simon zadek

The Tories, according to a report in The Times today, missing having a straight majority in Parliament by only 16,000 votes. What makes this such an extraordinary data point are two other pieces of information. First that thousands, and potentially tens of thousands of people, where unable to vote because of administrative chaos at the election booths. Second that no identification is required to vote in the UK, a fact that would be a cute sign of trust if was not such an appalling symbol of misplaced unaccountability. Reporting in The Times on both counts:

Marie Marilyn Jalloh, an MP from Sierra Leone, said: “There has to be doubt over the legitimacy of the result. Where people have been disenfranchised or cases of fraud are found there should be another vote. In my country this would be very controversial…Your system is a recipe for corruption; it was a massive shock when I saw you didn’t need any identification to vote. In Sierra Leone you need an identity card and also to give your fingerprint. Here you need nothing. In this respect, our own system is more secure than yours.”

Compounding this is of course is the current spectacle of Messrs Clegg, Cameron and Brown negotiating for power, discussing the intricacies of electoral reform and cabinet seats, as Greece burns, and the European Union staggers in its attempt to match its unwieldy ‘network governance’ model with today’s imperative to act quickly and with authority. Mr Brown is our Prime Minister, and as an aside is paid to do this job, and should be on the ball in participating in this, Europe’s crucial moment. Or perhaps the ‘absenting’ of the UK from the most important moment in the Union’s history is in Europe’s interest, since there would be little prospect of the UK’s contribution reflecting anything more than domestic horse-trading.

So who won the UK elections…well, we know that Mr Cameron won the race, Mr Clegg won the power-game, and Mr Brown gets to do another lap to see if he can pick up the gold medal through his constitutional right to offer power-sharing bribes to others. As I write this blog, it seems likely that Brown will fail in his attempts to do a deal, Mr Cameron will get his run at the main game, and Mr Clegg would be foolish not to find a way to climb on board the Tory bandwagon. So much for the formal result.

And who lost…well, Mr Brown clearly lost, but at least succeeded not to be slaughtered at the polls, a win of sorts compared to what might have happened. Mr Clegg lost in failing to capitalize on the ‘TV Wow’ that he experienced, and Mr Cameron lost, whatever is his next job, in failing to get a strong mandate from the UK electorate. His will be a disabled government at best.

Actually there were more losers than these three gentlemen and their tribal followers. Anthony Barnett must be feeling down that his optimistic ‘call to revolution’ in Our Kingdom as he wrongly predicted a three party race. And advocates of electoral democracy must be cringing at the news that hundreds if not thousands of citizens were not able to vote, which will no doubt amuse Mr Chavez and other masters of disenfranchisement.

But most of all, anyone interested in the future of the UK must be wondering how these electoral games relate to the real challenges facing this little, over-crowded, over-indebted island. Since entering the European Union in the early 1970s, the UK’s political process has opportunistically squandered the nation’s assets in five, well-grooved steps.

First come the North Sea Oil, which paid for tax cuts and consumer imports, and accelerated the demise of our manufacturing base through neglect and painfully high exchange rates (that made imported consumables a bit cheaper).

Second came the sale of our public-owned assets, privatization, alongside the fire-sale of public housing at cut price (in fact happening around the same time). It certainly powered-up the private sector, and crucially allowed M Thatcher to distribute yet another round of largesse to her loyal voters, who helpfully spent it out quickly on yet more imported products, witnessed by the rapid collapse of savings rates at around the same time.

The third round of asset use was somewhat different in quality, the ballooning world of public-private partnerships. This allowed the public sector to develop a huge and largely undisclosed off-balance sheet contingent liability to the private sector, which had the effect of placing UK Inc in hock to the private sector indefinitely for the supply of its most basic services, and the politically attractive spin off of making the government’s capital account looking a whole lot better.

Fourthly of course was the use of our own homes to mobilize assets and, once again, spent it on all things glitzy and, given that we by that time had no manufacturing base to speak of, imported from other shores. Thanks to our sturdy Chancellor of the time, the relaxation of consumer and mortgage credit made all that possible and so apparently painless at a time of endlessly rising property prices.

And that brings us to the grand finale (to date), the implosion of the financial services sector, bloated by risk, driven by greed, and enabled by our voter-conscious, democratically elected government. With this, unintended, second Big Bang, the underlying weakness of the entire economy has been revealed, hidden by the preceding four magical moments that had moved our national assets from what was a well-stocked balance sheet to the country’s one off profit and loss account.

Now what, you may well ask, has all this to do with the elections. Well in one sense nothing, of course, because it has not been in any party’s interest to reveal what has happened to our underlying asset base in the last 30 years (and that is before we even get into what we have done to our human capital, but don’t get me started on this). Our horrendous public sector deficit and rapidly re-growing balance of payments problems would not be so scary if we had not squandered our inherited assets that might have formed the basis for tomorrow’s wealth creation and sustainable economic growth. The fact is, or at least a reasonably melodramatic view would be, that our balance sheet is shot, and our underlying capacities seriously damaged if not permanently destroyed.

Whoever becomes Prime Minister will only lead and be seen as a true leader by resolutely stripping back the hubris and building anew. This is not a million miles from Mr Obama’s calling card, but to his advantage he was taking the helm of an economy that was still vibrant and well stocked with natural, financial, human and institutional capital, even although its ballooning debt to the outside world might yet destabilize their attempts to remobilize these assets to the nation’s benefit.

So for our leader-to-be, I suggest the following: (a) come clean, quickly, on the real nature of the problem and the dream we have lived across labour and tory administrations for three decades, (b) establish a ‘true north’ accounting framework that allows for our assets and debts, natural, human, financial and social, to be tracked and reported on, (c) renounce the fashionable demand for every minister to be visibly innovative, since it only adds to the problem of short-term populism at the cost of long-term change, (d) take advantage of our ‘hung’ situation by creating a government-by-consensus approach that draws in the best from all parties in a ground-level review of what can be done for the UK’ citizens to live healthily in this century, thereby bringing to an end the era of obsession, addiction and denial that have become symptomatic of our post-colonial period.

A week in South Africa, and a step further in a brilliant initiative, the South African Renewables Initiative (SARI) exploring how to boost renewables and in the process drive industrial development opportunities deep into the industry’s value chains, and help to vaccinate South Africa’s energy and carbon intensive against the expected growth of ‘carbon sensitivity’ in its key international markets by establishing a green purchase obligation for these sectors.

The keystone to the deal concerns the capacity of South Africa to finance the rapid scaling of renewables generation through a German-style feed in tariff that pays a premium on green energy produced and fed into the grid. What a great way to get private citizens and commercial investors to cough up money for the equipment…only problem is the cost. Even Germany is beginning to groan at the cost to the public purse. According to one estimate, “In 2008, the tariff’s estimated cost was 3.2 billion euros, or $5 billion. This amounts to less than two-tenths of 1 percent of the German economy, hardly a significant price tag to encourage a technology that delivers 15 percent of the nation’s electricity. Furthermore, the cost is spread across the entire ratepayer base. In 2007, the added cost per household was 3 to 4 euros per month, about the price of a latte”.

For South Africa, the cost to the tax payer (or spread across all consumers) is manageable at low levels of renewables, including the current target of 4% of the total mix by 2013. But to catalyze industrial development and jobs, and to deliver enough ‘green’ to exporters, will take 10-15%, and rather fast, say by 2020. At this scale, it is just not practical to finance this domestically…hence the problem.

One possible solution, and the topic of the work that i am involved in with Associates Maya Forstater and Saliem Fakir on behalf of the South African Government, is to cut a deal with key governments making international climate financing commitments to subsidise the feed in tariff rather than pay for projects. Whilst the feasibility study is a work in progress, initial estimates suggest that the implied cost by carbon ton abated might be as little as US$10, closer to the cost per ton of avoiding deforestation than the much higher costs normally estimated for promoting most renewables at this stage in the game.

Work-in-progress, certainly, but progressing quickly, so watch this space as it develops…

BAe’s admission that it has been guilty of illegal practices, basically bribery at scale, is a relief and vindicates the persistence campaigning on this issue by the Corner House and other advocates of clean practice. BAe, once at the starting gate for a radical transformation to produce non-military products, the so-called Lucas Plan, is now one of the world’s largest merchandiser of fine weaponry to the four corners of the globe. Admitting to the evil deeds, one assumes, was part of a deal that satisfied the US’s call for blood and allows BAe to keep bidding for a share of the world’s largest military budget. And since the Saudi family appears to have been removed for now from the limelight, one also assumes that BAe gets to stay in that lucrative market, its dominant source of profit over many years. So i guess everyone is happy now, right ?

Not really, the ultimate loser is once again the UK, its leading politicians which ingloriously sought to cover it up in the spirit of good inter-cultural relations with the Middle East. In truth it beggars belief, that first Mr Blair and then Mr Brown, both who liberally evoke their religious fervor and moral rectitude, could choose to suppress what seemed obvious to us all, that dirty deeds had been committed and needed to be surfaced and penalised according to the law, or at least as close as one can come to that these days. Anwar Ibrahim, in an earlier role as President of AccountAbility, wrote personally to the now Prime Minister pleading with him to take the high ground on this issue as he entered office, citing the ‘ethical north’, a political opportunity, but also an opportunity for the US to regain its stature in international benchmarking of good practice. Sadly there appeared to be no one at home at Number 10, and the advance met with stony silence…imagine how much better this would seem and be if Mr Brown had acted then.

And why do I say once again. Well, what with MPs’ heading for the courts over their liberal attitudes towards expenses, and the murky world of calls to war against Iraq in the spotlight, it is hard not to see a pattern of all-too-visible moral collapse. In fact, the pay-off of Mr Blair seeking at all costs to maintain the UK’s standing in the world has achieved, in a nutshell and as fast as they take to fall to the ground, exactly the opposite.

Thank goodness it just doesn’t matter to anyone much, least of all the citizens of that fair isle who are just trying to sort out their lives, their livelihoods and their families’ security in the face of that more legal transgression by the financial industry, egged on by, yup, you guessed it, those Anglo-Saxon politicians from the UK and the US.

Copenhagen was a structured, sovereign-state based negotiation with clear rules of engagement (albeit abused). It had a beginning, middle and (at least in theory) an end. It was designed to reach agreement on a specific set of activities entirely focused on the public good. It was also a veritable ‘walk through babylon’ (as my video clip painfully illustrated), and as we now all know deteriorated into a shambolic, ego-laden, mecantilist dog-fight.

Davos is designed as the elite market place for anything the globe has to offer. Intellectuals, activists and would be politicians ply their trade as casually as the attending traders normally do so glued to their phones, computer screens and wallet books. It is ordered along the lines of chaos, legitimacy is a matter of power, money, influence or stardom through the arts. There is no one deal to be done, no obvious rules of the game (there are some less obvious ones, to be sure), and governments compete for airtime with the latest bestselling writer, and the rowdiest Texas oilman.

Davos is a spectacle to behold, always threatening to reflect our worst Darwinian inclinations. Copenhagen, on the other hand, was meant to reflect humans at their best, open to collaboration for the public good. And yes, you have guessed it (you smart, cosmopolitan blog readers), life has its way of inverting the expected. Copenhagen actually demonstrated humans’ capacity to be petty, narrow-minded, and deeply tribal. far from being focused on the public good, it was focused on the private gain of vested interests largely not in the room, whether they were businesses, parochial politicians or even short-sighted populations of citizens who should have known better.

And Davos…well it is what it says on the tin, in one moment abstracted from any sense of reality, at another exhibiting the human ego at its most profoundly revolting. Yet it somehow unlocks the participants’ passion, innovation and a will to imagine and take risks. In muddling up the public good with private gain, it evokes much of what is amazing about our species and without doubt explains how we have survived to date (for better and worse). It is in Davos that investors in green technology have the stage,

yes aching for public subsidy if they can get it, but in truth knowing that they will fund the low carbon economy if it is going to happen. It is in Davos that the Chinese business community schmoozes with Western Governments and vice versa. It is on these snowy hills that more irreverent potential is discussed than could be dreamed of in any formal multilateral procedure.

Yes, a Managing Director of the World Bank was right when she reminded us at Davos that the farmers we were discussing were not in the room. And who knows what complex political equation Strauss Kahn from the IMF was making when he supported Soros’s proposal to unlock capital to fund climate management. And it is slightly crazy making when Sarkozy proposes to rewrite the rules of capitalism (better than his Italian counterpart though), and it makes you wonder when Davos declared itself ‘green‘ on the back of a half-hearted labelling of carbon-spewing, attending SUVs. But frankly such weaknesses are chicken-feed when compared to the cynical nonsense that stalked the corridors of the Bella Center in Copenhagen just weeks before.

You may well despair, and I might join you for an accompanying drink when you do, but Davos is more about our future than Copenhagen will ever be in bringing more of the right people to the table, and providing more opportunities for the deal making that is needed to safeguard our children and theirs in turn. We can bemoan the elitism, the false dawns too often announced and then neglected forever more, and the fly-in humbug of much that is said and neither meant nor even heard. But through this there is an authenticity in the demonstration of real power, truly extraordinary wealth, unbelievable innovators (for whatever reason and end), and a will to grasp the world as it is and shape it into the future. The tens of thousands leaving Copenhagen were angry, burnt out, and deeply exhausted. Those leaving Davos will be tired, often confused, but in the main better informed, connected and able and willing to act.

Have I drunk the Davos Kool Aid for too long to have any remaining sense? Well maybe, self-diagnosis is not humankind’s speciality, far from it, and I am no exception to the rule. Certainly Davos exhibits in technicolor more than it resolves what I called in an earlier blog this week sustainability’s very own Valley of Death, in a nutshell our ’struggle to innovate at scale in a timely way in addressing the world’s toughest problems‘. But its more likely that the solutions lie lurking beneath the canapes at Davos than the decrepit cheese sandwiches of Copenhagen if only because the folks in the former are actually treated with respect, treat each other in the main with respect, and have a will to live rather than just survive.