Monthly Archives: November 2015

Leaked letter: Rudd admits 25% green energy undershoot, misled Parliament

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A letter from Energy Secretary Amber Rudd leaked to The Ecologist shows that the UK is on track to miss its legally binding obligation to achieve strict EU targets on renewable energy by an estimated 50TWh (terawatt hours), or 3.5% of its 15% obligation – that is a shortfall of almost 25%.

This stands in stark contrast to her public position, including a statement to Parliament on 22nd June in which she said: “We are on course to achieve this objective. Renewables already make up almost 20% of our electricity generation and there is a strong pipeline to deliver the rest.”

As Rudd warns, this impending failure puts the UK at a double risk – of legal action taken in the UK, which the government would probably lose; and of enormous fines imposed by the European Court of Justice:

“The absence of a credible plan to meet the target carries the risk of successful judicial review, and failing to meet the overall target in 2020 could lead to on-going fines imposed by the EU Court of Justice (which could take into account avoided costs) until the UK reaches the target level.”

But by misleading the House of Commons in her statement, she is now certain to have a more immediate problem on her hands – demands for her resignation and a full-blown Parliamentary investigation.

Her first test will come tomorrow before the Energy and Climate Change Committee tomorrow (Tuesday 10th November) when its members grill her on her department’s annual report and accounts.

The grisly detail of Rudd’s deception

The letter, to Cabinet colleagues Philip Hammond (Foreign Secretary), Oliver Letwin (Cabinet Office), Greg Hands (Chief Secretary to the Treasury) and Patrick McLoughlin (Transport Secretary) begins by setting out the scale of what the UK has to achieve:

“The target sets a legally binding obligation on HMG to deliver 15% of the UK’s final energy consumption across electricity, heat and transport from renewable sources in 2020, with a binding sub-target for 10% of transport fuels to be from renewable sources in 2020.

“Beyond a flat rate of renewables for each member state, the effort share for meeting the EU-wide 20% target was based on GDP. As a result of this, and the fact that the UK started from a very low base of renewables deployment, our target requires amongst the most significant annual growth in renewables deployment (16% average annual growth from 2011 to 2020) of any member state.”

And although the UK’s current trajectory is on course for a massive miss of 32-66 TWh (terawatt hours) per year by 2020, with a central estimate of a 50TWh shortfall, the UK’s public position is that there is no problem meeting the target. As she told Parliament on 22nd June 2015 – ironically in her statement termination subsidies for onshore wind:

“The renewable electricity programme aims to deliver at least 30% of the UK’s electricity demand from renewables by 2020. We are on course to achieve this objective. Renewables already make up almost 20% of our electricity generation and there is a strong pipeline to deliver the rest.”

But she sets out the truth in her leaked letter – also proving that in addition to misleading Parliament in June, she knew she was lying, if not then, subsequently, without making any correction. Until 2017 / 2018 the UK will be achieving its milestones, she writes, but after that

“The trajectory then increases substantially, and currently leads to a shortfall against the target in 2020 of around 50 TWh (with a range of 32 – 67TWh) or 3.5% points (with a range of 2.1 – 4.5% points) in our internal central forecasts (which are not public). Publically we are clear that the UK continues to make progress to meet the target.”

The cuts that are destroying a once booming British industry

Since its election to power in May 2015, the Conservative government has unleashed an astonishing series of attacks on the UK’s renewable energy sector which has included:

The government’s claim is that this has been motivated by the need to save money allocated under the ‘Levy Control Framework’ which allocates funds for renewable energy, however the depth and extent of the cuts betrays a strong ideological agenda to destroy the UK renewables industry.

Following her re-election in May, Rudd promised: “I want to unleash a new solar revolution – we have a million people living under roofs with solar panels and that number needs to increase.” However in office she has done the precise reverse. This letter now shows the desperate position those cuts have put the UK into.

Rudd’s plan to meet target without new wind and solar

The first element in Rudd’s plan to meet the UK’s target is by “Maintaining and improving existing policy performance towards the target”, she writes. “This would require us:

  • “to maintain our commitment to achieving at least 30% of electricity generation from renewables;
  • “to meet the 10% sub-target for renewable fuels in transport;
  • “and to continue support for the deployment of new renewable heating installations after the current funding settlement ends in 2015/16.”

Spot the lack of mention of anything to do with new wind and solar power? Her plan is based entirely on other means of achieving the target – even though wind is by far the lowest cost form of renewable energy, and solar is likely to become cheaper by 2020 with continued support to the point where it competes directly against fossil fuel generation.

The renewable heat incentive alone, Rudd writes, could deliver 20TWh (with a range of 15 – 32TWh), leaving a ‘central shortfall’ of around 30TWh. However she adds that “These forecasts are subject to significant uncertainty as the market for renewable heat is at an early stage and as a result of market and technical performance factors relating to renewable electricity.”

The next element is “Additional UK renewables deployment”, she writes. “Officials across Whitehall are reviewing policy options open to us to address this c.30TWh shortfall through additional deployment of renewables in heat, electricity and transport.”

Current levels of ‘renewable fuels’ derived from crops are already set to be doubled between 2017 and 2020, adding around 2 pence per litre on pump prices, but Rudd suggests that a further increase would be possible.

“An additional 12.9TWh or 0.9% points could theoretically be delivered above the sub target, at an estimated cost of £850m/year (adding a further 2.1 pence per litre on pump prices).”

But she warns that the move would be counter-productive in climate terms: “Due to limited availability of sustainable feedstocks, supply beyond the sub target appears likely to increase carbon emissions by increasing deforestation through new demand for agricultural land.”

There’s also potential to increase additional biomethane production produced from organic wastes and some specially grown crops, however two thirds of the 6TWh this could produce have already been counted:

“The highest potential for additional renewable heat is from bio-methane injection into the gas grid, which could deliver up to 6TWh (or 0.4% points) by 2020. However a significant proportion of this (up to 4TWh) is already included in the proposals for continuing support for renewable heat post 2015/16.”

The ‘third way’ – buy it in from Norway

Rudd’s third step is certain to cause huge anger in the UK’s renewable energy industry as it involves simply buying it in from abroad, specifically from Norway’s hydroelectric dams. But it comes with one big problem – the required electrical connection to Norway won’t be ready on time:

“Additional deployment of electricity focuses on importing renewable electricity from Norway via the planned interconnector. This could deliver a maximum of 10TWh, depending on market forces. However, my officials do not expect the interconnector to be in operation until late 2021 at the earliest, and therefore would not strictly help the UK to reach its 2020 target.”

But that’s not the only problem: if the renewable power is generated in Norway then how can it be made to count as British just be importing it?

“Should this change, we believe that an intergovernmental agreement would be necessary, under which the UK would be required to make payment(s) to the Norwegian government (on top of that which would be paid for the electricity supplied through normal market mechanisms).”

Which is all very well, but it will cost the Uk money that should be going into our own renewables programme., Moreover there’s no guarantee that the arrangement would be considered valid by the European Commission or by the European Court.

So why not just buy in ‘statistical credits’ from other countries?

Nonetheless Rudd goers on to consider further “Use of co-operation mechanisms” that would allow the UK to finance renewable energy projects in other EU states.

Which raises the question: when the UK has Europe’s richest wind power resource, why would we want to do that? In the process exporting the jobs, expertise and industrial investment to other countries?

“In the absence of other measures to increase renewable energy consumption in the UK, a strategy to meet the target (and to ensure that the target is met in the most cost-effective way) would need to involve the UK purchasing renewables deployment later in the decade from other EU Member States which have over-achieved their target.

“There are two ways to do this The first would see HMG directly support a specific renewables project in another EU or European Economic Area Member State or third country, with an agreed proportion of the renewable energy generated being transmitted to the EU where the project occurs in a third country.”

And another problem then strikes: “However, at this stage there are no projects we have identified with the potential to deploy in the right time frames.” Which leads Rudd to attempt to invent a whole new market mechanism in ‘statistical credits’ for renewable energy from other EU countries.

“The alternative is to reach an agreement with an EU or EEA Member State, which is likely to over-achieve on its target, to buy ‘statistical credits’ from it in 2020. The market for such transactions does not yet exist, and there is a low likelihood that sufficient credits will be available to meet the total UK shortfall of 50TWh.”

Just one small problem there: there is currently no such thing as a ‘statistical credit’ that the Commission or the European Court would recognise. In addition, adds Rudd,

“We believe there is a medium – low likelihood that sufficient credits will be available to meet a shortfall of 30TWh. Costs are, however, also highly uncertain. Nevertheless, trading has the potential to make a cost effective contribution towards meeting the target alongside a package of domestic action.”

Next step – try to win over other EU states

Which makes it all the more important to get other EU states on side. Not that the time is propitious – just as UK Prime Minister David Cameron is trying to win concessions from them on a host of other issues.

“In tandem with this emerging strategy, officials will seek to build a consensus with other EU Member States which we believe to be in a similar position to the UK, in particular in relation to their renewables target but also to other 2020 targets for greenhouse gas emissions or energy efficiency. This may allow us to negotiate some flexibility in meeting the target.”

The other EU countries Rudd refers to include Germany, France, Poland, Spain, the Netherlands and Ireland who are also “currently off track to meet the target to varying degrees.”

However Rudd clearly has little confidence that these negotiations will be fruitful: “entrenched positions in Brussels and the need to defend broader HMG policy objectives mean that we cannot rely on this to deliver anything to significantly improve UK progress against the target.”

Nor is there ‘strength in numbers’ with other EU target-missers: “Whilst it may be tempting from a UK perspective to take comfort from this list, it should be noted that Germany in particular sees the target as a cornerstone of the EU’s climate agenda and has a strong domestic policy framework in place which may well allow it to make up any shortfall.

“In addition, the failure of other Member States to meet their target would not provide the UK with a formal defence in legal proceedings.”

Transport Minister warns – biofuels costly, unsustainable

In another problem for Amber Rudd’s plan Andrew Jones, minister at the Transport Department in charge of environment and innovation, wrote to Amber Rudd in a second leaked letter, warning against further increases in biofuel use in transport on cost, food security and ecological grounds:

“I concur with you, however, that meeting the 10% sub-target for renewable energy in 2020 is challenging. It requires a doubling of current biofuel inclusion rates right up to the limits allowed for by fuel standards in regular petrol and diesel in just a few years, and it will also require great care to secure sustainable sources of biomass supply and avoid consumer opposition …

“I should highlight that I do not consider it appropriate to go beyond the transport sub target. As you point out, we understand that demand at such levels appears likely to cause deforestation through new demand for agricultural land, and it could also increase food as well as fuel prices.

“This is why the UK Government argued strongly for the introduction of recently adopted measures to limit food based biofuels at EU level. As a consequence, environmental and social NGOs would be expected to campaign strongly against it.

“I believe such campaigning would be likely to win public support, not least given the estimated total increase of around 3 pence per litre on fuel costs that could result.”

Between a rock and a hard place

This all leaves Amber Rudd in an increasingly untenable position. First, she has effectively admitted to having deceived Parliament. That’s something she will surely struggle to justify to the Energy and Climate Change Committee tomorrow.

Second, she has revealed the disastrous outcome of her policy to destroy the UK’s renewable energy industry. The fact that the UK is seriously considering buying in actual power and non-existent ‘statistical credits’ for renewable energy from other European countries also speaks volumes for her policy failure.

As for the idea of supporting renewable energy projects abroad instead of here in the UK, it’s not hard to imagine how that will go down with the UK’s renewable industry. The solar industry alone is set to lose 27,000 jobs as a result of cuts to solar power subsidies.

And her idea to increase the volume of biofuels in petrol and diesel has rightly been shot out of the water by transport minister Andrew Jones.

There is of course one eminently sensible and achievable solution – to restore sustainable levels of support for wind and solar energy and roll it out in bulk for 2020 at ever diminishing cost.

Rudd, clearly, has lost all credibity at this stage, both politically and with the renewable energy industry that ultimately has to deliver the UK’s targets. The obvious choice for Cameron is to bring back Greg Barker, who as an MP was a respected energy minister from 2010 to 2014, and remains honorary president of the British Photovoltaic Association. He now sits in the House of Lords.

 

 

Oliver Tickell edits The Ecologist.

 

Jeremy Corbyn is right to reject Trident

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Dear Jeremy,

As a former operator of British nuclear weapons, I support your rejection of Trident replacement.

I write as a retired Royal Navy Commander. I have served my country in the crew of a Buccaneer nuclear strike aircraft with a target in Russia, and subsequently on Sea King anti-submarine helicopters equipped with nuclear depth-bombs.

Here are my reasons, in response to some of the pro-nuclear advocates’ arguments.

‘Britain cannot afford to risk its national security, lose credibility amongst its allies, and leave France as the sole European nuclear power.’

The Government, Ministry of Defence, RN and public face a reality check regarding the defence budget.

Respected commentators are expressing growing concern about the mismatch between ambition and austerity; and Trident replacement is set to be the single-largest procurement programme of the next decade.

The Strategic Defence and Security Review should expose how vulnerable it is, especially when placed alongside the Government commitment to complete both super-carriers, and equip and keep operational one of them. As RUSI’s Malcolm Chalmers observed in his recent report Mind The Gap, the constraints “will make the exercise of a clear-headed strategic intellect vital to the management of defence.”

Yet the late Sir Michael Quinlan admitted to Lord Hennessy: “Every British government has needed to find intellectual clothing for what has always been a gut decision never to allow France to be the sole European nuclear power.”

When weighed against the gravity of the implications, how rational and responsible is this? Besides, was not this decision rendered hollow once the ‘independent British deterrent’ came to depend upon a US-leased missile system, US software in the fire control system, US targeting data and satellite communications? This trumps any purile ‘Little Englander’ political posturing about the French.

US officials have warned that if Britain asks the US to provide a replacement system for Trident, it will become “a nuclear power and nothing else.” So would it not be wiser to turn the current defence budget crisis to advantage, and exploit the opportunity cost to provide a far more tangible, useful and credible key defence diplomacy and conventional deterrence role?

The US and UK would not to have to sustain the fiction of UK nuclear independence; and the UK government would be seen to have truly enhanced its special relationship as closest US ally, rather than nuclear vassal.

‘Britain’s ultimate security depends upon an aggressor being in no doubt that retaliation will be assured and catastrophic to their country in general and their leadership in particular.’

As for this macho ritual ‘nuclear test’ of British political leadership, the reality is that no Prime Minister would have to ‘press the button’. That dirty work is delegated to the Commanding Officer of the deployed Trident submarine. And back when I was in a nuclear crew of a Buccaneer strike jet or Sea King anti-submarine helicopter, we were given that dreadful, suicidal responsibility.

The current UK political leadership’s threat to use UK Trident therefore requires the four submarine crews to be prepared to commit nuclear terrorism, risking them being branded as guilty of the Nazi defence against war crimes.

Furthermore, nuclear deterrence is a disingenuous doctrine, because it is militarily irrational and not credible, for reasons set out in my book Security Without Nuclear Deterrence.

‘Since 1945 nuclear deterrence has prevented war and provided stability between the major powers.’

The Soviet motive in occupying Eastern Europe was to create a defensive buffer zone and ensure that Germany could never threaten them again. Soviet archives show that NATO’s conventional capability and soft power were seen as far more significant than its nuclear posture.

Nuclear deterrence meant that nuclear war was avoided by luck. We have come perilously close to nuclear war on several occasions:

  • Cuban missile crisis 1962;
  • Exercise Able Archer miscalculation 1983;
  • Russian misidentification of a Norwegian meteorological research rocket 1995.

Also, it prolonged and intensified the Cold War.

As for stability, the reality is that nuclear deterrence stimulates arms racing – and some 1,500 US and Russian strategic nuclear weapons remain at dangerously high alert states, especially with the reckless nuclear posturing over Ukraine.

‘The 1996 advisory opinion by the International Court of Justice did not conclude that the threat or use of nuclear weapons would be unlawful, especially when a nation’s survival is at stake.’

The Court, under heavy pressure from the three NATO nuclear weapon states, did not specifically pronounce on the legal status of nuclear deterrence.

However, it determined unanimously that any threat or use of nuclear weapons must conform to international humanitarian law, and confirmed that the principles of the law of armed conflict apply to nuclear weapons.

The envisaged use of even a single 100 kiloton UK Trident warhead could never meet these requirements.

‘The number of states acquiring nuclear weapons has continued to grow.’

This is a direct consequence of the P5’s use of nuclear weapons as a currency of power; and their modernisation plans flout their obligation under Article 6 of the Nuclear Non-Proliferation Treaty (NPT) to get rid of their arsenals.

For the 184 states which have made a treaty commitment to renounce nuclear weapons, the UK’s moral authority is compromised by its nuclear posture.

‘There was no international impact when South Africa and Ukraine abandoned nuclear weapons.’

Neither qualified as a recognised nuclear weapon state. The UK was the third state to detonate a nuclear weapon, and is one of the five permanent members of the UN Security Council (known as the P5). British anti-nuclear breakout, therefore, would be a sensational game-changer.

‘No benefit would flow from a UK decision not to replace Trident.’

Seizing this moment to take the initiative would enable the Government genuinely to claim this was in line with its commitment under NPT Article 6, and to be a ‘force for good in the world’, from which it would reap massive kudos and global respect – for example, Britain would retain its P5 status.

The opportunity cost for the RN would be immediately measurable; and the Army and RAF would no longer resent the RN’s preoccupation with a militarily useless irrelevance.

Sincerely,

Commander Robert Green, Royal Navy (Retired).

 

 

Petition: ‘Support Jeremy Corbyn: No to nuclear weapons! No to Trident!‘

Robert Green served in the Royal Navy from 1962-82. As a bombardier-navigator, he flew in Buccaneer nuclear strike aircraft with a target in Russia, and then anti-submarine helicopters equipped with nuclear depth-bombs. On promotion to Commander in 1978, he worked in the Ministry of Defence before his final appointment as Staff Officer (Intelligence) to the Commander-in-Chief Fleet during the 1982 Falklands War. He is now Co-Director of the Disarmament & Security Centre in Christchurch, New Zealand.

 

Obama rejects KXL pipeline – it’s the climate!

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President Obama today denied Canadian oil company TransCanada a presidential permit to construct the Keystone XL, a pipeline that would have carried Canadian tarsands oil into the USA.

Obama announced his refusal in his Rose Garden address today, citing the pipeline’s projected contribution to climate change – and deeming it not in the national interest.

“After extensive public outrage and consultation with other cabinet departments, the State Department has decided that the KXL pipeline would not serve the national intersts of this country”, said Obama. “I agree with that decision.”

He explained that the pipeline – which would have run 1,200 miles from the Alberta tarsands vis Texas to Nebraska – “would not make a meaningful long term contribution to our economy.” Instead he urged bipartisan support for a full-scale renewal of the US’s crumbling national infrastructure.

Nor, added Obama, would KXL serve to reduce fuel costs: “The pipeline would not lower gas prices for American consumers. In fact, gas prices have already been falling, steadily.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership”, Obama continued.

“Today, we’re continuing to lead by example. Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

The move may also be motivated by the forthcoming Presidential election. Both leading Democratic candidates, Hillary Clinton and Bernie Sanders, have taken strong anti-KXL positions. And both have seized on climate and energy as a key point of differentiation between their Republican adversaries who are overwhelmingly pro-fossil fuel and ‘climate skeptic’.

Joy as seven-year campaign culminates in victory

The Presidential announcement follows seven years of intense public campaigning that has included grassroots opposition in the states to be crossed by pipeline.

“This is an extraordinary moment for grassroots activism and the fight against fossil fuels”, said Friends of the Earth President Erich Pica. “For seven years, people from around the United States campaigned together to transform a previously routine decision to approve a pipeline into a leadership test on climate change.

“With this decision, President Obama has taken leadership in significantly slowing the expansion of the tar sands industry. We have not only succeeded in stopping the Keystone XL pipeline, we’ve awakened a grassroots climate movement.

Ben Schreiber, head of climate & energy at FoE US, said he believed the decision to be inevitable based on climate change alone. “The President set up a climate  test and it was clear the KXL pipeline could not pass it. As soon as he set that test the project was heading for a refusal.”

“It’s no accident that this decision has come just weeks before the Paris climate conference”, he added. “Clearly Obama wants to use this decision to send a message that the US is serious on climate change.”

Only last week, he said, TransCanada had smelled defeat and tried to withdraw its application so it could resubmit it under the next President in the hope of an approval. “But they failed. And now this refusal is final. There is no appeal and no second chance.”

We must keep fossil fuels in the ground!

“Today marks the beginning of a new paradigm”, said Lindsey Allen, Executive Director of the Rainforest Action Network. “The president of the United States affirmed that the only way to stop the worst impacts of climate change is to leave fossil fuels in the ground.

“If Keystone XL had been fully built, it would have carried 800,000 barrels a day of toxic tar sands bitumen from the oil sands fields of Alberta, Canada, across our entire country. President Obama vowed that the pipeline wouldn’t be built if it it added significantly to the problem of climate change.

“The evidence clearly showed that the pipeline would be ‘game over’ for the climate. But for years, insiders predicted that Keystone’s approval was a done deal. But you took action, and proved them wrong.”

350.org Executive Director May Boeve added: “President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic – and sets an important precedent that should send shockwaves through the fossil fuel industry.

“Just a few years ago, insiders and experts wrote us off and assured the world Keystone XL would be built by the end of 2011. Together, ranchers, tribal nations, and everyday people beat this project back, reminding the world that Big Oil isn’t invincible.

“Everywhere you look, people are shutting down fracking wells, stopping coal export facilities, and challenging new pipelines. If Big Oil thinks that after Keystone XL the protesters are going home, they’re going to be sorely surprised.

“If it’s wrong to build Keystone XL because of its impact on our climate, it’s wrong to build any new fossil fuel infrastructure, period. Our movement simply will not rest until our economy shifts away from the dirty fossil fuels of yesterday to the clean renewables of tomorrow.”

 

 

Oliver Tickell edits The Ecologist.

See the full Presidential statement on KXL.

 

UK’s nuclear deal with China is a boon for bankers – and no one else

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At first glance, it seems an almost inexplicable paradox.

A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure.

The nuclear deal between Britain and China goes against the advice of the security services, the military and the US government.

So to explain this paradox, we must look carefully at another major deal in the British government’s flirtation with President Xi Jinping: the inter-penetration of the two countries’ financial services.

There would seem to be no possible connection between Chinese companies building and operating nuclear power stations in 2020s Britain and a curious political role created in 1571.

But the fact that the Remembrancer, a representative of the City of London Corporation, is allowed to attend and monitor debates in the House of Commons, says much about Britain’s priorities.

When considering economic and budgetary policy, the Remembrancer is at hand to ensure that our elected representatives remember that, whatever other interests they might serve, the needs of financial services must be paramount.

And the near-invisible hand of the Remembrancer seems recently to have been at work ensuring that Britain’s infrastructure is made accessible to Chinese state-owned companies.

London capital

London is at the heart of the matter. It is the focus for the country’s economic, cultural and political power. Its primacy has been sharpened as Britain’s elites are reproduced through the same private schools and universities, and operate within the same social networks.

The state has emerged with a structural propensity to privilege the interests of London elites over all others.

The problem emerged at the end of the 17th century and continued for the next 260 years via the opportunities for financial and commercial speculation enabled by what was the British Empire. Gradually, the interests of financial services came to dominate economic policy formation.

That would be problematic in any economy, but in Britain it has been doubly so because of the City’s strong preference for global speculation, or ‘casino capitalism’. This has come to supersede investment which supports the renewal of the productive, manufacturing basis of the economy.

Against the common good

Consequently, in the late 19th century, when British manufacturers were first confronted by German and US competitors, they were effectively abandoned.

With their obsessively short-termist orientation, banks and the stock exchanges fought shy of investing in innovation, product renewal and advanced production processes. And no government since has intervened to reconfigure the interests of City of London institutions to match more closely our common good.

Fast forward to November 2015 and we are still living with this legacy. In 2012, estimates of the wealth of Cabinet members suggested that 62% were very wealthy individuals whose family fortunes were largely wrapped up in financial and real estate speculation.

In the current Cabinet, that is likely to be even more the case. And they belong to a Conservative Party that obtains a significant part of its funding from hedge funds and other City institutions.

Whatever one’s political persuasion, it is hard not to conclude that there are material interests in place that encourage government policy towards the expansion of opportunities for financial speculation. This is now so much the case, it seems, that it is allowed to override some of the Conservative Party’s most deeply held ideological positions.

The City wins – Britain loses

Let’s assume that new investment in nuclear power is essential – and that’s a very big assumption indeed. The government must explain why less risky (strategically and geo-politically) alternatives to Chinese involvement, such as investment by Japanese or US companies, were not seriously pursued.

Difficulties in obtaining the investment from British banks and the stock market might have had something to do with it. But ultimately the decision to involve Chinese companies – initially with EDF at Hinkley Point and then on their own at Bradwell and Sizewell – only makes sense if it is seen as part of a quid pro quo for the previously announced financial services deal.

Britain and China’s agreement to explore real-time linkages between the Shanghai and London stock exchanges offers an enticing glimpse of the future for City institutions as they hope that China’s economy will become an historically unprecedented financial services bonanza.

They will get easier access to the Chinese market, while Chinese state-owned banks, such as the China Construction Bank, will join the Bank of China in being able to deal on the London stock exchange.

Should the bonanza materialise, it will offer the potential to seriously boost City profits. For the rest of the country, these deals point to a rather different future.

They put the Chinese Communist Party and military at the heart of strategic infrastructure. They interlink the British and Chinese financial systems at a time when the latter is structurally weak, poorly regulated, and struggling with corruption.

Worryingly, the Chinese financial system is also subject to very high levels of non-performing loans. With the onset of recession in the Chinese economy, that toxic debt risks becoming an ever greater problem. So, roll on the next – China-inspired and British-endorsed – economic collapse?

Another country

Most depressingly, this confirmation of the City’s gilded position provides further endorsement for speculation and detracts from pressure on the City to help tackle economic rejuvenation and wealth inequality.

With this kind of support, the City can safely ignore the continued wasting of the country’s real economy, with its desperate need for investment in its productive base and regional economies.

To understand the reasons for all political-economic decisions, we have to strip away the mystery and ask: “Who wins and who loses?” With the China deal, it seems clear that whoever else loses, the Remembrancer – and the financial interests he represents – look set to be the only real winners.

 

 

Jeffrey Henderson is Professor of International Development, University of Bristol.The Conversation

This article was originally published on The Conversation. Read the original article.

 

Obama rejects KXL pipeline – it’s the climate!

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President Obama today denied Canadian oil company TransCanada a presidential permit to construct the Keystone XL, a pipeline that would have carried Canadian tarsands oil into the USA.

Obama announced his refusal in his Rose Garden address today, citing the pipeline’s projected contribution to climate change – and deeming it not in the national interest.

“After extensive public outrage and consultation with other cabinet departments, the State Department has decided that the KXL pipeline would not serve the national intersts of this country”, said Obama. “I agree with that decision.”

He explained that the pipeline – which would have run 1,200 miles from the Alberta tarsands vis Texas to Nebraska – “would not make a meaningful long term contribution to our economy.” Instead he urged bipartisan support for a full-scale renewal of the US’s crumbling national infrastructure.

Nor, added Obama, would KXL serve to reduce fuel costs: “The pipeline would not lower gas prices for American consumers. In fact, gas prices have already been falling, steadily.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership”, Obama continued.

“Today, we’re continuing to lead by example. Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

The move may also be motivated by the forthcoming Presidential election. Both leading Democratic candidates, Hillary Clinton and Bernie Sanders, have taken strong anti-KXL positions. And both have seized on climate and energy as a key point of differentiation between their Republican adversaries who are overwhelmingly pro-fossil fuel and ‘climate skeptic’.

Joy as seven-year campaign culminates in victory

The Presidential announcement follows seven years of intense public campaigning that has included grassroots opposition in the states to be crossed by pipeline.

“This is an extraordinary moment for grassroots activism and the fight against fossil fuels”, said Friends of the Earth President Erich Pica. “For seven years, people from around the United States campaigned together to transform a previously routine decision to approve a pipeline into a leadership test on climate change.

“With this decision, President Obama has taken leadership in significantly slowing the expansion of the tar sands industry. We have not only succeeded in stopping the Keystone XL pipeline, we’ve awakened a grassroots climate movement.

Ben Schreiber, head of climate & energy at FoE US, said he believed the decision to be inevitable based on climate change alone. “The President set up a climate  test and it was clear the KXL pipeline could not pass it. As soon as he set that test the project was heading for a refusal.”

“It’s no accident that this decision has come just weeks before the Paris climate conference”, he added. “Clearly Obama wants to use this decision to send a message that the US is serious on climate change.”

Only last week, he said, TransCanada had smelled defeat and tried to withdraw its application so it could resubmit it under the next President in the hope of an approval. “But they failed. And now this refusal is final. There is no appeal and no second chance.”

We must keep fossil fuels in the ground!

“Today marks the beginning of a new paradigm”, said Lindsey Allen, Executive Director of the Rainforest Action Network. “The president of the United States affirmed that the only way to stop the worst impacts of climate change is to leave fossil fuels in the ground.

“If Keystone XL had been fully built, it would have carried 800,000 barrels a day of toxic tar sands bitumen from the oil sands fields of Alberta, Canada, across our entire country. President Obama vowed that the pipeline wouldn’t be built if it it added significantly to the problem of climate change.

“The evidence clearly showed that the pipeline would be ‘game over’ for the climate. But for years, insiders predicted that Keystone’s approval was a done deal. But you took action, and proved them wrong.”

350.org Executive Director May Boeve added: “President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic – and sets an important precedent that should send shockwaves through the fossil fuel industry.

“Just a few years ago, insiders and experts wrote us off and assured the world Keystone XL would be built by the end of 2011. Together, ranchers, tribal nations, and everyday people beat this project back, reminding the world that Big Oil isn’t invincible.

“Everywhere you look, people are shutting down fracking wells, stopping coal export facilities, and challenging new pipelines. If Big Oil thinks that after Keystone XL the protesters are going home, they’re going to be sorely surprised.

“If it’s wrong to build Keystone XL because of its impact on our climate, it’s wrong to build any new fossil fuel infrastructure, period. Our movement simply will not rest until our economy shifts away from the dirty fossil fuels of yesterday to the clean renewables of tomorrow.”

 

 

Oliver Tickell edits The Ecologist.

See the full Presidential statement on KXL.

 

UK’s nuclear deal with China is a boon for bankers – and no one else

Leave a reply

At first glance, it seems an almost inexplicable paradox.

A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure.

The nuclear deal between Britain and China goes against the advice of the security services, the military and the US government.

So to explain this paradox, we must look carefully at another major deal in the British government’s flirtation with President Xi Jinping: the inter-penetration of the two countries’ financial services.

There would seem to be no possible connection between Chinese companies building and operating nuclear power stations in 2020s Britain and a curious political role created in 1571.

But the fact that the Remembrancer, a representative of the City of London Corporation, is allowed to attend and monitor debates in the House of Commons, says much about Britain’s priorities.

When considering economic and budgetary policy, the Remembrancer is at hand to ensure that our elected representatives remember that, whatever other interests they might serve, the needs of financial services must be paramount.

And the near-invisible hand of the Remembrancer seems recently to have been at work ensuring that Britain’s infrastructure is made accessible to Chinese state-owned companies.

London capital

London is at the heart of the matter. It is the focus for the country’s economic, cultural and political power. Its primacy has been sharpened as Britain’s elites are reproduced through the same private schools and universities, and operate within the same social networks.

The state has emerged with a structural propensity to privilege the interests of London elites over all others.

The problem emerged at the end of the 17th century and continued for the next 260 years via the opportunities for financial and commercial speculation enabled by what was the British Empire. Gradually, the interests of financial services came to dominate economic policy formation.

That would be problematic in any economy, but in Britain it has been doubly so because of the City’s strong preference for global speculation, or ‘casino capitalism’. This has come to supersede investment which supports the renewal of the productive, manufacturing basis of the economy.

Against the common good

Consequently, in the late 19th century, when British manufacturers were first confronted by German and US competitors, they were effectively abandoned.

With their obsessively short-termist orientation, banks and the stock exchanges fought shy of investing in innovation, product renewal and advanced production processes. And no government since has intervened to reconfigure the interests of City of London institutions to match more closely our common good.

Fast forward to November 2015 and we are still living with this legacy. In 2012, estimates of the wealth of Cabinet members suggested that 62% were very wealthy individuals whose family fortunes were largely wrapped up in financial and real estate speculation.

In the current Cabinet, that is likely to be even more the case. And they belong to a Conservative Party that obtains a significant part of its funding from hedge funds and other City institutions.

Whatever one’s political persuasion, it is hard not to conclude that there are material interests in place that encourage government policy towards the expansion of opportunities for financial speculation. This is now so much the case, it seems, that it is allowed to override some of the Conservative Party’s most deeply held ideological positions.

The City wins – Britain loses

Let’s assume that new investment in nuclear power is essential – and that’s a very big assumption indeed. The government must explain why less risky (strategically and geo-politically) alternatives to Chinese involvement, such as investment by Japanese or US companies, were not seriously pursued.

Difficulties in obtaining the investment from British banks and the stock market might have had something to do with it. But ultimately the decision to involve Chinese companies – initially with EDF at Hinkley Point and then on their own at Bradwell and Sizewell – only makes sense if it is seen as part of a quid pro quo for the previously announced financial services deal.

Britain and China’s agreement to explore real-time linkages between the Shanghai and London stock exchanges offers an enticing glimpse of the future for City institutions as they hope that China’s economy will become an historically unprecedented financial services bonanza.

They will get easier access to the Chinese market, while Chinese state-owned banks, such as the China Construction Bank, will join the Bank of China in being able to deal on the London stock exchange.

Should the bonanza materialise, it will offer the potential to seriously boost City profits. For the rest of the country, these deals point to a rather different future.

They put the Chinese Communist Party and military at the heart of strategic infrastructure. They interlink the British and Chinese financial systems at a time when the latter is structurally weak, poorly regulated, and struggling with corruption.

Worryingly, the Chinese financial system is also subject to very high levels of non-performing loans. With the onset of recession in the Chinese economy, that toxic debt risks becoming an ever greater problem. So, roll on the next – China-inspired and British-endorsed – economic collapse?

Another country

Most depressingly, this confirmation of the City’s gilded position provides further endorsement for speculation and detracts from pressure on the City to help tackle economic rejuvenation and wealth inequality.

With this kind of support, the City can safely ignore the continued wasting of the country’s real economy, with its desperate need for investment in its productive base and regional economies.

To understand the reasons for all political-economic decisions, we have to strip away the mystery and ask: “Who wins and who loses?” With the China deal, it seems clear that whoever else loses, the Remembrancer – and the financial interests he represents – look set to be the only real winners.

 

 

Jeffrey Henderson is Professor of International Development, University of Bristol.The Conversation

This article was originally published on The Conversation. Read the original article.

 

Obama rejects KXL pipeline – it’s the climate!

Leave a reply

President Obama today denied Canadian oil company TransCanada a presidential permit to construct the Keystone XL, a pipeline that would have carried Canadian tarsands oil into the USA.

Obama announced his refusal in his Rose Garden address today, citing the pipeline’s projected contribution to climate change – and deeming it not in the national interest.

“After extensive public outrage and consultation with other cabinet departments, the State Department has decided that the KXL pipeline would not serve the national intersts of this country”, said Obama. “I agree with that decision.”

He explained that the pipeline – which would have run 1,200 miles from the Alberta tarsands vis Texas to Nebraska – “would not make a meaningful long term contribution to our economy.” Instead he urged bipartisan support for a full-scale renewal of the US’s crumbling national infrastructure.

Nor, added Obama, would KXL serve to reduce fuel costs: “The pipeline would not lower gas prices for American consumers. In fact, gas prices have already been falling, steadily.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership”, Obama continued.

“Today, we’re continuing to lead by example. Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

The move may also be motivated by the forthcoming Presidential election. Both leading Democratic candidates, Hillary Clinton and Bernie Sanders, have taken strong anti-KXL positions. And both have seized on climate and energy as a key point of differentiation between their Republican adversaries who are overwhelmingly pro-fossil fuel and ‘climate skeptic’.

Joy as seven-year campaign culminates in victory

The Presidential announcement follows seven years of intense public campaigning that has included grassroots opposition in the states to be crossed by pipeline.

“This is an extraordinary moment for grassroots activism and the fight against fossil fuels”, said Friends of the Earth President Erich Pica. “For seven years, people from around the United States campaigned together to transform a previously routine decision to approve a pipeline into a leadership test on climate change.

“With this decision, President Obama has taken leadership in significantly slowing the expansion of the tar sands industry. We have not only succeeded in stopping the Keystone XL pipeline, we’ve awakened a grassroots climate movement.

Ben Schreiber, head of climate & energy at FoE US, said he believed the decision to be inevitable based on climate change alone. “The President set up a climate  test and it was clear the KXL pipeline could not pass it. As soon as he set that test the project was heading for a refusal.”

“It’s no accident that this decision has come just weeks before the Paris climate conference”, he added. “Clearly Obama wants to use this decision to send a message that the US is serious on climate change.”

Only last week, he said, TransCanada had smelled defeat and tried to withdraw its application so it could resubmit it under the next President in the hope of an approval. “But they failed. And now this refusal is final. There is no appeal and no second chance.”

We must keep fossil fuels in the ground!

“Today marks the beginning of a new paradigm”, said Lindsey Allen, Executive Director of the Rainforest Action Network. “The president of the United States affirmed that the only way to stop the worst impacts of climate change is to leave fossil fuels in the ground.

“If Keystone XL had been fully built, it would have carried 800,000 barrels a day of toxic tar sands bitumen from the oil sands fields of Alberta, Canada, across our entire country. President Obama vowed that the pipeline wouldn’t be built if it it added significantly to the problem of climate change.

“The evidence clearly showed that the pipeline would be ‘game over’ for the climate. But for years, insiders predicted that Keystone’s approval was a done deal. But you took action, and proved them wrong.”

350.org Executive Director May Boeve added: “President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic – and sets an important precedent that should send shockwaves through the fossil fuel industry.

“Just a few years ago, insiders and experts wrote us off and assured the world Keystone XL would be built by the end of 2011. Together, ranchers, tribal nations, and everyday people beat this project back, reminding the world that Big Oil isn’t invincible.

“Everywhere you look, people are shutting down fracking wells, stopping coal export facilities, and challenging new pipelines. If Big Oil thinks that after Keystone XL the protesters are going home, they’re going to be sorely surprised.

“If it’s wrong to build Keystone XL because of its impact on our climate, it’s wrong to build any new fossil fuel infrastructure, period. Our movement simply will not rest until our economy shifts away from the dirty fossil fuels of yesterday to the clean renewables of tomorrow.”

 

 

Oliver Tickell edits The Ecologist.

See the full Presidential statement on KXL.

 

UK’s nuclear deal with China is a boon for bankers – and no one else

Leave a reply

At first glance, it seems an almost inexplicable paradox.

A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure.

The nuclear deal between Britain and China goes against the advice of the security services, the military and the US government.

So to explain this paradox, we must look carefully at another major deal in the British government’s flirtation with President Xi Jinping: the inter-penetration of the two countries’ financial services.

There would seem to be no possible connection between Chinese companies building and operating nuclear power stations in 2020s Britain and a curious political role created in 1571.

But the fact that the Remembrancer, a representative of the City of London Corporation, is allowed to attend and monitor debates in the House of Commons, says much about Britain’s priorities.

When considering economic and budgetary policy, the Remembrancer is at hand to ensure that our elected representatives remember that, whatever other interests they might serve, the needs of financial services must be paramount.

And the near-invisible hand of the Remembrancer seems recently to have been at work ensuring that Britain’s infrastructure is made accessible to Chinese state-owned companies.

London capital

London is at the heart of the matter. It is the focus for the country’s economic, cultural and political power. Its primacy has been sharpened as Britain’s elites are reproduced through the same private schools and universities, and operate within the same social networks.

The state has emerged with a structural propensity to privilege the interests of London elites over all others.

The problem emerged at the end of the 17th century and continued for the next 260 years via the opportunities for financial and commercial speculation enabled by what was the British Empire. Gradually, the interests of financial services came to dominate economic policy formation.

That would be problematic in any economy, but in Britain it has been doubly so because of the City’s strong preference for global speculation, or ‘casino capitalism’. This has come to supersede investment which supports the renewal of the productive, manufacturing basis of the economy.

Against the common good

Consequently, in the late 19th century, when British manufacturers were first confronted by German and US competitors, they were effectively abandoned.

With their obsessively short-termist orientation, banks and the stock exchanges fought shy of investing in innovation, product renewal and advanced production processes. And no government since has intervened to reconfigure the interests of City of London institutions to match more closely our common good.

Fast forward to November 2015 and we are still living with this legacy. In 2012, estimates of the wealth of Cabinet members suggested that 62% were very wealthy individuals whose family fortunes were largely wrapped up in financial and real estate speculation.

In the current Cabinet, that is likely to be even more the case. And they belong to a Conservative Party that obtains a significant part of its funding from hedge funds and other City institutions.

Whatever one’s political persuasion, it is hard not to conclude that there are material interests in place that encourage government policy towards the expansion of opportunities for financial speculation. This is now so much the case, it seems, that it is allowed to override some of the Conservative Party’s most deeply held ideological positions.

The City wins – Britain loses

Let’s assume that new investment in nuclear power is essential – and that’s a very big assumption indeed. The government must explain why less risky (strategically and geo-politically) alternatives to Chinese involvement, such as investment by Japanese or US companies, were not seriously pursued.

Difficulties in obtaining the investment from British banks and the stock market might have had something to do with it. But ultimately the decision to involve Chinese companies – initially with EDF at Hinkley Point and then on their own at Bradwell and Sizewell – only makes sense if it is seen as part of a quid pro quo for the previously announced financial services deal.

Britain and China’s agreement to explore real-time linkages between the Shanghai and London stock exchanges offers an enticing glimpse of the future for City institutions as they hope that China’s economy will become an historically unprecedented financial services bonanza.

They will get easier access to the Chinese market, while Chinese state-owned banks, such as the China Construction Bank, will join the Bank of China in being able to deal on the London stock exchange.

Should the bonanza materialise, it will offer the potential to seriously boost City profits. For the rest of the country, these deals point to a rather different future.

They put the Chinese Communist Party and military at the heart of strategic infrastructure. They interlink the British and Chinese financial systems at a time when the latter is structurally weak, poorly regulated, and struggling with corruption.

Worryingly, the Chinese financial system is also subject to very high levels of non-performing loans. With the onset of recession in the Chinese economy, that toxic debt risks becoming an ever greater problem. So, roll on the next – China-inspired and British-endorsed – economic collapse?

Another country

Most depressingly, this confirmation of the City’s gilded position provides further endorsement for speculation and detracts from pressure on the City to help tackle economic rejuvenation and wealth inequality.

With this kind of support, the City can safely ignore the continued wasting of the country’s real economy, with its desperate need for investment in its productive base and regional economies.

To understand the reasons for all political-economic decisions, we have to strip away the mystery and ask: “Who wins and who loses?” With the China deal, it seems clear that whoever else loses, the Remembrancer – and the financial interests he represents – look set to be the only real winners.

 

 

Jeffrey Henderson is Professor of International Development, University of Bristol.The Conversation

This article was originally published on The Conversation. Read the original article.

 

Obama rejects KXL pipeline – it’s the climate!

Leave a reply

President Obama today denied Canadian oil company TransCanada a presidential permit to construct the Keystone XL, a pipeline that would have carried Canadian tarsands oil into the USA.

Obama announced his refusal in his Rose Garden address today, citing the pipeline’s projected contribution to climate change – and deeming it not in the national interest.

“After extensive public outrage and consultation with other cabinet departments, the State Department has decided that the KXL pipeline would not serve the national intersts of this country”, said Obama. “I agree with that decision.”

He explained that the pipeline – which would have run 1,200 miles from the Alberta tarsands vis Texas to Nebraska – “would not make a meaningful long term contribution to our economy.” Instead he urged bipartisan support for a full-scale renewal of the US’s crumbling national infrastructure.

Nor, added Obama, would KXL serve to reduce fuel costs: “The pipeline would not lower gas prices for American consumers. In fact, gas prices have already been falling, steadily.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership”, Obama continued.

“Today, we’re continuing to lead by example. Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”

The move may also be motivated by the forthcoming Presidential election. Both leading Democratic candidates, Hillary Clinton and Bernie Sanders, have taken strong anti-KXL positions. And both have seized on climate and energy as a key point of differentiation between their Republican adversaries who are overwhelmingly pro-fossil fuel and ‘climate skeptic’.

Joy as seven-year campaign culminates in victory

The Presidential announcement follows seven years of intense public campaigning that has included grassroots opposition in the states to be crossed by pipeline.

“This is an extraordinary moment for grassroots activism and the fight against fossil fuels”, said Friends of the Earth President Erich Pica. “For seven years, people from around the United States campaigned together to transform a previously routine decision to approve a pipeline into a leadership test on climate change.

“With this decision, President Obama has taken leadership in significantly slowing the expansion of the tar sands industry. We have not only succeeded in stopping the Keystone XL pipeline, we’ve awakened a grassroots climate movement.

Ben Schreiber, head of climate & energy at FoE US, said he believed the decision to be inevitable based on climate change alone. “The President set up a climate  test and it was clear the KXL pipeline could not pass it. As soon as he set that test the project was heading for a refusal.”

“It’s no accident that this decision has come just weeks before the Paris climate conference”, he added. “Clearly Obama wants to use this decision to send a message that the US is serious on climate change.”

Only last week, he said, TransCanada had smelled defeat and tried to withdraw its application so it could resubmit it under the next President in the hope of an approval. “But they failed. And now this refusal is final. There is no appeal and no second chance.”

We must keep fossil fuels in the ground!

“Today marks the beginning of a new paradigm”, said Lindsey Allen, Executive Director of the Rainforest Action Network. “The president of the United States affirmed that the only way to stop the worst impacts of climate change is to leave fossil fuels in the ground.

“If Keystone XL had been fully built, it would have carried 800,000 barrels a day of toxic tar sands bitumen from the oil sands fields of Alberta, Canada, across our entire country. President Obama vowed that the pipeline wouldn’t be built if it it added significantly to the problem of climate change.

“The evidence clearly showed that the pipeline would be ‘game over’ for the climate. But for years, insiders predicted that Keystone’s approval was a done deal. But you took action, and proved them wrong.”

350.org Executive Director May Boeve added: “President Obama’s decision to reject Keystone XL because of its impact on the climate is nothing short of historic – and sets an important precedent that should send shockwaves through the fossil fuel industry.

“Just a few years ago, insiders and experts wrote us off and assured the world Keystone XL would be built by the end of 2011. Together, ranchers, tribal nations, and everyday people beat this project back, reminding the world that Big Oil isn’t invincible.

“Everywhere you look, people are shutting down fracking wells, stopping coal export facilities, and challenging new pipelines. If Big Oil thinks that after Keystone XL the protesters are going home, they’re going to be sorely surprised.

“If it’s wrong to build Keystone XL because of its impact on our climate, it’s wrong to build any new fossil fuel infrastructure, period. Our movement simply will not rest until our economy shifts away from the dirty fossil fuels of yesterday to the clean renewables of tomorrow.”

 

 

Oliver Tickell edits The Ecologist.

See the full Presidential statement on KXL.

 

UK’s nuclear deal with China is a boon for bankers – and no one else

Leave a reply

At first glance, it seems an almost inexplicable paradox.

A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure.

The nuclear deal between Britain and China goes against the advice of the security services, the military and the US government.

So to explain this paradox, we must look carefully at another major deal in the British government’s flirtation with President Xi Jinping: the inter-penetration of the two countries’ financial services.

There would seem to be no possible connection between Chinese companies building and operating nuclear power stations in 2020s Britain and a curious political role created in 1571.

But the fact that the Remembrancer, a representative of the City of London Corporation, is allowed to attend and monitor debates in the House of Commons, says much about Britain’s priorities.

When considering economic and budgetary policy, the Remembrancer is at hand to ensure that our elected representatives remember that, whatever other interests they might serve, the needs of financial services must be paramount.

And the near-invisible hand of the Remembrancer seems recently to have been at work ensuring that Britain’s infrastructure is made accessible to Chinese state-owned companies.

London capital

London is at the heart of the matter. It is the focus for the country’s economic, cultural and political power. Its primacy has been sharpened as Britain’s elites are reproduced through the same private schools and universities, and operate within the same social networks.

The state has emerged with a structural propensity to privilege the interests of London elites over all others.

The problem emerged at the end of the 17th century and continued for the next 260 years via the opportunities for financial and commercial speculation enabled by what was the British Empire. Gradually, the interests of financial services came to dominate economic policy formation.

That would be problematic in any economy, but in Britain it has been doubly so because of the City’s strong preference for global speculation, or ‘casino capitalism’. This has come to supersede investment which supports the renewal of the productive, manufacturing basis of the economy.

Against the common good

Consequently, in the late 19th century, when British manufacturers were first confronted by German and US competitors, they were effectively abandoned.

With their obsessively short-termist orientation, banks and the stock exchanges fought shy of investing in innovation, product renewal and advanced production processes. And no government since has intervened to reconfigure the interests of City of London institutions to match more closely our common good.

Fast forward to November 2015 and we are still living with this legacy. In 2012, estimates of the wealth of Cabinet members suggested that 62% were very wealthy individuals whose family fortunes were largely wrapped up in financial and real estate speculation.

In the current Cabinet, that is likely to be even more the case. And they belong to a Conservative Party that obtains a significant part of its funding from hedge funds and other City institutions.

Whatever one’s political persuasion, it is hard not to conclude that there are material interests in place that encourage government policy towards the expansion of opportunities for financial speculation. This is now so much the case, it seems, that it is allowed to override some of the Conservative Party’s most deeply held ideological positions.

The City wins – Britain loses

Let’s assume that new investment in nuclear power is essential – and that’s a very big assumption indeed. The government must explain why less risky (strategically and geo-politically) alternatives to Chinese involvement, such as investment by Japanese or US companies, were not seriously pursued.

Difficulties in obtaining the investment from British banks and the stock market might have had something to do with it. But ultimately the decision to involve Chinese companies – initially with EDF at Hinkley Point and then on their own at Bradwell and Sizewell – only makes sense if it is seen as part of a quid pro quo for the previously announced financial services deal.

Britain and China’s agreement to explore real-time linkages between the Shanghai and London stock exchanges offers an enticing glimpse of the future for City institutions as they hope that China’s economy will become an historically unprecedented financial services bonanza.

They will get easier access to the Chinese market, while Chinese state-owned banks, such as the China Construction Bank, will join the Bank of China in being able to deal on the London stock exchange.

Should the bonanza materialise, it will offer the potential to seriously boost City profits. For the rest of the country, these deals point to a rather different future.

They put the Chinese Communist Party and military at the heart of strategic infrastructure. They interlink the British and Chinese financial systems at a time when the latter is structurally weak, poorly regulated, and struggling with corruption.

Worryingly, the Chinese financial system is also subject to very high levels of non-performing loans. With the onset of recession in the Chinese economy, that toxic debt risks becoming an ever greater problem. So, roll on the next – China-inspired and British-endorsed – economic collapse?

Another country

Most depressingly, this confirmation of the City’s gilded position provides further endorsement for speculation and detracts from pressure on the City to help tackle economic rejuvenation and wealth inequality.

With this kind of support, the City can safely ignore the continued wasting of the country’s real economy, with its desperate need for investment in its productive base and regional economies.

To understand the reasons for all political-economic decisions, we have to strip away the mystery and ask: “Who wins and who loses?” With the China deal, it seems clear that whoever else loses, the Remembrancer – and the financial interests he represents – look set to be the only real winners.

 

 

Jeffrey Henderson is Professor of International Development, University of Bristol.The Conversation

This article was originally published on The Conversation. Read the original article.