Peter Mandelson is a former UK business secretary and EU trade commissioner.
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Peter Mandelson is a former UK business secretary and EU trade commissioner.
It sounds like the wishful thinking of a television news editor: encounters between politicians and journalists should involve less rudeness and more candour. Perhaps, indeed, the political interview – for decades the mainstay of Newsnight, whose editor Ian Katz expressed these wishes in the Financial Times last week – has already been replaced by social media, a forum for direct debate in which interviewers are redundant.
Despite Russia’s recent underperformance, the size and potential of its economy has made it an attractive prospect for global companies. From German manufacturers to French and Italian luxury brands and British retailers, businesses have been drawn there to trade and invest. For them Russia has been too big to miss.
But today a different view is taking hold: that unless President Vladimir Putin’s attention shifts urgently from political entanglement in his neighbourhood to prioritising his nation’s economic needs, Russia’s disappointing economic performance will become an established trend.
Future investment will depend on perceptions of political risk as well as expected economic returns – and Mr Putin’s apparent readiness to see Russia isolated in an interdependent world has increased this risk.
The longer we have to reflect on it, the more last November’s Third Plenum of the Chinese Communist party emerges as a watershed. It seems increasingly clear that Xi Jinping, the new party chief, is managing to corral support behind a substantial leap forward from the reforms begun 30 years ago by Deng Xaoping. As state and market continue to jostle for pre-eminence in the leadership’s carefully balanced rhetoric, it would appear that when Mr Xi signals left, he means to turn right.
The plenum was characterised by an interesting metaphor. A senior official told China Daily that while three decades of rapid development had dramatically closed the “hardware” gap between China and the developed world – particularly in the coastal areas in the south – it still had a “software” deficit. While the west focuses on ideas like ‘opening up’ as describing what we want from China, the software metaphor tells us a lot about China’s weaknesses and what it needs from the rest of the world.
As the Labour party gathers for its conference in Brighton, its leader, Ed Miliband, faces a more aggressive Conservative party that is getting its act together. David Cameron’s strategists have launched what will be a relentless campaign to persuade voters that, despite all the pain and hardship of the austerity years, “hard-working families” can now enjoy lower income tax and a smaller public deficit with less welfare spending, crime and immigration. Labour’s task is to dispute these claims but, above all, offer better policies in their place.
Mr Miliband has laid important foundations for his campaign. He has recalibrated Labour’s position on public spending, welfare and immigration, aligning his approach with economic reality and popular opinion. He has ensured that Labour’s door remains open to working with the Liberal Democrats, despite the short-sighted attacks made by some in the party. Above all, he has not allowed his party its habitual descent into factional war following election defeat. With the quiescence of the New Labourites he disowned during his leadership campaign, the party has chosen to close ranks behind him.
M y experience has taught me that the hardest thing in politics is to say you have changed your mind. Politicians instinctively hate u-turns as they denote fallibility and, they think, weakness. But reversals can be a sign of strength and courage. I once supported High Speed 2, a proposed rail link from London to the north which the Labour government of which I was a member first put forward. There are no simple options when it comes to transport – but I now fear HS2 could be an expensive mistake.
In any decision of the magnitude of HS2, understanding of the costs and benefits involved will evolve. Politicians should not be afraid to think again about a project whose estimated cost has just risen again by a quarter, to £42.6bn. In 2010, when the then Labour government decided to back HS2, we did so based on the best estimates of what it would involve. But these were almost entirely speculative. The decision was also partly politically driven. In addition to the projected cost, we gave insufficient attention to the massive disruption to many people’s lives construction would bring. Why? Not because we were indifferent but because we believed the national interest required such bold commitment to modernisation.
David Cameron is making three assumptions in seeking to change the basis of Britain’s EU membership and then put this “new settlement” to an in-out referendum. That our partners want Britain in at any price. That they will negotiate a new treaty in which Britain’s demands can be easily accommodated. And that the British government will be able to determine the timetable. All these assumptions are highly questionable.
In Britain, the fate of the coalition government continues to hang on what happens to the economy. The prospect of a sustained recovery is forecast by some. This, it is assumed, will lift the country’s mood and the coalition parties’ poll ratings. Equally, others believe that UK growth won’t be looking much different in a year’s time, notwithstanding the rise in employment. In which case the gossip of last summer that George Osborne, UK chancellor will be reshuffled in a straight swap with William Hague at the Foreign Office could become reality. While if things continue to look sticky for Nick Clegg you could see the pressure mounting on him to stand aside for Vince Cable.
Here’s how to start an argument in Britain. Suggest that far from being inherently flawed, the euro is fixable and could succeed in the long run. Suggest Britain should even consider joining it at some point. This last idea is a proposition with which the majority of British people disagree, strongly. I know this because the think tank Policy Network has today published new polling that tells you that eight in ten British people believe Britain should never join the euro, in any circumstances, even if it costs Britain influence in Europe. I am going respectfully to disagree.
There is a clear sense that collectively we have spent 20 years building a system that can’t really last. Financial market volatility, personal and government debt and rising inequality are not the canaries in the global economic coal mine. They are the coal mine itself.
This week the Institute of Public Policy Research, a British think tank, is publishing the report of a year-long review of globalisation, which I have led. It argues that, like our model of capitalism itself, globalisation is not working in the way it can and should in progressive societies. It also makes the case that globalisation remains one of the best tools we have to achieve those progressive goals at the global level as long as we have the right policies to guide it.
Capitalism’s ability to adapt and reinvent itself is its greatest strength. The same is true of globalisation. There are few who would argue that the status quo ante of the last decade is tenable. Preserving the benefits that come with open global markets for ideas, trade and investment means acting now to reduce the risk in those markets and better share the benefits they bring to our own economies. The IPPR’s case is absolutely right: the complicated reality is that for global prosperity, like capitalism, globalisation is both the problem and the solution. Globalisation is dead. Long live globalisation.
This is not the moment to abandon seven decades of building union in Europe. It undoubtedly remains a huge challenge to complete the project. In a world that is fast tilting away from its postwar Atlantic centre of gravity, Europe needs more than ever to come together and maximise its competitive strength and market power.
The basic logic and European belief in union will prevail. But it is going to be a rocky and hard fought road and advocates of greater union will need to be more honest with the public, and more sure of their arguments, than they have been in the past.
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