Category Archives: UK

Theresa May can now play Elizabeth I in a new buccaneering age of Drake

“There must be a beginning of any great matter, but the continuing unto the end, until it be thoroughly finished, yields true glory.”

–Francis Drake, aboard the Golden Hind, to Sir Francis Walsingham, off Cape Sagres, Portugal, 1587

Well, she did it, and about time too. Tempted by polls showing her fathoms ahead of Jeremy Corbyn–(surely the picture next to the definition of ‘gormless’ in the dictionary)—Mrs. May took the plunge to rid herself of an uncertain majority. Whatever the exact outcome of the June election, the results are already in; she will be strategically successful in doing so.

Gone is the implied threat of political blackmail and revenge by disgruntled former Cabinet Ministers, such as the jack-of-all-trades-master-of-none George Osborne. Gone also is the (highly unlikely) fear that the disjointed opposition might somehow join forces to thwart her: unelected left-leaning Lords, the forgettable Lib Dem leader (feverishly dreaming that Brexit never happened), economically illiterate Scottish nationalists, and the remnant of the grown-up Labour Party (suffering mightily under their clueless leader).

While it was always highly unlikely this rabble could bring themselves to agree on an ice cream flavour, let alone a common policy, they did pose a more tangible threat in terms of vetoing the ultimate outcome of the Brexit negotiations, peeling away enough soft Tory support then disappointed that the talks did not yield a soft Brexit.

With a majority of 100 or more (and it will be higher), Mrs. May skilfully proves she is taking no domestic political chances with the Brexit negotiations. This must signal the Prime Minister means precisely what she says; the Brexit outcome will be hard (or as the cabinet prefer to call it ‘clean’), with Britain exiting the Single Market, taking back control of its immigration policy, leaving the European Court of Justice behind, and striking out on its own into the exciting new multipolar world we find ourselves in.

By calling the election, the only faint domestic threat to all this (cue the vapours yesterday morn of the left-leaning papers) –of minority Tory Remainers and the disgruntled allying with the Lords, the Lib Dems and Labour–ceases to be a possibility. For this tactical political reason alone, the election is worth calling.

But there is a broader, strategic and for more important horizon that the Prime Minister’s boldness has made possible, nothing less than the UK inaugurating a new Drakean age of prosperity and sovereignty. For the very motley crew that stands in the way of a hard Brexit also would have posed the chief political challenge to realising the policies that need to be put in place for Britain to dynamically thrust itself forward into this new era.

Ignoring the laughably futile European efforts at supposedly increasing defence spending (waiting for Berlin to spend more is like Waiting for Godot), Britain can now go ahead and do so knowing that this will surely mean ever closer ties with the US, still the most powerful country in the world by a long way. This is the ultimate strategic prize. While Brussels, unelected and without an army, can lecture people around the world with nothing to back such annoying bromides up with, London instead will have a seat at the decision-making table over every major strategic issue. And sovereignty, a say in how the world is run and control over this country, is surely what a majority of the British people voted for in the EU referendum.

Even more importantly, without negotiating free trade deals glacially over decades (only then to have Wallonia almost on its own scupper the recent EU-Canada trade pact), Britain can act to its Drakean advantage. There is an easy 10 years out litmus test for whether Brexit was worth it, a yardstick that has absolutely nothing to do whatever final deal is hammered out with the gnomes of Europe.

If in 10 years’ time if Britain has functioning free trade deals with the major Commonwealth countries (Canada, Australia, New Zealand), the US, India, and China, these closer economic links with the parts of the world actually growing (unlike the EU which over time is not) will catapult Britain into the first rank of powers, in terms of influence, prosperity and its future. Not doing so will mean Little England failure. That is the real political risk ahead, and also the vast geopolitical reward.

The usual suspects whining about not being handed a soft Brexit would fight the whole of this Drakean programme tooth and nail. Given the rickety present majority, they might even derail part of the agenda, and would surely slow it down. This must not be allowed to happen as now is the time for decisive measures. What Mrs. May has done is clear away the plotters who might have done her in, and that is admirable. But now she must revel in this chance, take hold of it with both hands, and let no power or persuasion deter her from her coming task of doing nothing less than ushering in a new Drakean age.

Published in City AM London, April 20, 2017.

 

 

Unilever and the confused priorities of the Davos elite

If Angela Merkel epitomises the overrated in terms of international statesmanship, her equal in corporate terms must be Paul Polman of Unilever. As is true with the German Chancellor, it us unfathomable to me that the leader of a major corporation with a record this hapless should be lionised. For the larger point is that both are symbols of a world that has forgotten that, in healthy societies, recognition must coincide with a record of real accomplishment.

In Polman’s case, his peculiar talent is to perfectly talk the talk of Davos Man, the globe elite who–despite foreign policy disasters in Iraq and economically running the world into a ditch post-Lehman—somehow still thinks they are the repository of global governance wisdom. Since taking over Unilever in 2009, Polman specifically has talked sonorously about water conservation and the dangers of global warming, decreasing the Anglo-Dutch company’s carbon footprint, using more sustainable materials in making the Dove soap and Lipton tea that are two of Unilever’s core brands, and promoting global health.

All of these are worthy causes, and if I were looking for the new head of Oxfam I might well consider Polman for the job. The problem is that a fixation on these societal goods does not necessarily dovetail with a passionate commitment for maximising shareholder value that is the ultimate moral duty of any company chief.

In line with the general philosophical confusion of much of the Wilsonian centre-left, Polman ignores the fact that, in the real world, trade-offs amongst positive goals are merely a fact of life. When asked how much time he spends on specific Unilever business compared with cajoling politicians around the world to sign onto the Davos wish list, Polman tellingly has replied, ‘To me it is the same. I don’t separate that.’

But of course it is not the same. By refusing to prioritise between maximising shareholder value and saving the world, Polman is likely to do neither. For a man who loves everything loves nothing and helps nothing. Life is about priorities, about making choices, not ducking them.

Of course, setting the bar so morally high also leaves you open to endless charges of hypocrisy. In Unilever’s case its global reach has, under Polman’s watch, led it to reaching a settlement over allegations of mercury poisoning in India, while being accused of monopoly practices in South Africa, being slow to halt sexual harassment on its tea plantation in Kenya, and poor labour practices in Vietnam. While Unilever has moved to correct the abuses, in practical terms the company can never be as saintly as Polman’s rhetoric.

But it is Polman’s business record that is perhaps the greatest cause of concern, flowing as it does from his confused all-things-to-all-men Davos philosophy. Banishing reporting of quarterly returns (I would too if my record were as poor as his), Polman urges the world to take the long view. Let us take him at his word.

In the 12 months to 15 February 2017, just before Kraft Heinz announced a $143 billion takeover bid, Unilever’s share price rose some 10 percent. The wider FTSE 100, however, soared by some 28%. In the fourth quarter of 2016, Unilever’s sales missed expectations globally, while falling 2.3 percent in Europe, with many forecasters expecting even worse times ahead in 2017. Defending these poor recent results, Polman blamed both the ‘shock’ of Brexit, wherein the pound fell by 20% against both the euro and the dollar. He also pointed to Prime Minister Modi’s ‘surprise’ anti-corruption campaign, where the Indian government withdrew 500 and 1000 rupee notes, which undercut Unilever’s business there.

But, as regular readers of this column well know, neither of these events should have been surprising (as they have not been to me), and the possibility of both should at a minimum have been planned for. Instead of doing this, the lure of attending another development conference with the great and the good seems to have been to much of a temptation for Polman. For he has certainly taken his eye off the analytical ball.

There only so many hours in the day. And where you put your time in life, there also shall be your treasure. Polman–mindlessly lauded by the city elite—has made it unambiguously clear where his priorities lie. He has straightforwardly said, ‘I am really more interested in development.’ There is nothing at all wrong with this. But it is not overmuch to point out that a company as important as Unilever (with 168,000 employees in 2016) deserves a full time chief executive.

In the wake of the crash caused by many of his Davos colleagues, Polman has earnestly called for ‘a better form of capitalism.’ My gentle suggestion is that Unilever deserves a better form of capitalist.

Published in City AM, March 20, 2017

The UK will get a US free trade deal–but Trump will drive a hard bargain

By Dr. John C. Hulsman and James Frayne

Back in 1783, when Britain signed a trade deal with the fledgling United States as part of the Treaty of Paris which concluded the revolutionary war, the world-class British delegation was infinitely more experienced and better prepared than their novice American counterparts.

Sadly, this is not the case today. Fast forward 234 years and Britain’s negotiators will be walking into the room to do a new and even more important trade deal with Washington with even less experience than the Americans had at the end of the eighteenth century.

Given Britain is about to enter into an era-defining commercial agreement with the world’s leading power, it is extraordinary that the process is not already a central part of the national conversation. For the agreement will have a major impact not only on the national finances but also on the structure of the economy and the key sectors within it. We believe that an agreement will be for the good for both countries – particularly the UK – but some turbulence is inevitable.

It might be years until pen is put to paper. But the contours of the deal will likely be apparent in the coming year. President Trump will arrive here in October as a recognised deal-maker and as someone with historic affection for these islands. Things might move very quickly, for there is certainly great enthusiasm for such a deal within the ruling Republican Party.

It is hard from abroad to fathom just how in charge the Republicans presently are—they control the presidency, (soon) the Supreme Court, the House of Representatives and the Senate, the governorships and the localities–and also how keen they are to reach a deal with the UK. The Republican party has long had major elements deeply suspicious of the EU, and closely tied at the same time to the Special Relationship.

As such, the US-UK trade deal is a no brainer geopolitically for much of the party. When the hard commercial fact is added that the US is the largest source of foreign direct investment (FDI) to Britain and vice versa, the deal becomes the easiest of sells, even in a newly protectionist America.

Contrary to the fearmongering nonsense of David Cameron, George Osborne, and the last days of the Obama administration, Britain will not be at the back of the queue for doing trade deals with America. Instead, as the president has heavily implied, it will be at the front. He is backed in this by House Speaker Paul Ryan, and Senate Majority Leader Mitch McConnell, both strong Anglophiles.

But it’ll be the content that defines the agreement, which could have a significant impact on specific parts of the economy. For Britain, the sectors likely to be most affected are those in which US firms are the strongest and where US firms have the most to gain because of the size of the UK market.

Financial services is the most obvious area. The UK finance market is vast and already well known to American firms. Other areas likely to be impacted include healthcare and pharmaceuticals, aerospace, tech, agriculture and food production, and of course consumer goods.

In the case of financial services, there has been speculation in the US media that any deal might require the UK to basically accept the US regulatory structure wholesale. There have also been suggestions that the NHS might need to be opened up to US firms and that food standards might need to be changed to accommodate US practices.

Such reports need to be treated with healthy scepticism: scaremongering by opponents of Brexit and opponents of free trade will deliberately highlight any potential negatives. Equally, major (and positive) changes to the UK economy will surely follow from the deal as British consumers enjoy cheaper goods and firms are better able to compete on their merits in the enormous American market.

The British Government will also soon be formulating its view on the best approach for these key sectors. It will be particularly keen to protect the City and the lobby groups of other key industries will pile on the pressure to ensure the Government does not leave them exposed. It will be mindful too of public opinion, above all on sensitive areas like healthcare. Nobody can mess with the NHS.

But let us be honest: while both will gain economically from the arrangement, Britain needs this deal more than the US. We will go into these negotiations as the closest of friends and we will leave as the closest of friends. Without a deal, however, Britain’s economic viability outside the EU will be questioned. With that in mind, US negotiators will drive a hard bargain. As the adage goes, Americans talk like hippies but act like gangsters.

Dr John C Hulsman is senior columnist at City AM, a life member of the Council on Foreign Relations, and president of John C. Hulsman Enterprises. James Frayne is director of public opinion specialists Public First. They are launching a joint research project to examine the impact of a UK-US trade deal.