Category Archives: UK

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.

Mrs. May must be even bolder to make Global Britain a free-trading success

“Fear not, we are of the nature of the lion.”

–Queen Elizabeth I

There was just enough in Theresa May’s speech today to reassure those who campaigned to leave the EU. Crucially, she made clear we are definitely leaving the Single Market and taking control of our borders. She suggested only a great deal would keep us in the Customs Union in some form, a highly unlikely event. Her tone – and such things matter – was forthright and constructive. Blessedly, we all know where she stands.

At one level, all she really did was confirm that we are going to be leaving the EU. But such has been the paranoia amongst eurosceptics about the prospect of some sort of excessive accommodation that just hearing we are going to be leaving will be enough to have Tory backbenchers cheering.

It was a speech long overdue. Having been almost completely silent on the EU as Prime Minister, May had well and truly lost control of the debate. Eurosceptics, dominant in the Tory Party, feared the worst and the media questioned whether she had meaningful plan. As such, despite addressing EU leaders, it was mostly a speech for a domestic audience – designed to assert control over the debate and to reassure Leave voters that she is on their side.

From that perspective, it was a job well done. But it is hard not to come away from the speech thinking that we should be further ahead by this point. When May took over back in the summer, some Leave campaigners were worried that, as a Remain supporter and someone who has spent relatively little time thinking about the future of Britain’s role in the EU and the world, she would not be well placed to help create a new role for Britain.

To be fair, the physical backdrop to the speech called for a “Global Britain”. And there were many points within the speech where she underlined her aspiration for Britain’s global role – not least in a very upbeat, internationally focused introduction. However, by this time in the process it is not good enough to merely speak in generalities, even if the Prime Minister’s impulses are clearly on the mark. It is time to talk about the specific, glittering geopolitical possibilities that can make May’s Global Britain a success.

While all the world is now to be now Britain’s oyster in terms of securing free trade deals, obviously some bilateral arrangements matter more to London than others. Indeed, in the media’s obsession about the terms of negotiations with the EU, a much larger strategic point has been almost entirely missed: the success or failure of Brexit will have far more to do with whether Britain can secure free trade deals with the Commonwealth countries (Australia, New Zealand, Canada), the US, India, and China, than whatever are the specific terms reached with the economic basket case that is the EU. That is where Britain’s Drakean, swashbuckling, energies must lie.

The great news (it is far better than good) is that the May government is pushing on an open door. Australia, New Zealand and critically Donald Trump’s America (once again the Project Fear establishment should never leave their day jobs and attempt to become actual foreign policy analysts) are itching to quickly negotiate and secure trade deals with the UK. As these three countries all have a solid record of growth–certainly compared with a becalmed EU—this is the first step toward Global Britain. But this is just the low-hanging fruit. The medium-term test is whether India and China (probably in that order) can also reach trade agreements with the UK. This is what the May government should actually be worrying about.

There is a further Holy Grail to attain if Brexit is to lead to a new Elizabethan Age: the Global Free Trade Alliance (GFTA). This proposed trading group would be a coalition of genuinely dynamic economies, voluntarily committed to pushing the free trade envelope. A legislative initiative rather than a trade deal, Parliament would offer GFTA members (chosen by neutral numerical criteria relating to their economy’s openness) access to the UK market with no tariffs, quotas, or other trade barriers, on the single condition they offer the same to the UK and the other members of the club. Such a radical move would over time do nothing less than remake both the UK and the world.

May gave a very solid speech which should encourage everyone that believes in a new, global future for Britain. She gave a speech that even five years ago would have been unimaginable. But we are where are and now is the time to think big. We look forward to hearing a detailed vision along these lines in the next few months.

Written with James Frayne and published in City AM London, January 7, 2017