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President Isaac Hertzog has just addressed journalists, Members and a broader audience, for a live stream Q and A, at Chatham House.

It was astonishing. Bronwen Maddox is a brilliant and formidable Chair, and maintained an element of journalistic integrity to be proud of. Sadly I cannot say the same for President Hertzog’s obfuscatory and dissembling replies. It wasn’t just that he was evasive, it’s also that his replies were so defensive as to be quite simply unbelievable. He spoke repeatedly about Israel following the international Laws of War. He misrepresented these very rules when he stated that how a Conflict is begun can determine how you execute your response. When that is precisely why they are the rules of engagement under the Geneva Conventions. How a war is started is completely irrelevant to how it is prosecuted. Bronwen put to him that the significant loss of life of civilians and the careless way in which residential areas have been targeted seemed to substantiate, at a policy level, that Israel views civilians as collaborators. Potentially and essentially all civilians. President Hertzog denied this, and that he had actually previously said he viewed civilians as collaborating with terrorists. Ms Maddox cited a speech from him saying precisely this, in 2009 – which the President felt had been misrepresented. It was put to him the willful and direct targeting of hospitals was indeed a war crime, and again his response was to say that these are known and intelligence driven hot beds of Hamas military operations. Numerous times, including by the attending journalists, it was put to the President that these concerns and perceived misrepresentation that Israel feels slighted by, could be righted by allowing in external observers – not least journalists, and the international humanitarian community. This question was sidestepped.

An astute attendee questioned the President on how he thought it might be possible to correct, and get back on track, relations with a broader swathe of Arab neighbors, as was progressing under the Abraham Accords. Of course this drew a neutral and diplomatic answer. Sadly there was not time to address Saudi Arabia’s particular point that Israel should now establish “irreversible steps” towards a two-state solution.

Finally, the President agreed that whilst militarily, Israel was winning this conflict, it was losing internationally, the war on public relations… This appearance certainly did nothing to alter this view.

#Gaza #PresidentHerzog #Palestine

President Trump has been shot and handled himself with aplomb. In my book, anybody who has been shot and immediately pumps a fist in the air in defiance, doesn’t have anything to prove to tinpot bullies on the international stage. We know Trump has a deferential psychology towards so-called strong men – yet he all too easily forgets, he is the strongest man on the planet.

There appears a consensus that peace between Russia and Ukraine must be gained, at almost any cost, yet I feel quite strongly that this entire episode has been entirely mishandled. You do not give red carpet treatment to an international war criminal, who actually could have been arrested the moment he stepped onto US soil (except the US doesn’t recognize the International Criminal Court’s jurisdiction). There can be no land for peace deal, there can only be a peace for security guarantees, in a context which recognises the innate sovereignty of Ukraine to exist as an independent state. Putin has repeatedly shown he doesn’t respect ceasefires, nor peace agreements, and his entire claim to territory is based on the deluded view that Ukraine shouldn’t exist, and it forms part of a greater Russian empire, he aims to rebuild. Russia is a military superpower; it is not a superpower beyond this. Sergei Lavrov attending the Alaska meeting last week, with a CCCP sweatshirt, parades this delusion. Poland was one of the greatest States in continental Europe; Turkey had an Empire; Britain had the greatest of all Empires.. and now we are a smaller economy than India, one of our former colonies. Things change.

The aggressive expansionist and supremacist mentality of the Russian leadership seems to not want to change, and therefore a land for peace deal will not work.. only a peace for security guarantee deal will work. If the US provides intelligence and the threat of airstrikes, this will be of substantial help. The UK has hinted at putting “boots on the ground” – however we also need to recognize that a likely maximum deployable contingent would barely be greater than 10,000 British troops… (50,000 international peacekeepers were deployed in Kosovo – tiny in comparison to Ukraine). 10,000 is roughly the number that are being killed or injured on the Russian side – every week. That means any security guarantee has to be geopolitically coherent amongst cooperating European States, with a feasible and sustainable logistics supply line. A security guarantee is worthless, unless it illustrates our readiness and preparedness to fight to uphold it.

Bullies only respect strength, and hold quiet contempt for those who would otherwise give them the red carpet treatment.

#Ukraine #peaceagreement #Putin #Trump

“When the facts change, I fire the fact finder.” Keynes would have been proud… Dismissing Erika McEntarfer, commissioner of the Bureau of Labor Statistics, is genuine a market making move. It is Politburo politics of the most blatant kind.

I’ve been trying to coalesce this version of truly bizarre political radicalism that Trump represents. A sort of “in your face” defiance that actually defies their own self-interests – and is shrinking any element of geopolitical presence that the US has. I understand the US wanted to just retrench and deal with its own affairs, but surely not at the expense of international goodwill and and the astonishing lack of trust and certainty that his very presence represents.

As reported on Reuters: “Mehill Marku, lead geopolitical analyst at PGIM Fixed Income, a New Jersey-headquartered investment firm with $837 billion in assets under management, said investors were also watching Trump’s expansive interpretation of his powers as President, a legal doctrine called the “unitary executive” theory.” How the US constitutional system is itself not rebelling at Trump’s excessive and repeated use of Executive Orders, I simply do not understand..

And again,  if you compare it to any of the political scandals that I can think of since the 60s, including Watergate, surely the net harm to the US is greater than any of these, and arguably should it have been a non-Presidential system, Trump should be indicted and commencement of a new democratic replacement begun. The defenestration of Liz Truss by comparison, looks positively super efficient – and she had done significantly less damage than Trump so far! What happens to inflation data when the stockpiled stocks have run out? Will the US Federal Reserve manage to make any sensible progress against this level of bluster?

#BureauLabourStatistics #ErikaMcEntarfer #Trump #Indictment

Who would have thought it in 2016? Brexit in our opinion has been the most effective act of economic and political self harm in a very long time indeed. Yet France, who only three years ago our then prime minister, Liz Truss, notably couldn’t decide whether or not President Macron was friend or foe, is moving towards the creation of a Pan European nuclear umbrella with the UK. 

France has an entirely independent nuclear deterrent. It has been said for a long time that the UK’s nuclear deterrent had “sovereign independence” – and yet there was always some element of operational uncertainty as to whether or not this directly equated into strategic and political independence – due to the co-sharing of the missiles carrying UK warheads, with the US. France didn’t suffer from this potential tactical sleight of hand… And today, Thursday the 10th of July, marks a profound day for UK / French cooperation.

President Putin in his historical revisionism, has entirely created his own worst outcome, one that he professed to fear most: the Eastern nuclear expansion of NATO. For some this is not a closed book, as they argue the accession of new members from within the remit of the former Soviet Union, into NATO, created this conflict. Yet what Putin has managed, due to the near 20-year hesitancy, on the part of the US, as they seek to exit themselves from role of world policeman – Putin has created the perfect conditions for President Trump to put Europe on notice, that it needs to sort out its own backyard. Today, the UK and France placed Putin on notice, that he will soon face a higher and better guarded fence, on which there are mounted surveillance towers. And those towers contain nuclear warheads. Catastrophic historical blunder by Putin. Rather than exercise dominance over a benign region, he has single-handedly caused the massive re-arming and extension into the operational nuclear realm, of his near neighbours. Way to go Vladimir!

At the outset of the Russia Ukraine conflict, Putin, as we have written before, had a very clear and implicit element of nuclear intimidation behind his every action. Including his earlier deliberations on whether or not he would actually utilise this capacity in Ukraine itself. Our position clearly stated at the time, was that Europe should militarily coalesce, acting collectively to call President Putin out on this nuclear hostility. Today’s UK/French statement of intent on nuclear collaboration, will reach straight into the heart of where Putin goes from here…and has almost certainly made the world a safer place…

#nuclearcapability #nuclear #rapprochement #nato

There is a structural malaise in the UK labour market, There always has been, yet it has now been both exacerbated and consolidated by Covid. The attempted reforms to the Government’s prime disability benefit, the Personal Independence Payment (PIP), which is facing stumbling blocks as it limps its way through Parliament, doesn’t actually address the broader point: that so many people transition from Universal Credit – the UK working age Benefit, primarily intended for people who lose their jobs – onto PIP, and other elements of disability benefit, as the sums paid for Universal Credit are impoverishing.

The United Kingdom has perhaps the lowest rate of Unemployment Benefit across the G7 (excluding the US but notably including Italy) and the EU more broadly. The lowness of this figure is specifically designed as a disincentive to claim it in the first place, not least with the onerous and astonishingly intrusive questioning that accompanies any claim. However what it doesn’t acknowledge, is that the United Kingdom labour market more broadly is both unbalanced towards lower productivity output, utilising less investment heavy technology, and therefore more basic in the doing of so very many jobs. This simply means that the lower skilled trades are easily replaceable, and when one loses work, it can be really rather difficult to get back in. And so the financial disincentive of having a low paying Unemployment Benefit almost directly funnels people into claiming additional support, via seeking disability or ill health supplementary payments – such as PIP.

Given the structural malaise in the broader market, as initially outlined, once they have secured some element of additional payments, a number of recipients of these now combined benefits, can actually just about manage to pay their bills. And boy do they not want to come off – particularly post-Covid.

And so rather than being a disincentive to claim in the first place, the United Kingdom Benefits system has a powerful incentive to dig yourself deeper into the system in order to avoid penury level basic Benefits.

This is an atrocious outcome for the individual, as they quite simply get stuck in the “Benefits Trap”. The UK actually ends up on a low growth, low output increasingly tight spiral, which if we are lucky, flatlines – rather than actually deflates – the economy. It’s bad for the individual, and it’s bad for society…

I propose higher Benefits, easier to claim, and a stronger firewall between Universal Benefit, and access onto life sucking sickness benefits such as PIP, may help. Whilst undertaking attempts to structurally alter the labour market, making more rigorous training courses in all of the manual trades. Also the adoption of a higher investment spend per worker – may well shorten the time and  capture of unemployment, also promoting a more skilled manual working sector, providing the bedrock of the economy, and achieving that elusive growth in the UK.

#PIP #Government

As an occasional commentator, it is easy to pontificate about motives in today’s Spending Review… Having looked at it again, I now think that it is a fairly complex and nuanced response to an environment that has changed – with a deepening of the security crisis in Ukraine, and a clamouring for more targeted funding for the police, and  increasing capital expenditure for the Department of Justice, in the prison building program… For the first time since coming to power Rachel Reeves has exhibited some maturity, not just as Chancellor of the Exchequer, a role that she had held in Shadow position for many years, but as one of Labour’s key figures. Arguably given the flack that she has faced in the past year with the truly misguided increase in Employers’ National Insurance Contributions, had she not made a very credible fist of this Spending Review, then her tenure as Chancellor would become yet more fragile.

“This is not a return to austerity”, she said, as she also spoke about reform, and the need for investment and renewal. The specifics were considered: across the Western world, arguably mirroring the rise in nationalism, the political classes have deemed it acceptable to reduce the Development Aid budget. The most extreme example of this was the dismantling of USAID by the Trump administration. More to say on that another time, however it provides a useful fig leaf for the squeezing of the Foreign Office by 6%, both in capital and day-to-day spending, notably through it’s foreign Aid budget. 

The sophistication of Government financing is often lost on the public, in that I am sure few voters would realise that a large portion of the Foreign Aid budget was actually allocated directly to cover the housing costs of UK illegal immigrants and asylum seekers. With a cancellation of this cost by 2029, as this function is now being brought in-house, with the building of specific accommodation. Commentators repeatedly mis-attribute the funding for these hotels to the Home Office when it actually largely comes from the Aid budget of the Foreign Office.

Debt interest payments at around £131Bn, are now slightly higher than the budget for the Department for Education, itself the second largest spending Government Department, after Health. Yet, like Health, it’s infrastructure is in quite dire straits. Apparently we are to await news on a separate infrastructure and industrial strategy positioning paper in the not too distant future, which should tie these aspects together into a more coherent and hopefully integrated strategy.

By relaxing the rules on Government Debt, to facilitate capital spending, the Chancellor has taken full advantage of the leeway this has afforded her. However she will be pulled back into the cycle of bond market vulnerability, should this spending profile not directly accord with what the Office of Budget Responsibility lays out before the autumn Budget.

The subtleties within the spending shows, in my eyes, the first time I can discern any sophistication in the day-to-day actions of this Government. The technology budget of the NHS will increase by 50% during this review period. Defence spending will rise to 2.6% by 2027, though apparently this also includes spending on the Intelligence Services (which is not universally agreed to form part of the NATO definition of Defense spending; equally with the technical and electronic sophistication of Defense, nor is it condemned) 

Realistically given the wafer thin margin, evident even after the relaxation of Government Debt rules, we now believe there’s a greater likelihood of tax rises in the autumn Budget.

#spendingreview #RachelReeves #capital #infrastructure