Category: Interludes

22-12-18

Dear Partners in thought:

You will forgive my facetious use of Agatha Christie’s famous line even if we are not dealing with a mystery but a tragedy… 
The victory Twitters and laps of Donald Trump about having won against ISIS in Syria and bringing the boys and girls home to fit the America First ethos were bound to create a strong reaction and pushback from all quarters, including the Republican legislators usually faithful to him. One could only listen to 40 year old ex-veteran Illinois congressman Adam Kinzinger who was actually speechless about the news or Lindsey Graham who felt that the honour of America was under real threat. 

DT’s declaration and decision went against many statements put out by the various departments earlier in the week, including the DoD that the fight was going on, even if ISIS had been mortally wounded, and that there was no discussion about this. It was not also that a withdrawal of 2,000 servicemen would change the face of battle (it could not) but it would change the geopolitical landscape of the Middle East leaving both Russia, Iran, not to mention the Assad regime a free hand. A withdrawal at this stage and time from one of the hottest war-torn regions with competing influences would also signify a withdrawal of America on the stage of world affairs – perhaps indeed a fit for what Lindbergh would have liked decades ago. Oh yes, America First too. It was not hard to imagine that Jim Mattis, the eminently professional and level-headed SecDef would resign in protest in a move that says it all given its magnitude that goes far beyond the Department of Defense.

For those who don’t follow the amazing choreography of the Trump administration with its comings and goings (the goings are harder as the potential cast gets thinner as we approach 2020, particularly among those in their thirties with a career ahead of them), Jim Mattis was the adult in the room (or the house, you know the one with the white painting). I recommend you reading my Book Note on “No better friend, no worts enemy” by Jim Proser who tells you more about the an and indeed the Marine.  

With Mattis gone, after many of his ilk, we seem to be left only with loyalists who are precisely selected for that reason and accept the job without being really well known as they are usually not the top of the crop in any of their disciplines (so to it’s a great on the job training scheme as long as the loyalty factor is assessed to be strong). We now have a Trump team without the usually skilled experts seen in the US administrations who are respected for what they have done and can do. There is one exception with Jay Powell, actually an erstwhile Trump appointee at the Federal Reserve Board, but he is badly failing the loyalty test and has had to make grand speeches about the independence of the Fed and “doing the right thing”. In a preview of things to come, you will have noted that the potential replacement of Nikki Haley at the UN was an ex-Fox News presenter with little experience of International affairs before she got the role of Spokeswoman at the State Department (It also shows how critical the UN is for DT, which is unsurprising but should make the nominee reflect about why she was rumoured for the job). It’s going to be an interesting ride now there is only one pilot in the plane and we know who he is. 

On a silly note, we learn today that both the US… and the UK (yes!) are behind accusations that are likely true that China (or Chinese) are behind cyber attacks on critical assets including the US Navy, NASA  and other key infrastructures arguably in a drive to steal intellectual property and related secrets to advance their global leadership rise. The truth, that may be sad, is that nations spy against each other, including the US on its allies as we saw during the Obama Administration. It is a fact of life and it is highly likely that both the US and the UK are spying on China too. It does not mean that the West should not react and defend its interests as it should. It is just amusing that the news erupts at a time when Jim Mattis is resigning and Ms. May tries to show an independent and viable  UK soon ruling the waves. Everything is linked and timing is never innocent even if the point behind the news is perfectly valid…

Warmest regards,
Serge          

Serge Desprat- Dec 22, 2018 (Prague)

18-12-18

Dear Partners in thought, 

It is always wise not to comment too much on events that are unfolding so rapidly as with the Brexit process even if Ms. May “kicks the can down the road” in the hope of finding more time for the outcome she would like for her deal. So far and even if MPs have finally a say in the process (which they should), nothing has shown that the most likely ultimate outcome short of a No Deal abyss would not take place if one would be able to cut through the battlefield noise. A second referendum is looming more clearly as the only viable way forward than ever, this even if a challenging choice for many, including at party level and for different reasons, at a time where there is no ideal avenue. 

Ms. May struggles to stress that a second referendum, she now de facto acknowledges as a possibility, would create “irreparable damage” on the country’s politics and would be “faith breaking” as if to steer MPs to finally vote for her unloved deal, which she thought was the pragmatic antidote to No Deal chaos. Leave MPs seem to have worked for a few days on plans for a second poll (incidentally being potentially short of potential campaign officials due to the Electoral Commission’s investigations for violation of campaign law). However they are getting ready as they can also understand simple logics. While they would bet on many Leave voters to reaffirm their earlier choice, some of them as a matter of principle, they are no longer sure as they were in 2017 that it would be enough to win the day any longer as some Leave voters would switch on the face of facts while more Britons would vote this time, especially the younger generations. As the probable majority of the UK electorate would back staying in the EU at this point in British history, the Brexiteers would then make the vote not on the EU but on democracy itself, bringing the famed “will of the people” to the fore. 

It would be a great example of sophistry if “democracy” was used as a way to attack the very democratic ability for people in a free country to revisit a matter so crucial as the one at stake, having the ability to reassess such an existential matter two and half years later in the absence of any other viable option. “Democracy” should not be used to prevent democracy itself or enshrine an outcome that may not be in the best interests of the people without giving them the ability to revisit matters when warranted. Democracy should always give people a voice, which incidentally is not the same as guaranteeing any poll outcome. Any opposition to a second referendum today, that is superficially based on the earlier “will of the people”, is in fact derived from the realisation that the people have likely changed their minds based on a fuller understanding of what Brexit means. While it is fair to recognise the right of Brexiteers to try to preserve the result of the June 2016 poll, sheer politics should not deprive the people’s basic rights to have a direct say on such a key matter today given the light of events.    

Putting aside the deafening noise and the cheap fearmongering, it is highly likely that Parliament (the “mother of modern democracy” after all), when it finally is able to regain its voice, will back a second referendum, humbly and wisely deferring to the people to make the most important choice or indeed reassessment of their generation, this possibly with the three questions we know. The British people indeed deserve a second chance and only they can finally decide for themselves.  

Warmest regards,

Serge   

Serge Desprat- Dec 18th, 2018 (Prague)

9-12-18

Dear Partners in thought, 

It is the fourth weekend of the yellow vests’ demonstrations and actually riots in Paris and France even if the numbers have gone down and Sunday was calmer (in relative terms) than Saturday. The yellow vests are still hard to understand but I wanted to share a few pointers on this seemingly unstructured but potent movement:

1. Born “from nowhere” through social networks, it is not led though it organises itself to “demonstrate” (and indeed to riot) while lacking a negotiating face to settle issues with the government, something that may not be a clear objective in itself.

2. It is deeply rooted in the French revolutionary ethos as seen throughout history since 1789. Deeply, it is an anti-elite and anti-(capitalist) system revolt though without viable alternatives on offer. It is a “scream” originally rooted in despair that is real for some, focused on the protest more than on any solutions. 

3. It has not one agenda, even if it started with an opposition to fuel taxes aimed partly at fighting climate change (now recalled), but expresses multiple agendas and at times representing individual ones. 

4. Each agenda is item-conflicting like with a demand for less taxes though with a request for more forms of financial assistance, all with a general utopian flavour devoid of any sense of economic reality as if the latter was besides the point. 

5. If one common feature can be found it is the frustration against the stagnation in earning power over the last ten years, the rise of (indirect) taxes, the big level of unemployment and a strong French attachment to equalitarianism through this time a scream for the re-instauration of the ISF wealth tax (equalitarianism over freedom and in spite of the French mixed historical motto of liberty, equality and fraternity) . 

6. It is targeted against the King or Président Macron and his “distant style” and liberal economic policies as while the French love their king and clearly wanted one in May 2017, they have short memories, hate reforms and also periodically like to cut their king’s head off, at times literally. 

7. Early demonstrators are gradually shadowed by “professional” street-fighting extremists looking for clashes with police forces leading to an unprecedented level of arrests, which in spite of a very broad but non-specific support by “two thirds of the French”, risks to be discredited and create eventually a popular late May 1968 backlash still to emerge. 

8. Russian hackers are deemed to have fomented fake news on social networks to incite riots in the same vein as seen during the British referendum of 2016 and US and French Presidential elections of 2016 and 2017. On Saturday, one of the arrested rioters was wearing a yellow vest with the Russia-supported separatist Donetsk People’s Republic flag on its back. 

9. The yellow vests saga is a process of “emotional contagion” enhanced by social network technology when people get involved without clear grievances but as they wish to join “something big” that takes form against “the system” which has been in many but at times vague ways unfair to them (all of this while France has a majority of non-income tax payers and one of the highest redistribution systems in the OECD).  

10. It is very costly with a loss of EUR 1 billion as the fourth weekend was starting and a blow to the retail and tourism industries notably in Paris which will result in less taxes that could be used to enhance additional redistribution. 

11. Traditional opposition parties that have not provided any real opposition to the government since mid-2017, possibly allowing the yellow vests to emerge due to the void, have not yet taken any real credit for the events as the situation is still too unclear even if a few politicians, such as former Président Hollande (looking for an unlikely come back) and Laurent Wauquiez, the leader of Centre Right Republicans (looking for a mere “existence”), made sure they were pictured with the yellow vest crowd or wore a vest respectively.

12. It will become essential for the elite (and the media) to explain to the yellow vests that a government democratically elected in a free country like France needs to be respected and is not changed by street riots as well as conveying to “them” the need to sit down and discuss their grievances with the government in a rational and reasonable way within the context  of the institutions and economic system as we know it. Lastly it will be key to convey to the yellow vests the fact that a collapse of our economic system as we know it and can improve would lead to their own real collapse and true pauperisation.

Things are unfolding on a daily if not hourly basis but I hope these pointers are useful to understand what we know to be the “Gilets Jaunes” especially in these times of Faulknerian “sound and fury”. Keep tuned for the official communication from Emmanuel Macron this Monday. 

Warmest regards,

Serge                

Serge Desprat – Dec 9, 2018 (Prague)

7-12-18

Dear Partners in thought,

As the 11th December vote is looming it is increasingly apparent as foreseen that Ms. May will not get her deal through Parliament. It was to be expected as a forgone conclusion that no amount of wishful thinking or Churchillian rhetoric would have changed. As the government stresses the long queues at ports, the likely shortages of key goods for consumers and the Bank of England assessment of a gradual 10.5% GDP decline that a No Deal would entail in a desperate hope to sway Parliament to back the hapless deal on offer that satisfies no one, one hears more and more the only dual choice available to avoid disaster: either a “Norway +” arrangement or a once thought impossible second referendum.

The deal proposed by Ms. May is one that was negotiated and signed with the EU after arduous discussions, where the EU spoke as one. It was not the product of a diktat as it is often referred to by those Brexiteers (already preparing to deal with the expected popular backlash of the consequences of a No Deal outcome) who would ideally have an “à la carte menu”-based exit (as if one would join my club in London but only pay for and do what one wants, which is not very British after all). There was no diktat from Bruxelles, who was dealing with a much unwanted exit scenario, and the agreement that was struck reflected the best deal “for both parties” and the impossibility for the EU to surrender its existential principles and risk setting up a disastrous precedent for the future of the union.

The EU will not likely renegotiate an exit agreement with Britain as it is simply too complex and unacceptable for it to do so. A “Norway +” could have been envisaged much earlier but the British team chose to believe it could have its cake and eat it too, making a poor negotiating hard line choice in front of a 27 member country union, its main trading partner and the largest bloc in the world. Wishful thinking ran amok driven by dreams of past glory only gradually shattered by a succession of reality checks, even with the hallowed “special relationship” with America. However, as stressed in an excellent wrap up piece of “where we are and likely to go” by Philip Stephens in the FT today, the European Court of Justice, through its Advocate General, has indicated the possibility that the UK could revoke unilaterally the famed Article 50 and rescind its decision to leave the EU. If that were done, as Philip Stephens rightly argued, then a likely caretaker PM post-Parliamentary defeat could ask the EU 27 to “stop the clock” pending a second referendum with the right questions and the better facts at hand for British voters, something we know would likely be given by Bruxelles in the hope that the EU would stay eventually stronger.

This second referendum option, which has always been unfashionably the more logical one for a while and is gaining increasing momentum,  even considering the ire of some of the Brexiteers, would be the less bad (and I dare say even the best) of all options for Britain. Rather than a blow against the much heralded “will of the people”, this avenue would strengthen democracy in giving Britons a new shot, after two and half years of a revealing process and knowing the outcomes far better, at a more sensible choice of their very future. It would also allow the younger age group to take more possession of their future, something they did not in June 2016. A second referendum would not provide a foregone conclusion in terms of outcome, even if a majority leans Remain today but it would give an opportunity for an outcome that would have to be accepted by all. Even a Remain win would entail discussions with the EU for the next steps though with the likelihood that the latter would show flexibility to keep the former “in” on good terms for Britain as a win-win outcome. The UK would then stay in the EU with its people knowing far better all the key strengths the great nation derives from “being” in this great bloc and would be able to keep influencing it as it has done with success in the past. In many ways, this Brexit process would also be a valuable experience that many other EU members would learn from as we keep growing together as the leading bloc in the world.

Warmest regards,

Serge

Serge Desprat – Dec 7, 2018 (Prague)

1-12-18

27-11-18

Dear Partners in thought,

Following the signing of the current deal with the EU, I noticed Ms. May’s soon to be tour of the four nations of Britain which seems a bit odd as surely she knows it is the Parliament that must vote on the deal (I am being facetious) and not the nation. If wanting to get the support directly from the people, one could wonder (as some reader in the FT today rightly did) why she does not go for a second referendum with three questions (current deal , no deal and…yes remaining). If I were an MP I would not be too pleased to see my PM trying to exert pressure on my vote in that way. It is all the more odd as only between 15% and 22% of Britons support her now signed deal (with more preferring the No Deal route, terrifyingly) while Ms. May is getting more popular due to her doggedness and resiliency as she pushes a lost cause deal, showing perhaps the national admiration for the very rooted British trait of standing tough against all adversity. 

I was reading Gideon Rachman’s op-ed in the FT today where as a sensible Remainer at heart he finally express his support for the current deal which, if not good for sure, is the best one could get. I seem to remember he was at some point talking about a second referendum but now feels that it could bring “partisan bitterness and civil war”, something I hear from other reasonable people. I think that while a second referendum would clearly upset some, it is still the best outcome of all as it gives back the voice to all voters who can at last choose in a more educated way for some, likely post-Parliamentary rejection, between a “No Deal” and “Remain” based on facts and not promises. Also fearing partisan bitterness and even civil war as the extreme Brexiteers and populist activists usually speak louder and could be more violent than the Remainers, thus more prone to a civil war “of sorts” (even if I feel the latter way overstated) is not really an argument, also as after all leaving in a no deal manner could be an option and stick to vox populi “today”. Democracy would be respected and people could choose “today”. I humbly think the British people should not surrender principles and what is best for them just because it might be an easier and less painful path societally. This is not British history, fortunately for many of us in Europe.

Warmest regards,

Serge  

Serge- Nov 27, 2018 (Prague) 

24-11-18

Dear Partners in thought,

Even though we should laud the sincere efforts to craft a partnership post-Brexit, why is that the UK and the EU are on the path to signing a deal that both know will not have the British Parliamentary votes on 10th or 11th of December as if avoiding a reality check? What if Ms. May, an erstwhile mild Remainer, were not actually and self-sacrificially exhausting all avenues so a second referendum, which might have been gradually and logically her secret, never admissible objective and would meet a very understanding EU, be indeed the only way out short of a no deal abyss nobody wants? Even if the unlikely fruit of changing circumstances, there could not have been a craftier plan as “The Prince” from Florence would agree. 

Warmest regards,
Serge     

Serge Desprat- 24 Nov, 2018 (Prague)

15-11-18

Dear Partners in thought,

13-11-18

Serge Desprat- 14th November, 2018 (Prague)

8-11-18

Dear Partners in thought,

If I may I would suggest seven take aways for the recent midterms as follows:

1. Many Americans still support DT, definitely among GOP and conservative voters and thus vote GOP for reasons of their own very often not especially liking the man but supporting his policies and not usually seeing their impact on the world (and sadly onto the US and them)

2. DT and the GOP retain control of most red states but waver in some states which propelled DT to the White House. Not a good sign for DT

3. DT and the GOP are losing the affluent suburbs and gradually the women’s vote nation-wide. Not a good sign for DT

4. The GOP only kept control of and increased their seats in the Senate because of the particular seats on offer (the one third of the Senate to be renewed) these midterms. Bad timing if there was ever one

5. Although the Dems scored a major House victory that was not a foregone conclusion together with seizing a few Governorships, theirs was weakened by “symbolic” defeats especially with the short one in Florida (Governorship) but also in Texas (even if O’Rourke did far better than ever expected, all the more as it seemed he could win early on as votes were counted, creating a hope that was that night, quite late, shattered) and the (still?) unsettled status of the top Georgia race (Governorship)    

6. The DT press conference yesterday, putting aside any peculiar style, was Orwellian in nature where “defeat” was simply “victory” in what is becoming a gradually accepted norm

7. While DT is actually heavily weakened on a nationwide basis (excellent side analysis of Harvard Law’s Laurence Tribe today), a sure way for him is to benefit from a radicalised Democratic Party and House that would focus on investigations and impeachment proceedings over the next two years which may likely bring the political process to a standstill, allowing DT to do more finger pointing come 2020. And potentially win.

I know I am partial but I encourage you to read the excellent analysis of Ed Luce and his Insights in the FT on what is happening and may happen in American politics and after the midterms. Great insights and style indeed.

Warmest regards,

Serge    

Serge Desprat- 8th November, 2018 (Prague)