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.

So if reinventing global governance is the game plan, who are the key players.

Are they the gathered assembly at Davos, the obvious cast of characters, or are there folks lurking on the fringes of the elite who might compete for a place at the table, or even redesigning the table or owning all or a piece of it.

The most recent entrant is BASIC = BRICS – Russia (or maybe ’self-definition without Goldman Sachs’). China-led or at least conceived of, it was of course these folks on whose door Mr Obama knocked on the search for Wen Jiabao. So in the popular game of geopolitical tag, 1:0 to BASIC if the opponent was the US-led G8.

BASIC met just last weekend, thoughtfully before Davos and a week or so in advance of the ‘not so hard and fast’ closing date for countries to register their commitments under the Copenhagen Accord. Reporting in The Hindu, China and India announced their decision not to sign up to the Accord for now. Indian Prime Minister Singh highlighted BASIC’s commitment to the UNFCCC and Kyoto and queried the legitimacy of the Accord beyond a high level political statement emerging from a battle worn Copenhagen.

Early days, and so far BASIC is focused on climate and largely reinforcing an understandably furious but wildly out-of-time G77 position. But could BASIC become a more widely transacted governance currency in times to come.  BASIC might be a refreshing antidote to the G8, but it could in the end be little more than an anti-G8. Such zero-sum politics would not serve us well, least of all the citizens of BASIC nations, since being defined by opposition is little more than being ’shadow like’. Could BASIC raise its game and conceive of a different politics that grapples with global problems rather than relocating the drivers of disfunction.
Curious will be to see to what extent BASIC becomes a reference point in the coming discussions at Davos in the coming days.