with bills, I want to help, because I was brought up seeing my parents having to juggle their budget like the rest of us.’

Yet this is the man who, as Chancellor, oversaw a breathtaking increase in public taxation in order to fund his insatiable appetite for controlling people’s lives. This is the same politician who raided private pensions in 1997, who raised stamp duty incessantly, who increased the duty on petrol and who ended the 10p tax band. If people are feeling poorer today, it is party because of this self declared saviour of the working man. Gordon Brown’s tragedy is that he cannot see any of this. It also provides the clearest evidence of how out of touch he is with the country.

His was a speech of self congratulation, not humility. Schools, hospitals and the police had all improved under his watch, he told us. That might be believable, were it not for the clear evidence of failing schools, MRSA and violent crime. There was barely a whimper of contrition from the man who has single handledly attacked the British middle class with his punitive economic policies. He did mention the ‘mistake’ over the 10p tax band but even here an apology was conspicuous by its absence. Instead he portrayed the justifiable public reaction as an ungrateful outburst: ‘What happened with 10p stung me because it really hurt that suddenly people felt I wasn't on the side of people on middle and modest incomes.’ It seems not to have occurred to Brown that while this policy’s repercussions hurt him, it actually hurt low paid workers far more.

Brown’s attempt to duplicate the style of US Presidential elections by having his wife introduce him on stage was as obvious a piece of spin as you could get. Few commentators have picked up on the rather discrepant sentiment uttered later on:

‘Some people have been asking why I haven't served my children up for spreads in the papers. And my answer is simple. My children aren't props; they're people.’

So it seems you can use your wife as a prop but not your child. This is what you call cognitive dissonance.

Brown may have silenced the party critics for a while. He appears to have bought himself valuable time and quelled the internal dissent, at least until the next by election. But the real test will come from the electorate who were cheated out of a general election in 2007. Brown may have fooled the Labour party but he won’t fool the great British people on the day of judgement.

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A gloomy outlook

22 September, 2008

'For a decade, the economy was kept afloat by an artificial boom in house prices and profligate consumer spending. Now the bubble has truly burst on this nation of debt addicts.'

If a week is a long time in politics, it seems to be an eternity for bankers. A series of events in the last 7 days, from the collapse of an investment bank, the take over of AIG and the unprecedented merger of two British banking giants, has culminated in a plan to nationalize all of America’s bad debts at taxpayers’ expense. In effect, creditworthy taxpayers are being made to subsidize foolhardy ones with a ‘get out of jail free’ card courtesy of the US Treasury.

It is incredible that in an era of free market expansion and capitalist economics, it should come to this. Yet if one believes Hank Paulson’s advisors, the US government had very little choice. In effect, they told him that the consequences of inaction would be a set of economic conditions far worse than those of the Great Depression in the 1930s. In other words, there would be global financial meltdown on a catastrophic scale with protracted misery for millions of people. If there is even a shred of truth in their claims then, as George Soros recently put it, saving the global economy had to trump moral hazard.

Still we have yet to see the worst effects of this crisis in Britain. With house prices in Britain continuing to fall, and predicted to drop by as much as 25% in the next year, we can expect to see house repossessions and bankruptcies soar. There will also be a drastic increase in unemployment in many industries, including the building trade. Tax receipts for a million people will dry up, while welfare payments rise. Particularly galling for the government will be that some of these people will be the very city slickers on whom they relied for wealth creation in the 1990s. As unemployment increases, demand will be sucked out of an economy increasingly mired in recession. And as consumer spending decreases, a downward spiral will be created which will lead to further job losses and economic slowdown.

What we are witnessing is the final unravelling of New Labour’s claims to economic competence. For a decade, ministers talked up Britain’s economic miracle’ but this was an illusion. For 10 years or more, the economy was kept afloat by an artificial boom in house prices and profligate consumer spending. The easy supply of cheap money allowed people to spend their way out of trouble and feel prosperous. Now the bubble has truly burst on this nation of debt junkies.

Gordon Brown’s government will have three equally unpalatable options for dealing with this crisis. First, they could increase taxes in order to fund the lavish public sector state they have created over the last 10 years. (But expect any tax rises to be conducted by stealth.) Second, they could increase the national debt (taxation in slow motion) still further, making even more of a mockery of the fiscal prudence which was supposed to characterise Labour’s handling of the public finances. Third, they could try and print their way out of trouble but any expansion of the money supply will simply multiply the inflationary pressures already buffeting our beleaguered economy. This last option would end any chance of cutting interest rates in the near future.

Indeed, Gordon Brown will try anything except the one thing that could mitigate the damage to our economy, namely a ruthless purge in public spending. This option would help to reduce our enormous tax bill, stop the expansion of the national debt and allow for a round of tax cutting that would stimulate the economy. But having expanded the public sector ‘client’ state over the last 10 years, Mr Brown is in no mood to slash it now. The problem is that many of those he has courted in a decade of financial bribery are now ready to desert his party.

Most depressing of all, the Tories appear to share New Labour's economic bankruptcy. They remain wedded to the notion of ‘sharing the proceeds of growth’ between public sector spending (sorry investment) and tax cuts. But this means that when there is no growth (as now), there will be no tax cuts and when there is growth, more taxpayers’ money will be thrown at public services. This is despite a decade of unprecedented spending that has quite obviously failed to transform the NHS, police and state schools! Whichever government is in power then, the poor taxpayer will receive little in the way of relief.

So we had better get used to the new order of things. Having binged on boom, we must now bear with bust. Britannia PLC and all who sail in her will need stoicism and resilience to survive these turbulent times.

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Proposals to resolve the Arab-Israeli conflict

18 September, 2008

On Tuesday night I attended a thought provoking debate organized by Intelligent Squared on the subject of resolving the Israeli-Palestinian conflict. A high powered panel offered their thoughts on this most intractable conflict.

Dan Gillerman, a former Israeli ambassador to the UN, sounded a note of optimism. There was a better chance of peace, he claimed, not because the impasse in Israeli-Palestinian relations was about to be overcome but because of twin threats that were mobilizing Israelis and Arab rulers alike: radical Islam and Iran. Radical Islam was ‘a clash within civilization’ as a ‘tolerant religion’ (Islam) had been ‘hijacked’ by terrorists.

Politically correct platitudes aside, he did point out (quite correctly) that most of the victims of Islamic terror were Muslims. The Arab states too were in a collective panic over the Islamic Republic of Iran. A resurgent Iran, particularly one armed with nuclear weapons, had produced a paralyzing fear among Arab rulers which had brought them closer to Israel, the one country which was most directly confronted by Tehran’s belligerent rhetoric.

Iran, he warned, had to be tackled urgently while investment was needed in the Palestinian Authority. Gillerman’s analysis was instructive for showing that the Israeli-Palestinian issue had to be seen in the wider context of religious fanaticism and Iranian/Syrian state sponsored terror. Without tackling these twin threats, no interim solution of the conflict would be possible.

Dr Hannan Ashrawi offered a quick fire diatribe at Israeli policy which was, in her view, a catalogue of unspeakable iniquities. The obstacles to peace had to be removed (mostly Israeli): settlements, check points, barriers, the security wall ‘of separation and annexation’, the occupation and so on. Unless the occupation was ended in the next few months, she said, the Palestinians would require ‘international protection.’ While admitting that the Palestinians had to put their own house in order with a reform programme and economic reconstruction, this was essentially the Muslim victim mentality on display. There was not one word to condemn Palestinian terror attacks, Kassams or suicide bombers. Zilch, nada.

There was much the same from Palestinian MP, Dr Mustafa Barghouti. Not one to deny his audience a visual treat, he showed a series of maps on a screen that purported to show how, over 60 years, the Israelis had been offering Palestinians a smaller and smaller chunk of ‘Palestine’ for their state: 45% of the land in 1947, half this by the year 2000 and about half of this today. Dan Gillerman helped to scupper this absurd propaganda exercise by pointing out that the Palestinians rejected the 1947 partition offer that would have created the much vaunted ‘two state solution’ 6 decades ago.

He should also have pointed out that in 2000, the Palestinians were offered 95% of the West Bank and Gaza (as well as compensation and a deal on settlements and Jerusalem) and turned this down as well. Barghouti talked about the security wall and checkpoints denying the Palestinians a ‘contiguous’ state but failed to mention that without these ‘impediments,’ there would be a dramatic upswing in violence and terror from Palestinian rejectionists. The situation in the West Bank and Gaza was, he claimed, tantamount to apartheid. This was a fatuous comment. Yes, there are genuine Palestinian grievances over issues such as water and settlements but to make such an asinine comparison does a gross disservice to the true victims of apartheid.

Ephraim Halevy, a former director of Mossad, argued that it was not possible to implement a permanent solution to the Arab-Israeli conflict. The best that could be hoped for was short term ‘conflict management’ and any viable interim agreement required three things: 1) The re-unification of the West Bank and Gaza. 2) A credible consensus among Israelis to have a further redeployment of forces. 3) An efficient Palestinian security system.

Israel needed partners who desired a temporary solution and this meant a negotiation with the ‘pragmatists’ of Hamas. It was not for the international community to enforce solutions or micromanage Palestinian or Israeli politics. If the Palestinians did not succeed, no one could do it for them. In this sense Halevy was right. But by the same token, the international community could (and should) withdraw its support for Palestinian politicians if they are not seen to be cleaning up their act.

The idea of a truce with Hamas though is barely credible. A truce in Islamic culture (or hudna) does not have the same meaning as it does in the West. It is a tactical manoeuvre that allows a group to regain strength for a future round of conflict. Hamas would therefore use the opportunity to replenish their weapons and finances and were they ever to take control of the West Bank, this would place many of Israel’s major cities under the threat of long range rocket attacks.

Yael Dayan, daughter of General Moshe Dayan, spoke briefly to enhance her credentials as a ‘Peace Now’ activist. She derided 40 years of occupation and settlement expansion and claimed that terror and incitement would end as a result of peace. Sadly the naïve Ms Dayan chose to ignore the fact that after withdrawing from territory in Lebanon and Gaza, Israel was rewarded with a drastic upswing of terror on both fronts. There is no reason to think the same thing would not happen again after a precipitate Israeli withdrawal elsewhere.

Finally Sir Malcolm Rifkind offered his observations on resolving the conflict. He spoke of how the 1955 treaty with Austria was a plausible model for ending Israel’s own occupation. In this treaty, Austria agreed to be neutral in the Cold War, which ended both American and Russian occupation of the country. If the Palestinians, he argued, offered a similar form of neutrality towards Israel, this too could end their occupation.

This analogy is to misrepresent the current conflict. Austria was never at war with either America or Russia and thus its promise of neutrality could be taken seriously and trusted. The Palestinian relationship with Israel, however, has been marked by outright belligerence. Peace deals have been rejected while Israeli withdrawals from territory have been met (as with the Gaza pullout) with a marked increase in violence. A concrete detoxification of the Palestinian (and Arab) mindset must precede any formal treaty offering neutrality.

In a sense this is the fundamental issue underlying the conflict. The grievances over territory, checkpoints, water and settlements (while real) are ultimately secondary ones. They are but the symptoms of an underlying, long standing primary problem: the failure to accept the existence of the Jewish state. Note to the West: deal with this primary issue first and anything is possible.

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Lessons for us all in the credit crunch

16 September, 2008

The collapse of Lehman Brothers seems to be a seminal moment in the credit crunch. A mighty institution has been brought to its knees, aided by a decision from the Fed not to rescue it at the last moment. Already comparisons have been drawn with the Great Crash of 1929.

Then as now, banks that lent recklessly were brought down by their own arrogance and greed. Then as now, investors borrowed reckless amounts of money because they were told that shares would continue to rise. Then as now, America was the lynchpin of the world financial system and its deteriorating economy produced devastating ripples across the globe. Then as now confidence was sapped by the erosion of the credit system. In reality, things are not as bad as in 1929. Investors in Wall Street and elsewhere have not been wiped out as their counterparts were 80 years ago. Yesterday's falls in the FTSE were modest compared to the terrible losses 8 decades ago. But the comparison is hardly asinine.

On the face of it, the decision not to bail out Lehman Brothers seems entirely sensible. One should be queasy at the idea of big government stepping in to ‘rescue’ troubled banks which have failed to run a successful business model. Were this to become the norm, there would be no incentive for banks (and bankers) to make sound investment decisions in the long term for they would be immune to the consequences of their mistakes. Taxpayers would end up paying the price for the greed and short sightedness of corporate fat cats.

The price of a capitalist system is that you gain huge rewards when you produce success and suffer crippling blows when you fail. A capitalist society can never be a utopia for all the people all of the time. Northern Rock received the ultimate government largesse at taxpayers’ expense, the direct opposite of living by free market conditions. In retrospect, this seems entirely mistaken. The decision not to save Lehman Brothers is the necessary pain that has to be administered to the banking system in order to ensure its long term recovery.

But it is not just greedy bankers that should heed important lessons here. The central banks in Britain, Europe and America kept interest rates too low for too long, encouraging reckless investment decisions by the bankers. And individual consumers, spurred on by the buzz of cheap credit, enjoyed a frenzy of profligate spending and debt binging which has brought some of them to their knees. Hence the increasing number of people in negative equity, the accelerating number of house repossessions and the vast expansion of bad debtors. They were busy piling up debts in the good times which they could not repay in the bad. The lesson for us all is that unmanaged spending in the boom years can lead to a nasty hangover when things go bust.

Some people see big government as a necessary corrective to our follies; that it should nurse us through our self induced economic hangover. But this is the biggest folly of them all. If people cannot take the pinch of economic pain, they shouldn’t take bad risks with other people’s money.

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Anti Israeli hysteria at the UN – yet again

12 September, 2008

Many people wrongly assumed that with the appointment of Ban Ki Moon in 2006, the UN would undergo a rapid transformation after years of siding with corrupt Third World dictators and terrorists. How wrong they were. It is reported that the UN Secretary General is about to demand that Israel compensate Lebanon and Syria for the damage caused during the war of 2006 against Hezbollah. The sum is apparently $1 billion, which would cover the cost of environmental and material damage caused to Lebanon and Syria during that war.

Naturally this is a grotesque demand for at least two reasons. As Michael Freund points out in his article in the Jerusalem Post, it completely ignores the context of the fighting and concentrates on the consequences instead. Israel was attacked by Hezbollah for no legitimate reason in 2006. The Lebanese militants killed 8 Israeli soldiers in a border raid and captured (and killed) 2 others. They proceeded to fire thousands of rockets at Northern Israel over the next month, shutting down major cities and forcing the evacuation of hundreds of thousands of people.

Israel responded vigorously by attacking Hezbollah’s headquarters and the bases from which they were firing weapons. To condemn a nation for acting in self defence and demand that it compensate its foe is both absurd and immoral. It would be the equivalent of a judge demanding that a householder compensate a burglar for inflicting injuries on his intruder in self defence. But in the UN, the inverse of morality and justice is sadly the norm.

Some may argue that Israel acted wrongly in attacking Lebanon, given that their war was with Hezbollah alone. Again this would be facile. Despite a UN Resolution calling for Hezbollah to be disarmed, the Lebanese government allowed the militants to use their territory to build up an illegal infrastructure. In military parlance, they formed a state within a state. Given this reckless disregard for international law, and their disregard for Israel’s security, the government in Beirut had no right to cry foul when Israel did the job for them.

To hold Israel responsible for the damage from this war is also perversely one sided. It ignores the enormous losses to Israel’s tourism for one month, the cost of evacuating hundreds of thousands of people, the infrastructural damage from rockets and various other associated costs. But in the UN’s eyes, Israel is the aggressor rather than victim and her losses are therefore inconsequential.

Of course to seasoned observers of the UN, Ban Ki Moon’s perversely distorted view of events is hardly surprising. His organization remains a viper’s nest of double standards, incompetence and hypocrisy, turning a blind eye to terrorists and their sympathizers while giving undue support to dictatorships. Above all, it harbours a fathomless level of malice towards the Jewish state, whose very status as a UN member is routinely called into question. This is poisonous bigotry, pure and simple. And as long as it continues to flow through the UN’s arteries, the calls for a League of Democracies should grow louder and louder.

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When a nation becomes a nuclear suicide bomber

10 September, 2008

At the moment the most immediate concerns for the West come from one of its enemies and one of its allies: Iran and Pakistan respectively. One is an unstable Islamic nuclear power whose military and intelligence services are, at least in part, supportive of Afghanistan’s Taleban insurgency. The other aspires to nuclear status and looks likely to achieve that goal, given the timidity and appeasement that currently stalks the White House. But if Iran were to go nuclear, would Israel possess the means to deal with this? Would the West?

In today’s Jerusalem Post, nuclear strategy expert, Louis Rene Beres, offers a thought provoking analysis of this issue. He differentiates between a rational nuclear actor and an irrational one. A rational nuclear actor is capable of achieving a stable deterrence relationship with another nuclear power, the kind of relationship that existed during the Cold War standoff between the superpowers. To cite the familiar acronym, both sides knew it was MAD to launch a pre emptive first strike at the other side as this would lead to immediate and crushing retaliation. In short, it would have produced ‘Mutually Assured Destruction’ and this certainty of mutual destruction was enough to deter both from stepping over the brink. An irrational nuclear actor is incapable of maintaining such a relationship.

For some 40 years, Israel has been a nuclear power operating a policy of nuclear ambiguity. During this time she has fought various wars against ‘rational’ enemies, that is, enemies whose wars against the Jewish state have been tempered by the knowledge that they could become targets for an Israeli Atomic bomb. It is likely that knowledge of Israel’s crushing retaliation, using its nuclear arsenal, deterred Saddam Hussein from using chemical weapons during the First Gulf War and may have limited Egypt’s war aims in 1973.

But is a nuclear Iran capable of maintaining a stable nuclear deterrence relationship with Israel? If she is, Rene Beres suggests the following:

‘To be deterred, a fully nuclear Iran would need to know that Israel's nuclear weapons are both invulnerable and capable of penetrating its defenses. Any Iranian judgment about Israel's willingness to retaliate with nuclear weapons would depend in part on a foreknowledge of these weapons. Any Iranian belief that Israel's nuclear weapons are exclusively mega-destructive must be modified. The enemy must be convinced that the Jewish state possesses a range of weapons to meet a range of threats, so the credibility of a deterrent posture could vary inversely with the perceived destructiveness of Israeli arms.’

Of course, Israel’s military does possess a formidable array of weaponry that could be used to devastating effect against a nuclear Iran. To enhance its strategic deterrence, Rene Beres suggests that Israel would have to end its policy of nuclear ambiguity and move to full disclosure.

But if Iran was an irrational national actor, this would not be enough. The country is a bastion of anti Western Shia fundamentalism, a rogue Islamist power whose mullahs long for the return of the Hidden Imam via some grave apocalyptic event. On this religious world view, the appearance of this (12th) imam is preceded by war and bloodshed. Given the fundamental importance in Islamic theology of death through jihad, it is not inconceivable that Iran’s leaders would see a Middle East nuclear conflagration as just such an apocalypse, with the destruction wreaked on their own citizens justified (in their view) by the demands of Islam. As Rene Beres says, ‘Iran could effectively become a nuclear suicide-bomber in macrocosm.’ Under these circumstances, deterrence through MAD would break down.

Rene Beres suggests that to enhance its deterrence: ‘It will not be enough to know only that Israel has the Bomb. These enemies will also need to recognize that Israel's nuclear weapons are effectively invulnerable, and that some are pointed at high-value population targets. Removing the Bomb from the basement could enhance strategic deterrence. Such a calculated end to deliberate ambiguity could also underscore Israel's willingness to use these weapons in reprisal for certain enemy first strikes and retaliatory attacks.’

In theory, this all makes perfect sense but it remains the wrong debate. Iran’s ambitions for regional dominance, which would be given an almighty boost by the possession of the world’s most lethal weapons, need to be curtailed sooner rather than later. For in international relations, as in life, prevention is always better than cure. But with the West so lethally divided about the current threat, it seems the cure, when it comes, will prove to be a painful one.

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Spelling out failure

09 September, 2008

Can this really be true? John Wells, a leading academic at University College London and President of the Spelling Society has recommended that schools ditch traditional spelling rules because they hold up children in class. In a report in The Times yesterday, he said:

‘The teaching of literacy in schools is a major worry. It seems highly likely that one of the reasons Britain and other English-speaking countries have problems with literacy is because of our spelling and the burden it places on children.’

Professor Wells believes that it is burdensome to fret about such things as the apostrophe. So this is what he suggests instead: ‘Instead of an apostrophe we could just leave it out (it’s could become its) or leave a space (so we’ll would become we ll). Have we really nothing better to do with our lives than fret about the apostrophe?’

He goes on: ‘Let’s allow people greater freedom to spell logically. It’s time to remove the fetish that says that correct spelling is a principal (principle?) mark of being educated. Text messaging, e-mail and internet chat rooms are showing us the way forward for English.’

Well, of course a mastery of apostrophes and commas is only part of what it is to be an educated, literate member of the human race. No one would suggest that to misspell words automatically makes you an uncivilized, ill educated philistine. But that is no argument for tearing up the rule book altogether. Spelling is hard to master, perhaps as difficult as learning Chaucer. But this provides all the more reason to persist with it. The alternative is an ‘Alice in Wonderland’ mentality where anyone has free rein to spell words according to whichever convention they choose. If we ditch time honoured spelling rules and persist with using mere phonetic equivalents, you create a recipe for anarchy.

As Elaine Higgleton, editorial director for Collins Language, comments on the suggestion of teaching spelling via phonetics: “Would we continue spelling the word think with a ‘th’ because that is how some of us pronounce it, or would it be spelled ‘fink’ as it is in the East End of London or ‘tink’ as in Ireland?”

A generation reared on text messaging and internet chat rooms as a substitute for reading are adopting increasingly sloppy habits in speech and writing. And now they have an ally for their linguistic slovenliness in the form of an absurdly titled President of the Spelling Society who wants – to abolish correct spelling. Hardly gr8 i fink.

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McCain sets out his credentials

05 September, 2008

Last night John McCain gave an impressive performance at the Republican Convention and probably did enough to win over his doubters, including Republican ones. He eschewed Obama’s soaring oratory and electrifying rhetorical flourishes. Instead he adopted a sober and measured tone, in contrast to much of the vitriol heaped by the Republicans on their opponents in the last 8 years.

He talked of the imperative need to lower taxes for America’s families and limit the government’s reach in domestic affairs. He condemned the Democrats’ plans to widen state involvement in education and health which would impose an additional tax burden on Americans. He turned on the ‘big spending, do nothing, me first, country second Washington crowd’ promising them that change was coming. In keeping with his maverick instincts, he railed against the corruption in his own party with his promise to ‘restore the pride and principles of his party.’ Given his history of challenging pork barrel spending, this sounded like a realistic aspiration.

Like Obama he pledged to end American dependence on foreign oil by building nuclear power stations, drilling offshore (Obama opposed this) and investing in new sources of energy. But it was in foreign policy that McCain sounded statesmanlike, dignified and confident. He warned of the grave Soviet threat hanging over Eastern Europe and the Baltic states and of Iran’s state sponsorship of terror. These nations barely figured in the Obama acceptance speech. But while acknowledging that he would defend American interests abroad and continue the fight against Al Qaeda, he said that he hated war and would use all the means at his disposal to prevent it. Perhaps only a man who has seen the ugly side of war, and worn its scars, can utter such views sincerely. He also pledged to work with other parties in a bipartisan manner.

All along McCain has shrewdly distanced himself from the Bush White House and in last night's speech, he mentioned the current President only once. This will have enhanced his image as a lone maverick while his tactical gamble in choosing an outsider, Sarah Palin, as a running mate appears to be paying rich dividends.

For some time, many Republicans have come to view McCain as a political loose cannon, just as some Democrats have been unconvinced by brand Obama. Perhaps last night McCain did enough to dispel the doubters and set himself on course for the most powerful office on earth.

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Piecemeal gestures cannot save the economy – or this government

3 September, 2008

The government thinks that offering piecemeal gestures will help end the crisis in the housing market. They are wrong. Take the £175,000 stamp duty ‘holiday’ for first time buyers. At best, this will save people up to £1750 when they purchase the property (at or below a £175,000 value) but it will do nothing to alleviate the far greater costs of obtaining a mortgage. With banks demanding high deposits, many 1st time buyers are still priced out of the market. A saving of 1% is hardly going to help cash strapped first time buyers.

Then consider the proposal to offer free 5 year loans to cover 30% of the value of a new property, again aimed at first time buyers. It scarcely seems sensible to encourage people into a market that is heading for further inexorable falls in value in the next 12 months. In the short term, the measure will simply increase the number of households that find themselves in negative equity.

No, the problems in the housing market, caused ultimately by the greed and reckless decisions of bankers, exacerbated by an era of cheap money and easy credit, and fuelled by the ‘buy now, pay later’ society, cannot be alleviated by short term, decisions made by an increasingly desperate government. The housing market will recover once house prices have reached a ‘sensible’ multiple of average earnings but not, it seems, before then.

This government lurches incompetently from one half baked initiative to another. How else can one describe the absurd intervention by Alistair Darling last week in which he stated that Britain faced its worst economic crisis for 60 years? Whether or not he was right, his off the cuff remark caused already declining confidence in the pound to plunge yet further. Sterling saw big falls against a whole range of currencies, in particular the dollar and the euro. If this big, bad government wanted to make a fragile economic situation worse, Mr Darling’s crass statement was the way to do it.

Ministers acted with the same thoughtlessness during the summer break. Rumours began to circulate that homebuyers would be given a holiday on stamp duty, though no clarification was offered one way or the other. The possibility was merely dangled in front of the nation, much like last year’s Autumn election that never was. Naturally the effect of such dithering and uncertainty was to turn the housing market from a state of hesitancy into one of near paralysis, with housebuyers reluctant to complete deals that could cost them thousands of pounds unnecessarily. This was, quite simply, an act of staggering political incompetence.

If Mr. Brown had really wanted to kickstart the economy, he could have announced a major purge in public spending, allowing major tax cuts to be made for families, businesses and investors. Such a move might have brought added inflationary pressures but it could also have kickstarted our ailing economy. But then our statist, intervention obsessed, tax and spend Prime Minister who has done so much to penalize hard working people for the last 11 years, was hardly about to relinquish the habits of a lifetime. Instead we face a near certain recession, the only member of the G7 (according to the OECD) to face such a predicament. All Gordon Brown has done is tinker round the edges of this economic catastrophe.

Given the harsh economic climate to come, the Prime Minister’s personal ineptitude and the serial incompetence at the heart of government, nothing can now save New Labour. A government that tackles crises by employing short term gestures instead of intelligent strategy cannot hope to save its own skin. That is why Brown and co. face almost certain wipeout at the next election. They deserve no better.

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Extremism in British mosques

02 September, 2008

In January 2007 Dispatches made an undercover documentary showing how leading British mosques were actively promoting extremist Islamic ideology. Their punishment for this ‘thought crime’ was to be investigated by the West Midlands police for disrupting ‘community cohesion’. It was a grotesque decision, and one overturned quite rightly some months ago. The investigators were promised that mosques would clean up their act and prevent radical preachers from inciting violence against non Muslims. Last night, in a follow up documentary, Dispatches revealed that this promise was a sham. Extremism was very much alive and well, flourishing thanks to Saudi Arabian money.

One female preacher in the Regent’s Park Mosque looked forward to the establishment of an Islamic state in Britain, ruled by Sharia law. In such a state, any Muslim found guilty of adultery would be stoned to death. She promised that any Muslims who left their faith would be put to death while homosexuals would be thrown off mountain tops. Her diatribes continued with a rant against the teachings of non Muslim faiths and against ‘vile’ unbelievers. All in all, it was a message of extreme intolerance, racism, misogyny and homophobia. Bear in mind that this appalling diatribe was being heard in the most respected mosque in the country, an institution repeatedly feted by world leaders.

As in last year’s documentary, the mosque’s bookshop continued to sell DVDs and books promoting hatred and sedition. In one DVD, a preacher is shown attacking the idea that women should be independent of men, arguing that men should dominate them as a result. Another preacher attacked unbelievers as ‘evil’ and condemned Jews for their ‘filthy and disgusting’ beliefs. Others proclaimed jihad as the supreme duty of Muslims worldwide.

The team also investigated the King Fahad academy in London, a school run by the Saudi embassy. As a former teacher at the school revealed, the school had been distributing Saudi text books that were preaching the Wahhabi message. These books disseminated the repugnant message that other religions were useless and that Jews were ‘monkeys and pigs.’

Finally, the documentary investigated the UK headquarters of ‘The Muslim World League,’ an Islamic NGO founded in 1962. Despite claiming that it promoted tolerance and mutual understanding, this organization was openly distributing books that promoted jihad, segregation and violent Sharia law punishments.

What these cases have in common is the insidious influence of the Saudi religious establishment and its official ideology, Wahhabism. Wahhabis believe that Muslims worldwide should hate and disown the ‘kuffar’ (unbelievers) and reject their teachings. Its imams and muftis call Jews ‘pigs and dogs.’ The Saudis themselves admit they have spent tens of billions of dollars disseminating Wahhabi teachings, leading to the creation of thousands of mosques, schools and centres around the world. As security expert Anthony Glees pointed out, we would be paying for this Saudi financed extremism for a long time to come. Yet still the Saudis remain out trusted ally in the war on terror, a war that their radical, state supported ideology has helped to create.

So what does all this reveal? On the one hand, radicalism is clearly not confined to 'extreme' mosques. If a respected institution like the Regent’s Park Mosque can host extremist radicals, then any mosque can. More to the point, the government’s claim to be tackling extremism must be seriously questioned. They have done little to stop Islamist preachers entering the UK. Instead they produce half baked and half hearted initiatives for combating extremism. Still, let’s be thankful for one thing. At least no do-gooding liberal crusader has accused Channel 4 of Islamophobia…for now.

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