Was Brexit Inevitable?

 

November 2017 – J Boima Rogers

The Brexit vote was a shock but in many ways it was inevitable.  At the end of the Second World War when European leaders decided to form a union to bind the continent together, ironically, the UK, the country that had played the leading role in bringing down the Nazis was not welcomed.   True to form, France reverted to its centuries old rivalry with the UK and did not welcome Britain to the new club.  The UK on its part has always had ambivalence towards the continent, making forays into continental wars and projects but steadfastly guarding its status as an island nation and marine time power with a global focus. In many ways the seeds of the divorce had been planted and germinating for a long time.  Negotiations are proceeding at snail’s pace and the likely outcome is uncertain.

Brexit was a shock that pundits and the political and economic establishments failed to foresee.  All the national parties, with exception of the United Kingdom Independence Party (UKIP) and most business groups opposed and campaigned against Brexit, predicting dire consequences which voters ignored.  It was a bitter fight, with both sides spending significant time and millions of pounds making their case in all forums, but at the end of the day the public decided it had had enough of the European Union (EU) and wanted powers brought back to the UK.  Scotland and Northern Ireland voted to stay but England and Wales voted to get out.  The shock reverberated across the UK, other EU countries and globally.  The British Prime Minister, who was on the Remain side and had initiated the process resigned.  The Scottish National Party (SNP), which had been licking its wounds after a failed independence referendum, tried to reassert its call for an independent Scotland because Scots had narrowly voted to remain.  Mrs Theresa May, the new Conservative Party Prime Minister decided to call an election to secure a strong mandate in the negotiations with the EU.  The British public decided that they could not trust her party to call all the shots and she lost the slim majority her party had and now has to depend on the Unionist Northern Ireland party to form a government.  In Scotland, the public decided to reign in the SNP which lost seats to other parties.

The seeds of the divorce go a long way and are implanted in the British psychic. Britons say they are going to Europe when they decide to cross the channel.  Over the centuries the Island nation has often been embroiled in military campaigns against continental partners, including the Dutch, Germans, Spanish, Portuguese, Austrians and French as well as in pan-European wars and projects, often reluctantly. For centuries, it focussed on its global outreach, acquiring colonies in all continents and was proud of the fact that by the end of Queen Victoria’s reign, its vast empire included over a quarter of the world’s population, excluding its rebellious child, the United States.  The British public, while playing pivotal roles in both world wars was not too enamoured with the European Economic Community (EEC as it was then called) that France and Germany spearheaded after the Second World War. The new club was designed to integrate the economies of Europe, largely to forestall major conflicts like the two world wars that had ravaged the continent in the twentieth century.  The UK held out for many years and eventually joined the club in 1973.

At the birth of the union, the British economy, heavily reliant on trade with its colonies and the world in general, did not fit well with the new club.  The focus of the group was initially steel and coat, but subsequently, agriculture became the dominant focus in terms of budgetary outlays.  The economies of the new club members were much more integrated, reliant on heavy industry and agriculture employed up to a quarter of some of its members, compared to less than three percent in the UK.  When the UK joined, half of the EEC’s budget was spent on agriculture (down to 40% in 2012) and a large proportion of the budget went to poorer south European countries which also had large agricultural economies. Britain, with a very small agricultural sector and a relatively high per capita income was a net payer into the group’s budget.    The UK, which proudly boasts of not having a written constitution, was suddenly inundated with regulations from Brussels on a myriad of areas.  It had joined the organisation on the basis of trade but it found that the union was encroaching on a host of political, economic and social areas. Much effort was made to harmonise standards to facilitate trade among members, with detailed regulations. The group aligned the currencies of its members and subsequently adopted a common currency.  It initiated a growing diplomatic corps and there have been moves towards a military alliance which some of its members would like to supplant NATO.  It increasingly made use of a separate but closely linked European Court of Justice as an arbiter of disputes.  The Schengen agreement allowed citizens to travel throughout the Union without passports.   The straw that broke the camel’s back was the mass migration of three million EU citizens into the UK over the last decade as the EU allowed its citizens to move and work in all states within the union.   Many workers in new, poorer East European countries took advantage of this clause and moved into the UK – other richer EU states had applied a clause that limited this free flow but Britain did not because it had wrongly assumed that a much smaller number of migrants would come to the UK.  Another cause of this migration is because other EU states have taken much longer than the UK to recover from the recent great recession.

These developments were viewed with alarm by Euro sceptics, mostly in the Conservative party but also in the Labour party, notably among working class members who faced increased competition for jobs and depressed wages as a result of the migration.  The pushback however started much earlier.  Margaret Thatcher secured the famous rebate, reducing Britain’s contribution to the EU budget significantly.  Politicians and the tabloids railed against new regulations and detailed product standards, which they argued were costly to businesses and consumers.  The UK withdrew from the arrangement which pegged the pound to other European currencies and refused to join the common currency and the Schengen agreement. Politicians and the tabloids railed against the European Court. Britain has been very opposed to the idea of an EU military unit supplanting NATO.  In the European Commission and the European parliament, the UK has often been in the forefront of what it labels “common sense” approach to new regulations and the enforcement of regulations.

In unravelling the UK’s rift with its EU partners we need to look at the legal and political frameworks which are markedly different.  As a policy adviser for British farmers my colleagues in Brussels were often perplexed about the UK’s concerns with new regulations.  The continental approach was to simply transcribe new regulations into their national statutes.  The British government’s approach was usually to refer new regulations to its lawyers to check on how they fit in with existing statutes but even more important,  to check whether the government would be open to legal challenge in the courts.  In one notable case (paying growers to grub apple trees because of EU-wide overproduction) that I was involved with, but which no doubt applied to other cases, the government used force majeure.   This meant that that regulation was one-off and could not be used as a precedent in the future.  This is partly because the lack of a written constitution means that policies are often based on precedents set in legal outcomes.  On the political front, most EU countries, largely because of the use of proportional representation, cobble together groups of parties to form coalition governments, whereas in Britain, because of the electoral process and tradition, coalition governments are rare.  In industry, notably in Europe’s powerhouse, Germany, there is a tradition of owners, management and workers setting councils to formulate strategy and policy, markedly different from the UK where each of those stakeholders is entirely beholden to its members and very partisan in relationships with other stakeholders. Indeed this adversarial legal, political and economic tradition is viewed by Anglo-Saxon countries as healthy for politics and business but for continentals as unnecessarily confrontational.

The clock is ticking fast but the negotiation between the UK and its EU partners is crawling at snail’s pace.  Britain wants a comprehensive approach while EU partners want to settle key issues first, notably, the divorce settlement (UK payment for what the EU considers as current commitments), the status of EU/British nationals in Britain and other EU states respectively and the Irish/Northern Ireland border, the only land border between the EU and Britain, before the most important issue to the UK, trade arrangements can be discussed.  The UK has suggested Twenty billion pounds divorce settlement, a far cry from the fifty billion pounds that the EU has suggested.  Developments within both camps complicate matters.  In the UK, the two major (UK-wide) parties emboldened by gains in the recent general election and the SNP, which were in the Remain camp, want a soft Brexit and are clamouring for a significant input in the negotiations.  The UK government is weak, partly because it lacks an outright majority but also because the Conservative party is sharply divided between the Leave and Remain camps.  In the EU, Angela Merkel, whose party lost significant ground in the recent German election, is still cobbling together a coalition and until that process is completed, the most powerful country in the EU cannot be fully engaged in the negotiation.

The last two weeks have been tumultuous, with the British government buffeted from all sides.  The weakness of the government was demonstrated when Mrs May refrained from sacking government ministers that have been accused of serious transgressions; two have resigned, not sacked as they would have been in a strong government.  Two other senior Ministers that opposition parties feel should be sacked because of transgressions and allegation of impropriety remain in the cabinet.   The Financial Times reported last week that executives of major American companies have expressed frustration with the lack of progress and clarity in the Brexit negotiation, suggesting that they would be forced to relocate to other EU states from the UK.  Michel Barnier, the EU chief negotiator has given the UK government two weeks to state how much it will pay for the divorce bill before negotiations can move on to trade and other arrangements.  Business Europe, the pan-European grouping met with the Prime Minister seeking clarity and expressing serious concerns about the uncertainty generated by what it sees as lack of clarity on the part of the British government and slow pace of the negotiation process.  A letter spearheaded by Boris Johnson, the Foreign Secretary and Michael Gove, signed by other Conservative Members of Parliament (MP) exhorted the Prime minister to follow the mandate it was given in the referendum, which for the group, suggests a hard stand in the negotiations and hard Brexit.  The UK chief negotiator announced that MPs will have a vote on the deal negotiated, a statement that pacifies MPs but which may be meaningless as Britain would not be able to amend the deal without the agreement of the 27 other EU members states.

The final outcome of Brexit is still uncertain but there are a few broad scenarios.  The EU needs to make Britain pay a price for its decision for two reasons.  As a net contributor to the EU Britain’s departure will leave a big hole in the budget, hence the demands for a hefty divorce settlement and we should expect Britain’s divorce bill to be significantly higher than its initial offer.  The EU has to impose punitive action in trade terms as a warning to other members who might want to follow the UK’s example.   However Britain is a major economic, political and military player and that is something that the EU has to accept and factor in the negotiation.  The UK buys more from other EU member states than it sells to them so EU exporters will be wary of measures that would disrupt this lucrative market.  Businesses are concerned about disruptions to supply chains that have been developed over many years if hefty tariffs and other trade restrictions are imposed. The UK is a major investor in many EU states who would like to maintain such investment flows; other EU countries also have major investments in the UK.   There are far more EU citizens in the UK than there are UK citizens in the EU.  These factors, combined with the size of the UK market, suggest that the UK should be able to negotiate better terms than arrangements with other non-EU countries like Norway and Switzerland.

My predictions are that the UK will increase its divorce settlement significantly higher than its initial offer and negotiations will continue after the formal Brexit deadline of March 2019, into the two year extension that the UK has proposed.  The UK will continue to play a significant economic, political and military role in the continent, albeit at a less engaged capacity.  In the short run, many experts are predicting that the economy will take a hit and indeed many global brands have indicated that they would shift some operations to the continent, no doubt looking at the much bigger EU market and egged on by governments in those countries.  In the long run though one should never underestimate the Brits, who initiated the industrial revolution and were the chief architects of globalisation.  Britain, through conquests, alliances and plain skulduggery established its presence in all continents and moved people, products and services around the globe.  Brexit may be another opportunity to play a more global role and in a way, history tells us that it was inevitable.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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Compact with Africa – a game changer or another white elephant?

 

 

October 2017 – J Boima Rogers

At the G20 meeting in June this initiative was launched.  Is it a game changer or one more grandiose proclamation that will not go anywhere? The initiative, Germany’s support and recent developments suggest otherwise.  It will hopefully improve Africa’s investment climate.  At the summit, the project was spearheaded by Germany’s Angela Merkel, the leader of the largest economy in the most powerful economic group in the world, the European Union (EU).  Recent developments, namely, mass migration from Africa into Europe across the Mediterranean Sea, the Trump factor and new technology, suggests that the compact could be a game changer.

The project report was jointly produced by the African Development Bank, the International Monetary Fund and the World Bank. It would target and try to ameliorate impediments to private investment and ensure closer cooperation and coordination among stakeholders.  The priority is countries that have “sufficient administrative and policy capacity”, to ensure stable and appropriate macroeconomic (soft) infrastructure, namely; effective, efficient and stable business regulatory policies and practices and; efficient financial markets, risk mitigation and availability; peace and security; governance and; the rule of law.  The five countries, probably nudged by the project authors that initially expressed interest in the initiative were Ivory Coast, Morocco, Rwanda, Senegal and Tunisia.  The priority statement appears to work on the centre of excellence concept that is, demonstrating to other African countries that by putting their houses in order they can get support from external stakeholders and investment opportunities.

This initiative is undoubtedly the result of recent developments in the geo-political landscape.  It was announced at the G 20 forum under the German presidency of that body.  The EU, by default, has taken the leadership of the world as the US retreats under Trump’s America First posture. Trump by his statements and actions, is no friend of the non-White world.  His budget reduced the State Department appropriation by a third and his speech in Poland and views of his Alt Right support base have clearly indicated that his priority, other than military adventurism, is people of European decent.  He left the meeting when the initiative was launched. China and the two main former colonial masters, France and the UK, major players on the continent would obviously need to be key stakeholders.

German support of the compact is a good development for a number of reasons.  Firstly, it has huge financial muscle and large foreign exchange reserves from the hefty trade surpluses it has accumulated over the years.  It is the dominant economic force in the EU, the world’s largest trading bloc. This means that it has the financial muscle to bankroll the project and it can press the EU to open its market to Africa.  Germany’s educational system, notably, its superb technical vocational system is what is badly needed in the continent where the educational infrastructure has failed to develop a technical cadre that the continent needs.  Germany is the factory builder of the world and has a solid industrial base, a track record that will be relevant to African countries requiring this expertise.  Finally, it should be noted that the recent election setback for Chancellor Merkel when her party lost out to the far right might ironically strengthen her position in supporting the compact, by arguing that failure to facilitate economic growth in Africa could spur migration from the continent, something the far right is very much opposed to.

It has been noted that there have been a hundred plus development initiatives in Africa and this one may sound like another white elephant but this need not be the case for a number of reasons.  Firstly, countries must have “sufficient administrative and policy capacity” to be eligible; countries that have expressed interest in the scheme appear to possess this requirement. This means they have to have done their homework, rather than as is often the case where donors have had to do all the lifting, projects often collapsed as soon as foreign donors withdraw.   The emphasis would appear be on improving the chosen countries rankings in the “ease of doing business” indices that the IMF, the World Bank and other organisations compile. Countries that are highly ranked in those indices and have the relevant physical infrastructure attract investment.  African countries have to apply to join the scheme and in so doing set, own and manage the agenda rather than having projects thrust upon them that merely salve the conscience of developed countries and ex colonial masters. The centre of excellence concept should make the compact attractive to other African countries, they can see that improvements in the investment climate results in assistance from donor countries, increased private investment and consequently economic development and jobs.

If this initiative is to be really effective it must make use of technology.  Technology in the form of database, Big Data and the internet will be crucial.   The project must build a database of previous initiatives, projects, studies, processes and outcomes.  This will allow all stakeholders, notably, donor countries and organisations, African governments and commercial operators to make use of what has been done, obstacles and successes.  The project can make use of Big Data to build comprehensive and detailed profiles and analysis in real time.  This information should be posted on the internet, emailed to relevant parties and updated on a regular basis. This will allow participants to learn from history, each other and for all stakeholders to develop policies and projects.

Africa’s main ex colonial powers, France and the UK have the largest footprints on the continent in terms of history, trade, investment, aid and connections, a factor that must be recognised and their active participation in this project is required.  They would need to re-orientate their engagement with the continent to increased focus on making Africa attractive for investment.  Their programmes should factor this element and they should use their influence on African governments.  China, the largest trading partner and physical infrastructure investor has so far ignored soft infrastructure.  This is partly because that country’s emphasis is to showcase gleaming structures.  China is also mainly interested in the continent remaining a source of raw materials.  It needs to incorporate soft infrastructure in its engagement with the continent; it should realise that those structures can only be maintained when Africa develops its soft infrastructure and; an acceleration of economic growth would increase the demand for physical infrastructure.  It needs to use its expertise to help Africa develop its industrial base for intra-Africa trading as well as exports to China.

The compact sets new precedents because of a number of factors. By explicitly setting out to make the continent more attractive for investment, it will ensure that corporate brands become more prominent not just aid brands.  While the latter do much needed work, the sustainable path to economic development, as the case everywhere else, is the development of the private sector for investment and job creation.   It brings into prominence a new major player, Germany, which has the resources, track record and educational tradition that will add significant value to economic development.  The use of Big Data and the internet has huge potential in a number of areas. African countries can learn from “centres of excellence” on the continent that have implemented measures that have worked.  African stakeholders can and must take the initiative in doing the relevant homework, setting, owning and managing the development process.  The focus for all stakeholders should be on persuading African countries on the merits of building the capacity to own and manage the process.

Two additional factors that the compact does not address but which are very important in the development process are conflicts and population growth.  The former can be minimised because conflicts are often the result of poverty and unfair income distribution.  Increased economic growth which the compact would generate will reduce this pressure.  The conditions set in the compact, notably, governance and rule of law, should ensure a more level playing field.  A growing private sector and the ensuing relative shift in economic activity away from government control, which often gives undue powers to certain ethnic groups, is another way of levelling the playing field. Finally, as noted above, aid organisations can still assist with some of the most disadvantaged groups. The rapid population growth in Africa must be addressed, something that the compact does not cover.  Africa needs to confront cultural and religious taboos otherwise the fight against poverty can get nowhere.

I would like to highlight some papers in my blog that have addressed many of these issues, notably, “Africa must build and maintain its infrastructure”, May 2013.  That paper takes a unique approach in that it reviews the continent’s physical and soft infrastructure.  It also reviews the continent’s inter-Africa trade infrastructure, which has huge potential for development and moving up the food chain.  Another paper notes that African countries should take an approach akin to a beauty contest, making their countries attractive to foreign investors.  In my paper on the Rwanda experience, I highlighted that country’s impressive development from its nadir in the 1990s mirroring similar elements to the compact.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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Has Trump Lost the Plot?

August 2017 – J Boima Rogers

President Trump appears to have lost the plot after less than a year into the job which Obama and many observers, including members in his own party had predicted.  This was clearly evident on Tuesday, 15th August at a press conference which was supposed to be on infrastructure but quickly descended into a typical brawl with the media on the Charlottesville clash between KKK, neo-Nazis and White supremacists on one side and protesters against that group.  Trump reverted to type, equally blamed both groups to the consternation of politicians from both major parties and even the two former Bush (Republican) presidents.  This event followed a tumultuous month including bellicose rhetoric on North Korea, fights with the Republican Senate majority leader regarding the failure of that body to pass a bill on healthcare, denigration of his Justice Secretary, the dismissal of key aides and the continuing Russian election investigation.  The administration appeared to have taken corrective action with the appointment of the well-respected General Kelly to replace Reinbus as chief of staff and then came Charlottesville.  The Charlottesville crisis is however only one more of the constant barrage of chaotic events never seen before in this office.  Trump who came to fix America appears to bring chaos into the system, damaging his incoherent agenda, his party and America.

The Charlottesville fiasco has shown Trump’s real colours.  The well prepared statement on Monday, which in line with mainstream politicians lambasted the neo-Nazis, was not really Trump.  A combative Trump in the press  conference on Tuesday in which he reiterated a moral equivalence between neo-Nazis and protesters as he did in his first statement was the real Trump, rather than the caged animal on Monday.  It is hard to imagine that the President of the USA, which had fought wars to free enslaved African Americans and Nazi Germany, would refer to neo-Nazis as “good people”.  It is hard to believe that a President of the USA would support a general who had rebelled against the federal government because the rebels wanted to keep a section of the populace in slavery and compared that general to heroes of the American Revolution. Where else in the world would you have a statue of a rebel who tried to break up a country getting the support of the President of that country?  It is hard to believe that the President would support neo-Nazis who are advocating hatred and subjugation of non-Whites.  Trump claimed that his original statement and the delay in issuing the much appreciated denunciation of the neo-Nazis was because he was waiting for facts on what really happened.  This goes against numerous actions he has taken regarding terrorist incidents around the world, when he has frequently tweeted condemnation and inflammatory statements about perpetuators almost in real time. Indeed Trump had time to denounce the African American Chairman of Merck who had resigned from his manufacturing council because of Tump’s action almost immediately after the resignation, even before his denunciation of the neo-Nazis?  And Trump has remained silent on attacks on Muslims, even in his own country, while lambasting attacks by Muslims abroad.  The Charlottesville incident has confirmed that Trump is beholden to neo-Nazis who regard themselves as superior to all other races in this polyglot nation.

Crucially for the self-styled doyenne of the business world, the Charlottesville fiasco has resulted in a barrage of criticism from business leaders. Mass resignations from two councils on manufacturing and general business that he had set up have resulted in him disbanding both groups.  However the rot started even before this incident.   He has yet to get any significant legislative win and is obsessed with Obama’s legacy, no doubt because of his racist tendency.  His attempt to repeal and replace Obamacare has flopped and he faces major hurdles in his other legislative agenda, namely, tax reform and infrastructure.  He has a crowded schedule in the next few months which, together with his lack of a clear and coherent vision and strategy, experience in politics, interest in in the intricacies policy formulation and his laziness will make him one of the most ineffectual leaders the country has had.

Republicans in congress are pushing the president to move on to tax reform even though Trump is still obsessed with health care.  Tax reform is a minefield that Trump is ill prepared to deal with.  It was assumed that savings from health care would have been used to part fund the tax give away that Republicans planned; that is no longer possible.  There are many competing interests and Trump has shown that he is unable to deal with such complexities.  Recent polls have shown that the public is not enamoured with huge tax reduction for corporations that the Republicans have been touting.  The public appears to believe by and large that personal taxes are currently fair. Crucially, observers have noted that the administration’s position in two areas have resulted in missed opportunities to raise revenue and conflict with Trump’s stated objective of making the US more competitive.   The administration, in its push for deregulation is reviewing Obama’s 385 tax rule and has postponed its implementation by a year from 2018.  This rule was intended to combat tax avoidance but also make American companies more competitive.  It eliminates a major tax advantage foreign competitors have over U.S. businesses in the latter’s home market: the ability to avoid U.S. corporate taxes via interest stripping.  The administration has also abandoned the Border Adjustment Tax (BAT) proposal that had been championed by Paul Ryan, the Speaker of the House.  That proposal which would tax imported goods consumed in the US but not exports, much like the value added tax in most industrial countries, would have raised significant income for the Treasury while giving US based producers a competitive advantage, thereby also helping stem the country’s huge trade deficit.  Trump is therefore not adhering to his America first principle but also losing out on significant revenues.  The planned tax cuts will increase the budget deficit without spurring significant economic growth as has been the case in previous initiatives.  Both the Reagan and Bush tax cuts resulted in lacklustre growth, much less than under Clinton and Obama when the opposite happened in taxes, economic growth and employment. The increase in the deficit is likely to be a point of contention with Republican deficit hawks and Democrats are not going to be too keen on tax cuts that disproportionately benefit the rich. Trump’s infrastructure plan is as yet a vague idea as his press conference on Tuesday demonstrated. Suffice to say it will be another opportunity for corporations to have rich pickings, no doubt to the cost of tax payers and users. While Trump and members of his team view this as a bipartisan project, expect opposition from Democrats and Republican deficit hawks in Congress.

All is not gloom for Trump’s agenda because the Environmental Protection Agency (EPA) is currently assaulting America’s environment by dismantling Obama’s rules and Executive orders which have protected country’s land, water and air.  The Justice Secretary, like Trump, an ethno-nationalist, is tightening immigration to effectively stem the diversification of America – the majority of immigrants are non-White and the birth rate or non-Whites are higher than for Whites hence their concern.  There will be tweaks with NAFTA, ironically using the tools that Obama created for TPP that Trump abandoned.

Trump has indeed lost the plot and it is hard to see how he can resuscitate this sick patient.  His chaotic administration is embroiled in one scandal after another. He has antagonised and insulted members of his team, party and the business community.  That and his lack of success and unpopularity are making it hard for him to lead his party even though they control both houses of congress.   In 2018 the House of Representative and some Senators will be facing voters and he is likely to be an albatross on his party, if he has not been impeached by then.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) www.oxfordmemo.co.uk

 

 

 

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Should Rwanda be the template for project Africa?

J Boima Rogers – July 2017

The rise of Rwanda from its nadir in 1994 when 800,000 people were killed in genocide against the minority Tutsi has been phenomenal.  Economic and social indicators have out-performed other countries in Africa and around the world.  How did Rwanda achieve this feat in just over two decades?  Yes there are caveats to the story, notably, issues regarding the democratic process and the sustainability of this model. However, even with this caveat the Africa project can learn a lot from this Rwanda success story.   How can Africa learn from this project and what are the implications for foreign partners?

I have used the project concept because in Africa, Asia, the America and Australasia the nation states were conceived and constructed by European powers and for much of Africa and Asia this nation state concept is very much in transition.  Whereas Europe had negotiated and fought for centuries to develop its nation states, the countries in rest of the world it conquered, created and ruled were based on the interests of European powers, formalised at the Berlin conference in 1884.  Fifty to seventy years ago African and Asian countries were given independence with little preparation for their newly minted status.  Since then they have faced major challenges and used a number of models in development with varying degrees of success.

The Rwanda case is a fascinating one that African countries could learn from. Rising from the ashes of the 1994 genocide, the country has made impressive economic and social gains.  GDP (PPP) doubled from $575 in 1995 to almost $1,170 in 2012. Between 2001 and 2015 it achieved an average of 8% GDP growth rate. The total value of exports increased at a rate of 20% per annum in the decade up to 2014. Nearly 620,000 tourists visited Rwanda in 2010 – just short of a six fold increase on the 105,000 recorded in 2000.

Strong economic growth resulting in substantial improvements in living standards has been accompanied by significant gains in social indicators.  The country spends huge proportions of its national budget on health and education. In 2011, almost 24% of total government expenditure went to health and 17% to education. It has achieved near-universal primary school enrolment. Life expectancy has risen from less than 48 years in 2000 to 65.7 years for women 62.4 years for men in 2011.  Deaths of under-fives have fallen from 230 per 1,000 live births in 1998 to 55 in 2012. Infant mortality has also plummeted – from 120 deaths per 1,000 live births in 1998 to fewer than 40 in 2012.   Rwanda tops the global league tables for the percentage of female parliamentarians. Fewer than 22% of MPs worldwide are women; in Rwanda, almost 64% are.

Rwanda achieved its success because its leaders had the vision, plan and ownership of the process.  The emphasis has been on developing its infrastructure, that is the physical and soft infrastructure as defined in a paper published in this blog in 2013 (Africa must develop its infrastructure).  The leadership has clearly outlined economic and social goals and measures that need to be taken in detailed plans on how to achieve them. The ownership factor has been crucial in the development process, because rather than allowing foreign partners to just jet in and prepare reports, make decisions on strategies,  plans and their implementation, the Rwandan government has emphasised the importance of its citizens setting the development agenda and being involved in all aspects of the development project.  It has clashed with foreign partners when it believes that policies advocated are not in the interest of the country.  A notable current case is the importation of second hand clothes where the government is taking a hard line against such imports because of the damage to its textile sector, to the extent that it is willing to go against the US which is arguing that the Rwandan policy contravenes the Africa Growth and Opportunity Act (AGOA) rules that gives goods from Africa preferential access to the US market.

Key factors in the Rwanda story relate to corruption, efficiency and effectiveness of the government.   The country was ranked as the third least corrupt country (tied with Maur1tius) in Africa by Transparency International in 2017.    The government has made major strides to create an efficient regulatory framework, which makes it much easier for private visitors, investors and aid organisations to operate in the country.  Finally, in a continent noted for failed or abandoned projects it has been effective in its delivery.   There are tangible physical evidence and solid statistics of project outcomes.   Rwanda was the third ranked African country in terms of its competitiveness by the World Economic Forum at number 52, behind Mauritius and South Africa in 2016/17.  In the table below compiled by The World Bank on ease of doing business, the country was ranked overall at 58 globally in 2017, an improvement on the previous year. It was the second highest ranked sub-Saharan African country in the index, after Mauritius.  Amazingly, it was ranked fourth in registering property and second in getting credit in the world as a whole.

Ease of Doing Business – Rwanda’s ranking in the world
2017 rank 2016 rank
Overall 58 59
Starting a business 76 109
Dealing with construction permits 158 110
Getting electricity 117 119
Registering property 4 12
Getting credit 2 2
Protecting minority investors 102 97
Paying Taxes 59 48
Trading across borders 87 131
Enforcing contracts 95 117
Resolving insolvency 73 69
Source: World Bank

 

The International Growth Centre in a review of the cost in terms of number of hours and monetary value of border and documentary compliance of members in the East African Community (EAC) found that Rwanda was the most competitive country in the group.  Worldwide, it was ranked 87th, higher than Kenya, 105th, Uganda, 136th and Tanzania 180th.

The efforts of the Rwandan government have resulted in positive outcomes three areas.  It has attracted foreign investors, tourists and foreign aid.  In 2005, Foreign Direct Investment (FDI) was less than 5% of gross fixed capital formation; in 2015, these inflows amounted to 24%, 8-10 percentage points higher than other countries in the EAC. FDI reached US$320 million in 2015, equivalent to 4% of GDP. This is well above the average for sub-Saharan Africa, comparable to Uganda and Tanzania and well ahead of Kenya.  One crucial aspect of Rwanda’s FDI is that a high proportion (40%) comes from other African countries, an indication that other African countries view the country as a good and safe return on investment.  The strong Rwanda brand has seen a very rapid expansion in tourism as noted above. Finally foreign aid donors have continued to pour aid at US113/head, much higher than the level of other countries in the region, because of the efficiency and effectiveness of projects in the country.

The Rwanda experience is far from perfect and has many issues.  Firstly, it is a small country, in terms of population and area.  There are only two ethnic groups and one indigenous language compared to other African countries with multitudes of ethnic groups and languages.  While the economy has grown significantly, it is still classified as a low income country with foreign aid forming an unusually large proportion of its economy and budget.  The ethnic divide may not be highly visible but it is still a major underlying factor that caused the genocide and could still is a destabilising factor in the future.  The major driving force is President Kagame, who is often viewed as the archetypical strongman. What happens if the Hutu majority is again mobilised against the Tutsi minority and/or when Kagame leaves office, dies or is toppled.   There are allegations of political and press suppression that the government has yet to fully account for.  The country has been accused of interfering in the Democratic Republic of Congo militarily and economically.  However even with these issues, which have yet to be fully validated, the country has achieved a lot since its nadir in 1994 and in many respects therefore the rest of Africa can learn from its experience. It should be noted also that when Kagame and his team ended the genocide they were benign in the treatment of the perpetrators, bringing to justice only the ringleaders even though a much wider group took part in these despicable actions.

The Africa project has a lot to learn from Rwanda as do the other projects around the world.  After the passion of independence, the reality check of the day after the party the Africa project stalled and in some instances went off the rails.  The Rwanda experience with the vision, plan and ownership of the Kagame regime is the antidote that many countries need.  While many other countries have far more natural resources than this small country, they lag behind in so many ways.  Governments are often viewed as the piggy bank that must be raided, jobs offered to friends and relatives without people manning those posts and/or providing any service, just receiving salaries and income from bribery.  Consequently, citizens do not receive the services and investors are deterred from investing in business ventures.

As noted above, there are issues with the Rwanda model, the most critical being democracy.  The ideal scenario of free elections, media and judiciary is theoretically crucial in creating a framework for economic development.  Empirical evidence however suggests that economic and social developments are not an increasing function of this democratic ideal.  The greatest economic and social case in modern times, China has not followed that path.  Other cases include Singapore and Malaysia, both projects created by Europe, which have experienced phenomenal economic and social development without going through this democratic ideal phase fully.  Does it therefore matter to the poor peasant in rural areas and slum dweller in towns and cities? In cases noted above, governments have demonstrated vision, plans, ownership and investment in infrastructure, critical factors that have spurred and nurtured investment by local and foreign investment.

In Africa in the 1960s and 70s Houphouet Boigny of Ivory Coast was the best example of such leadership which led to the transformation of that country in terms of its physical infrastructure although he was not so successful in building the country’s soft infrastructure.  In the last two decades Ethiopia is another example of rapid economic and social transformation but with allegations of political repression.  Other African countries like Cape Verde, Mauritius and Botswana have demonstrated good governance, low level of corruption and high efficiency levels.  Ghana is the gold standard in terms of parliamentary democracy having changed governments several times in the last two decades.  However none of these other African countries have achieved the performance of Rwanda in terms speed and rate of economic and social transformation. In the case of Ghana, ironically, the democratic process, which entails compromises and rewarding loyal voters, may have hampered its efforts to minimise corruption and improve efficiency.  I have therefore highlighted the Rwanda experience as an example for other African countries for a reasons noted above.  African countries can and must learn from each other as this is the best way, because it is not through a text book process or fleeting visits by consultants but the practical approach, a country with similar background which has proven it can be done.  Using Rwanda as a case study is also a significantly cheaper process.  This does not mean that outside assistance is not required.

Major foreign partners need to use Rwanda as a model for other African countries.  The key players are likely to be Europe and China.  Europe, which conceived the Africa project and has the strongest link recently announced at the G20 meeting a “Compact with Africa” initiative which aims to increase investment in Africa with the aim of  reducing corruption, improving the regulatory environment, and enhancing skills.  This German initiative should be welcomed.  China which has increased its commitment to the continent in terms of aid and trade needs to up its game in terms of ownership and corruption issues and go beyond viewing the continent as merely a source of raw materials.  These are dark days for USA/Africa partnership under the Trump administration.  This was evident in the recent G20 meeting in Germany when he left the room during discussions on the German proposal on Africa.  That combined with his American First ideology, sharply reduced state department budget and  other developments suggest a significant retrenchment in American engagement with Africa other from a military perspective – note the recent bombing in Somalia.  The focus of these project partners must be improvement of Africa’s physical and soft infrastructure to ensure that aid is more effective and the continent is more attractive for both domestic and foreign investors.  This focus makes the Rwanda model very relevant.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford http://www.oxfordmemo.co.uk.

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Does America First herald the demise of Pax Americana?

J Boima Rogers – June 2017

The second half of the twentieth century was the era of Pax Americana as the country dominated the world politically, militarily and economically.  Yes there was the Soviet Union but its power was limited to military might and politically through coercion of its satellite states and aspirations of communist parties and third world movements.  But the Soviet Union became estranged from its most powerful ally, China, western socialist parties were more inclined to social democracy, rather than the doctrinaire communist ideology.   Communist insurgents in less developed countries were besieged and apart from isolated cases never came into power.  When the Soviet regime folded in the late 1980’s, it left America in pole position leading commentators like Francis Fukuyama to proclaim “The end of History”, which implied that that Pax Americana and its ideals were here for ever.  Trump’s mantra, America First resonated with his base on three counts.  Firstly, that America had lost its position in the world and was not respected by allies and foes.  He would reverse that trend.  He stated that America was being taken for a ride by allies, China and other countries that had unfairly devastated American industry and jobs. He would make allies pay their way, reinvigorate the rust belt and bring back jobs.  He was highly critical of Islamist terror which he vowed to exterminate.

How did Trump come up with these themes?  Yes there were dark clouds in America’s hegemony but in many ways Trump’s analysis and solutions are delusionary.   The US economy which at the turn of the last century under Clinton saw rapid growth was going through transformation as international trade was liberalised, notably, under World Trade Organisation (WTO) rules, NAFTA and the emergence of a major player China, which abandoned communist economics.  Western corporations were blindsided by the size of the Chinese market with over one billion consumers, and encouraged and coerced into making the country the factory of the world.  The WTO, the China factor, NAFTA and export led growth in other countries resulted in huge shifts in production away from America and Western Europe.  US corporations were active participants, shifting production to take advantage of low wages to maximise profits. This trend which has continued in the 21st century has devastated America’s rustbelt.  This was however not the full story because new technology and automation in particularly, was largely responsible for the loss of industrial jobs.  Another factor is the mighty dollar, which according to a recent report is 30% over valued on a trade weighted basis.  All things being equal, the huge and persistent trade deficit that America has accumulated would have caused the value of the dollar to depreciate thereby rectifying this trade imbalance.  This has not happened because of the use of the dollar as the world currency; foreigners have tended park their earnings in the US and/or hold them in the currency.

The US has the largest army and significant outreach politically and militarily.  It spends far more on defence as a share of its GDP than its allies.  It has prodded its NATO allies to spend up to 2% of their GDP on defence.  They are still in transition and most have yet to get to that goal.  It should be noted though that the US defence budget is controlled by hawks in Congress who continually increase outlays and their decision is in no way guided by the NATO guideline.    Furthermore, this is the price of being the only super power and the US made a decision to engage in two wars, without any consultation of its allies, one of which, Iraq, was totally unnecessary.

With regard to Islamic terrorism, we need to place the issue in some historical perspective.   In Afghanistan, America encouraged and assisted rebellion against the soviets, in the 1970s and intensified this support under Reagan, sowing the seeds of Islamic insurgency as Islamic ideology pervaded rebel movements fighting the secular soviet supported regime.  US support for the corrupt Shah of Iran and Israel, the failed peace process between Israel and the PLO and autocratic regimes gave rise to the Islamic revolution in Iran, Hamas in Gaza and turned large segments of the Arab world to Islamists. The removal of Saddam Hussein, a brutal but staunchly secular leader and the subsequent dissefranchinisation of his minority Sunni support base created fertile grounds for ISIS.   The removal of Gaddafi from power in Libya instigated by European leaders but supported by America, with Secretary of State Clinton prodding a reluctant Obama, was another bonus for Islamists who filled the space created by the ouster of the autocratic leader.  Trump needs to take into account this historical perspective before wading into the quagmire because US intervention in virtually all these developments noted above have had unforeseen consequences.

Against this background of America’s diminished economic power, China’s emergence as a power, slow economic growth and wages in the US, terror attacks by Islamists, Trump’s simplistic positions seemed like the right solutions to his base, White working class Americans.  As is often the case with demagogues, Trump sold himself as the fixer, akin to his role in The Apprentice, untarnished by the corrupt Washington elite.  The scorecard to date has been vastly different from his campaign posture.  Indeed he has weakened America considerably at home and abroad.

At home, America has not seen a more dysfunctional administration, without any significant legislation success.  He has made little headway in major legislative priorities he had championed, such as healthcare (the house bill is languishing in congress) tax reform and infrastructure because of his incompetence, flawed policies and a fractious Republicans conference in congress.     He is besieged by lawsuits and strong and vocal opposition by civil organisations, states, local authorities and the media.  The judiciary continues to oppose his travel ban on Muslim majority countries.  The darkest cloud is the alleged collusion between his election campaign and Russia. Former FBI Director, whose devastating testimony to Congress about this allegation has described Trump’s statement on the issue as “lies, plain and simple”, characterising the President as a bully, using his office to obstruct the investigation.  This cloud weakens the administration, dominates the news and makes it difficult for Trump to develop and implement his agenda and impose his authority on lawmakers, with many Republicans in congress worried that a deeply unpopular president will reduce their chances of getting re-elected.

The political situation in America is the most polarised ever.  This prevents parties from working together for the mutual benefit of the country and Trump exacerbates the situation.  Two glaring examples of this situation are attempts by Trump and his party to repeal the Dodd Frank rules aimed at protecting the public and economy from a repeat of the ravages of the recent great recession.  Another example is the repeal and replace move on Obamacare.  Republicans just appear to hate these sensible regulations primarily because they were enacted by Democrats.  In the case of Obamacare there are reports that after the house gutted the regulation, the senate, sensing the political price that will follow the enactment of the house bill, is reinstating much of the original Obamacare features so that it has been called Obamacare light. What seems to have been lost in the process is for lawmakers to have paused and said how we could improve on the existing legislation.

This dysfunction is playing out on a number of issues that could actually strengthen the country but are bogged down by a highly polarised congress.  Key among these and a major driver in Trump’s election relates to the high and persistent US trade deficit.  Republicans have proposed a Border Adjustment Tax (BAT) that will tax imports and effectively subsidize exports which will not incur the tax.  BAT will address a number of issues; it will minimize America’s voracious appetite for imports and encourage import substitution and exports thereby reducing the trade deficit and, raise tax revenues to offset the country’s large budget deficit.  This proposal is unlikely to move forward partly because of partisan politics, because Republicans want to use savings for tax cuts, but ironically, because it does not have Trump’s support (it is not in his budget) even though it is in line with his America First mantra.  Lawmakers and business leaders have acknowledged the need to improve America’s infrastructure, but Republicans vehemently opposed Obama’s initiatives. Now with a Republican President they have embraced the issue.  The only problem pointed out by analysts is that Trump’s proposal is merely an opportunity for corporations to make money on projects, serving metropolitan areas while ignoring less attractive but badly needed infrastructure in Trump’s (low output) heartland.  Investment in clean energy is an area that would be good for the country and has the support of the general public and the business community but Republicans and the Trump administration are hostile towards this area as demonstrated when Trump pulled out of the Paris climate agreement.  Investment in science and technology will improve America’s competitiveness and is supported by scientists and business leaders but attracts little support from Republican budget deficit hawks and Trump has actually reduced the budget for this area.  America is being prevented from achieving its greatness because of partisan interests and Trump’s lack of vision and support and despite his assertions to be a non-politician, politics is in the way and he is at the centre of it.

The administration’s foreign policy agenda and Trump’s handling of it is even more worrisome. Shortly after firing the FBI Director Trump met with Lavrov, the Russian Foreign Minister, displaying bonhomie that is absent from his interaction with America’s European allies.   European allies viewed this event with alarm because of Russia’s occupation of Ukraine, veiled threats against former satellites, intervention in elections in Europe and Putin’s policies in Russia which are anathema to their democratic principles, notably, his treatment of opposition parties and the media.  Trump’s recent trip to the continent was a disaster.  He failed to confirm America’s commitment to NATO’s Article 5, which states that an attack on any country in the alliance would be countered by force by all members. Trump deleted that statement in his speech that his State Department and National Security Adviser had helped prepare.   While he subsequently affirmed America’s commitment to Article 5, two weeks after the meeting with NATO members, the damage was done and his earlier action says more about Trump’s true views about the alliance.  The main thrust of his speech was berating NATO members for not spending enough on defence.  He behaved arrogantly, refused to bond with European leaders – at one stage riding a cart rather walk with other leaders.   Photos show how he pushed aside the Montenegro leader to get in the front row.  He would not commit to endorsing the Paris Climate Change agreement, and repudiated it as soon as he got home.

Back home, rather than showing sympathy with Londoners in the recent horrific terrorist attacks, he was highly critical of its Muslim mayor; ironically while commenting at length about the London attack he was notably silent about the terror attack that killed two men who were protecting Muslims from abuse by a White supremacist in the US about the same time.  He has got embroiled in the dispute between Qatar and its neighbours and in the typical Trump fashion claimed credit for that country being demonised by other gulf Arab states.  Trump as usual has not taken into account the fact that Qatar hosts the largest contingent of US forces in the region. His message of “condolence” to Iran on the recent terror attacks has been described as “repugnant” by that country’s foreign minister.

America, which had lofty ideals about democracy, seems to be retreating from that sphere as demonstrated by a recent directive from Rex Tillerson the Secretary of State, who directed his diplomatic staff to separate “the way people are treated” from foreign policy, its friendship with dictatorial regimes and hostility to world forums and agreements.

Trump’s disastrous foreign policies and actions have drawn the ire of Senator John McCain, the Republican chair of the Senate Arm forces committee who while a fierce critic of President Obama, stated in a recent interview that the former President was better than Trump “ as far as American leadership is concerned” on the global stage.  His actions on NATO and the Paris Climate accord has caused the German leader to state that Europe “must take our fate into our own hands”, implying that Europe cannot count on the US anymore.  Other allies are also wary and uncertain about this neophyte, naïve and unpredictable president,    Besieged at home, losing the friendship and respect of allies abroad.  Trump would have hoped to make up with his buddy, Putin but that relationship cannot develop because of the cloud of Russian interference in the US election and defence hawks in his own party who are wary of the Russian bear.  The senate has recently unanimously passed legislation to impose further sanctions on Russia and make it impossible for Trump to lift Obama’s and the new sanctions without their authority; Trump was apparently planning to lift those sanctions.

Tump’s election and the populist mantra reflect a deficiency in the American electorate mechanism and the political climate in general.   In a paper by Jonathan Rauch and Benjamin Wittes, titled, More professionalism, less populism: How voting makes us stupid, and what to do about it, the authors note that “participation is effective only when supplemented by intermediation, the work done by institutions (such as political parties) and substantive professionals (such as career politicians and experts) to organize, interpret, and buffer popular sentiment”.  They contend that the Electoral College system “was intended as a firewall against the popular selection of a dangerous or unqualified president”.  The authors analyse the dangers of unbridled populism that the founding fathers envisaged and how the nation should be protected from the likes of Trump. They cite polls which show that a third of the public (and half of Republicans) believe that Obama was born in Kenya and that Hilary Clinton was involved in a satanic paedophilia ring.  The public make “rational decision” but need guidance from intermediaries.  In this digital landscape with an abundance of fake news and alternative facts a large section of the electorate have abandoned mainstream media for what they consider as trusted sources such as social media and when they do read the mainstream media, they tend to go for highly partisan ones, in the case of Trump supporters, Fox News.  Hence we have showman Trump who constantly reminds his supporters not to trust mainstream media, which he claims are the enemy, rather than purveyors of objective news and analysis.  The Republican Electoral College process helped in Trump’s nomination. The Party unlike the Democrats, operates on a winner takes all basis and super delegates do not have the freedom to vote according to their evaluation of the candidate but must adhere to the votes cast in their states even though they are much more qualified to assess the qualifications of candidates; there was no “firewall”.

Pax Americana is truly on a downward slope, thanks to Donald Trump. Respect is earned and so far Trump has only advocated hard (military) power, with no time for soft power.  His attitude and policies means America is not seen as a beacon of liberalism and democratic values.  Europe will no doubt be seriously considering Chancellor Merkel’ statement.  The economic ails that Trump gripes about are imaginary because Obama left him a much better economy than he inherited and is envied by other countries but Trump could squander it because of inappropriate policies.  The view that America is being taken for a ride is a simplistic notion, there is a complex dynamic at play and Trump does not seem to understand or have an interest in policies that will keep America in the forefront of allies, the world as a whole and cutting edge issues and sectors such as clean energy technology.  His approach on terrorism and forays in the Middle East ignore the historical perspective and risk America being sucked into a very complex dynamic.  The American political and electoral process, in particular, the Republican Party’s approach, without a firewall, has allowed an unqualified President to take the mantle.  The country is paying the price for it.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford, www.oxfordmemo.co.uk.

 

 

 

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Trump’s 100+ days – a dysfunctional wannabe strongman

May 2017 – J Boima Rogers

The election of Donald Trump, the most unqualified president in terms of experience and temperament is playing out as I envisaged to the detriment of Republicans, the US and the world.  He is trying very hard to be the strongman he promised with disastrous results.  The latest case is the firing of the FBI Director, James Comey who had recently stepped up his investigation of the alleged collusion between the Trump campaign and Russia. Trump the wannabe strongman took a similar posture prior to and during the election with Obama, his Republican opponents and Hilary Clinton.  As President he has continued his tirade against the Obama administration, Democrats in congress, judges and the media.  He is always on the attack for spurious or no reasons other than to let the whole world know that he is top dog. Analysts are increasingly worried that he is trying to move away from what America’s founding fathers envisaged, a democratic state with a strong congress, judiciary, media and civic society.  This of course does not bother the Donald who has lauded other strongmen leaders who presumably inspire him.   What are the underlying principles of the Donald? How has this played out in the country and abroad?  What are the implications for America and the rest of the world?

In assessing Trump’s progress or more aptly, lack of progress to date we need to look into the underlying factors at play.  The strongman aura is really a manifestation of insecurity of the man, which he tries to mask.  He is only happy when he is the centre of attention and hogs the news, hence he tweets outrageous statements and lies at all hours of the day and night  When this is combined with his ignorance and unwillingness to learn it can be very embarrassing and dangerous for a man in such a powerful position.    The Donald does not understand, care for or have empathy with low income and poor Americans.   Trump is racist as demonstrated early on in his career when he discriminated against African Americans in renting out his properties, eventually having to come to a court settlement on this issue.  He hounded innocent ethnic minorities in the 1980s.  He has surrounded himself with racist advisers who have pushed him into positions such as the wall with Mexico, rounding up and deporting primarily non-white illegal immigrants and of course the Muslim ban.  Finally it should be noted that Trump does not have any overall, coherent and consistent strategy or political principle.  He makes things up as he goes, says things he feels will make him popular and in many ways is a rogue Republican.

How can we assess Trump so far?  He has appointed a Supreme Court judge, rather, the senate, after denying Obama’s choice a hearing appointed Trump’s nominee.  He has signed a flurry of Executive Orders (EO) cancelling Obama’s environmental and financial rules.  The house of representative has passed a healthcare bill (that they prepared with little or no input from Trump) that will repeal and replace Obama’s healthcare legislature. The bill will deprive millions of poor and sick people basic healthcare while giving huge benefits in the form of reduced taxes to the rich. The independent Congressional Budget Office (CBO) had estimated that 24 million people would lose insurance in the first proposal.  Lawmakers did not obtain a CBO analysis before they voted for the version that they passed.   He has bombed Syria, even though he opposed such a move as candidate. Trump the candidate who strongly objected to the US’s overseas military projects has in addition to bombing Syria, authorised a disastrous campaign in Yemen, detonated the largest bomb in Afghanistan and sent an armada to the Korean peninsula.  It is rather odd that this commander in chief, who railed against foreign entanglements as a candidate and dodged service in the Vietnam War, is suddenly a warmonger, willing to sacrifice American lives abroad.

This record is paltry relative to the sweeping moves he promised from day one and his failures have more prominence, notably, his Executive Order banning travellers from seven (amended to 6) majority Muslim countries that has been blocked by judges.  He has failed to get funding for the US/Mexican border wall in the budget for the government up to September 2017.  Congress dismissed Trump’s budget wish list which would have significantly increased allocations for the military by ten percent while drastically reducing allocations for other items such as the state department, the Environmental Protection Agency (EPA) and other departments that Trump considers unimportant.  His administration has failed to fill many positions which have made it very difficult to initiate and roll out the Trump agenda. Trump’s ignorance and lack of guiding principles and strategy have resulted in him taking positions that are diametrically opposed to Trump the candidate.  He has gone back on this initial strong opposition to NATO, China and NAFTA.

Trump’s management style has weakened the office considerably while alarming many observers.  The ban on Muslim countries was unsuccessful because the Executive Order was poorly drafted and judges made use of his pronouncements on the issue before and after order was published.  The healthcare bill was passed before it had been costed by the CBO, an unprecedented action that would cause it to face serious problems in the more moderate senate and general public. The sacking of National Security Adviser General Flynn was done weeks after Trump had been advised that he was liable to blackmail by the Russians.  The sacking of FBI Director James Comey was followed by conflicting accounts by Trump and members of his team.  The acting Director of the FBI contradicted the White House spokesperson who claimed that one of the reasons Trump had sacked Comey was because he had lost the support of rank and file staff at the bureau, saying that Comey had overwhelming support among staff. Trump admitted in an interview by NBC that the investigation of alleged collusion between his campaign and Russia was a factor in his decision. He stated in that interview that “when I decided to just do it, I said to myself, I said, ‘You know, this Russia thing with Trump and Russia is a made-up story, it’s an excuse by the Democrats for having lost an election that they should have won”.   Strongman Trump also stated that part of the reason he fired Comey was because he was a “showboat grandstander”, obviously not only had Comey’s investigation irked the President, he committed the sin of stealing the spotlight from Trump.   Interestingly, the day after Comey was sacked, Trump received Russia’s gloating foreign minister at the Whitehouse who was accompanied by Russia’s TASS news agency reporter who took pictures of the “very successful” event.  US news outlets were not allowed to cover the event.

The alarming thing though about this administration is the threat to the US’s core principles and institutions.  Trump has attacked the judiciary for blocking the Muslim ban.  He has attacked the mainstream media for reporting the problems of his administration and recently suggested that he may put a stop to regular briefings of the media.  He has fermented opposition to Republicans in congress who have opposed him or not followed his dictats. And he has told numerous lies, often unnecessarily over even the most insignificant things starting from day one when he stated that his inauguration attracted the largest crowd ever.  His Republican base agrees and applauds him.  Republicans in congress largely agree but many are cowed through their fear that going against a spiteful president will get them out of office.

The American public and particularly Democratic and independent voters are not convinced and the Donald has consistently had the lowest polling of any president since polling started.  Privately many Republican congressmen also have misgivings.  They and the majority of Democrats and independents are worried about the mercurial president; that his biggest success, the new healthcare bill is inferior to Obamacare it replaced; that the allegation of Russian interference in the presidential election might have some validity; that Trump’s military adventures might be prohibitively expensive; that Trump’s plan to defund the state department by a third of its current budget will lose the US friends and make it unduly reliant on the military; that the presidents opposition to mainstream climate change thinking and a withdrawal from the Paris climate agreement will be detrimental to US’s interests.  Republican congressmen are worried that the unpopularity of this rogue Republican and his policies may cause them to lose their majorities in the senate and house of representative in forthcoming elections.

Analysts are on the whole not impressed and many are critical and alarmed. Chris Whipple, author of The Gatekeeper, a newly published history of White House chiefs of staff stated that “the Comey firing is just the most dramatic example of a White House that is completely dysfunctional, the most chaotic in modern history”.  In an event organised by The Brookings Institute, participants were scathing about the administration.  Susan Hennessey, fellow in Governance Studies and managing editor of Lawfare noted that Trump’s reliance on family and informal advisers has resulted in “national security by instinct instead of expertise”.  Leon Wieseltier, the Isaiah Berlin Senior Fellow in Culture and Policy described the administration as “incomprehensibly ignorant, with a serious narcissistic personality disorder, and a problem of impulse control”.  Benjamin Wittes, a senior fellow in Governance Studies and editor-in-chief of Lawfare, observed that “This is not a president who is functioning in the normal way that we expect presidents to function”. Wittes observed that the president’s flip-flops on issues such as whether or not China is a currency manipulator means that “he’s created an environment in which the words of the president of the United States don’t mean anything at all”. Dr Kamarck, senior fellow and director of the Center for Effective Public Management stated that “we have elected the least experienced person ever to hold the office of the presidency”.

It is only three and half month into the Trump presidency and within that time he has demonstrated that he is unfit for the task.  It shows though that the US system is dysfunctional.  Trump somehow won over the Republican Party even though he clearly did not represent the views of its mainstream, particularly its recent economic platform.  The college voting system (Trump lost the popular vote) allowed a man who did not have a coherent policy framework, no experience of government, lied consistently, invited America’s arch rival Russia to work on his behalf and paid little or no tax for twenty years to become its leader.  In a recent speech Obama said the electorate deserves who they elect.  America may be stuck with this man who will deprive them of their healthcare and fill the swamp with alligators as he implements a tax policy that will give away billions to the rich.  At the same time he will continue to wreak havoc on the poor, the environment and the American and world economies.  But then there could be another scenario. Americans may wake up and punish the Republicans in forthcoming elections to congress and give Democrats majorities creating serious problems for Trump as the Republican controlled congress did to Obama.  There may even be a starker outcome.  Dr Allan Lichtman, who has correctly predicted presidential elections for the last 40 years, has stated that Trump could be impeached.  In a recent interview he cited conflicts of interest, including the fact that since his inauguration Trump’s company has received approval for 38 ventures from the Chinese government.  Since Trump has not divested himself from his business, he will benefit directly from these potentially lucrative ventures.

The election of Trump has raised serious issue relating to the legitimacy of his victory as well as his and America’s agenda in the 21st century. Hilary Clinton won the popular vote by almost thee million.  Most of this discrepancy was in coastal states like California and New York.  In a recent study it was revealed that Mrs Clinton’s voters, largely in metropolitan areas, had significantly higher per capita output that Trump voters.  This effectively disenfranchisation of the more economically dynamic section of the country has serious implications for the political agenda and priorities.  This is reflected in the Trump mantra, that is, an emphasis on yesterday’s issues and conservative social and cultural agenda, immigration control, gun ownership, coal, religion and a strong military.  The more dynamic section of the population would rather focus on science and technology, climate change, clean energy and the digital sphere. As long as this anomaly continues it will act as a deterrent in electing a president that fully reflects the will of the people, give social conservative undue political leverage and prevent the country from stepping up to the challenges of the 21st century..

What does the Trump presidency mean for the rest of the world?  Firstly, it is difficult to say given Trump’s ignorance of issues, countries and regions and the fact that he has no defined guiding principles and strategy. His budget proposal and stated policy is to move away from global organisations such as the UN.  He may try to weaken commitments to and/or take the US out of the Paris climate agreement since he and his Environment Secretary do not believe in the science of climate change.  Trump has shown an admiration for other likeminded strongmen, with warm words for leaders of Russia, Egypt, Turkey, Philippines and even North Korea.  Previous administrations, including Obama’s encouragement and/or pressure on countries to adhere to democratic principles are out; under Trump despots of all kinds are preferred.

In Europe, while he has reversed his position on NATO I suspect that he still hankers for a rapprochement with Moscow if congress will let him.  His campaign rhetoric and recent meetings with Russian officials suggests that this is his wish.  Trump supported Le Pen who was hostile to the EU in the French election and welcomed Brexit.  Europe must therefore be wary of Trump.  In the Middle East and Afghanistan in contrast to candidate Trump, we should expect to see a more forceful posture and indeed his recent budget wish list for the military confirms this.  After a couple of day’s education by the Chinese leader, no doubt sweetened by commercial openings for the Trump brand, he has repudiated his hostility to China and we should expect closer relationship with that country.  That and the election of a new leader in South Korea who has a preference for diplomacy should complicate matters in the peninsular. Other countries in the region which have had recent tensions with China should not expect a robust defence of their positions from President Trump.  Africa and South America have not featured in Trump world but they should not expect much support and leaders would not fear any US pressure to implement democratic policies or improve civil liberties.

The Tump presidency could be a boon for other countries.  These countries would have opportunities to develop deeper regional relationships and climate change technologies and markets as the US abandons this space.  China is already taking the opportunity to develop closer ties with other Asian countries in the trade bloc it has been trying to develop. Japan and other countries that were involved with TPP that Trump pulled out of are also in talks about reviving the agreement without the US.  It should encourage Africa to develop the huge potential in trade links within the continent and China will no doubt enhance its dominant role in trade and investment in the continent.

As I go to press Trump is embroiled in yet another drama that has characterised this dysfunctional president and his chaotic administration, giving sensitive information on ISIS to the Russians, without the permission of the source. As usual the Whitehouse’s handling of the issue has been chaotic, with different accounts from administration officials.  Congress and even loyal Republican senators and representatives are livid with his action. It threatens America’s relationship with its allies.  Trump acted as a child showing off a new toy to his buddy, Lavrov, the Russian foreign secretary.  America must wish it had the grown up “no drama” Obama back in office.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO) http://www.oxfordmemo.co.uk

 

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Take America and the world down again

 

J Boima Rogers – January 2017

Donald Trump in the White House, the most powerful position in the world is an alarming prospect.  His proposals and actions since his election are unprecedented and frightening.  Never before have we seen a president-elect trying to assume power even before taking the oath of office and doing so in a manner that is totally unfit for the job. He has already failed his key supporters, White working class voters and his party.  This is to be expected from the most unqualified president-elect who has appointed an equally unqualified cabinet.  His election poses serious challenges but stakeholders must not give up hope though, the struggle must continue.

Trump’s cabinet appointments indicate that he has repudiated his key campaign slogan and core support base.  Rather than draining the swamp, he has filled it with alligators, billionaires and millionaires, the very people who symbolise the huge income divide in the country and were largely to blame for shifting jobs abroad as owners, major shareholders and financiers of companies that moved abroad.  He has appointed executives from the financial services sector, who were responsible for the great recession to key positions in his cabinet.  He has, along with the Republicans in congress made the dismantling of Obamacare the top priority.  This policy is likely to adversely affect his core support base much harder than his millionaire cronies.  Trump, a rogue Republican, has turned his party’s long term and recent policies upside down.  The party noted for its hawkish stand has a standard bearer who has embraced the US’s major adversary, Russia, which attacked the country by manipulating the US’s democratic process.  The most recent reports are that Trump may be beholden to the Russians because they have material that they could use to blackmail him.  The Republican party which has always advocated free trade and the primacy of market forces now has a leader who is taking a strongly protectionist stand.  The party of small government, which in the last eight years has fought tooth and nail against the budget deficit, to the extent of closing the federal government has a president that will increase the deficit very significantly.

President elect Trump is the most unqualified candidate to be elected to this powerful position.  He has no political experience and his primary claim of competence, his business acumen is seriously flawed.  He did not build his business “empire” from scratch; rather he inherited it from his father.  The fact that he was been declared bankrupt four times means he has a very chequered track record.  Since he has not paid federal tax for the last twenty years, while no doubt making use of the government’s infrastructure and services, he is a billionaire on welfare.   Finally it must be noted that having a business background is not necessarily a qualification for his new role as I demonstrated in a previous paper looking at the record of US administrations.  It should be noted that Silvio Berlusconi the former Italian prime minister, with a far more impressive business background than Trump, and similar in many respects to the president elect, left that country as the most uncompetitive among the major economies in the European Union.  Trump is seen by a majority of Americans (71% in a recent survey) as a strong leader but he is actually only a bully, picking on people who lack his power.  He is thin skinned, impulsive and lacks the strategic focus required for this position.  In a brilliant paper by Dr Michael F Oppenheimer, Clinical Professor of Global Affairs at NYU, he noted that “whatever attitudes he expresses about policy are skin deep, an incoherent, impulsive-driven miscellany of ethno-nationalism, isolationism, an infatuation with authoritarian rulers who he views as partners.”  Dr Oppenheimer contrasts this with Obama’s “informed pragmatism and instinctive caution”, attributes that that are required for this powerful position.

Trump’s cabinet, made up of political inexperienced, ideologues and incompetent managers poses serious challenges.  Nobel Laureate Economist. Joseph Stiglitz has noted that “America’s bog of legal corruption is likely to reach a depth not seen since President Warren G Harding’s administration in the 1920s”.    Four key positions are of particular importance should alarm the US and the rest of the world.  His Treasure Secretary, former Goldman Sachs Executive, Seven Mnuchin does not have the skills necessary for the role – Stiglitz notes that his key skill is tax avoidance, not constructing a well-designed tax system – and given his background his emphasis is likely to be removal of the controls imposed on the financial sector, the lack of which caused the recent great recession. His economic plan, cutting taxes, overhauling regulations, encouraging energy production and pursuing an America-first trade policy, is unlikely to generate the 3.5- 4 percent growth rate, described in a recent paper by Isabel V Sawhill of Economic Studies and Eleanor Krause as “fanciful”, citing a series of forecasts by reputable organisations including the Congressional Budget Office .  To achieve Trump’s growth rate, the authors noted that US productivity would need to be trebled. To address the rigidity in socio-economic mobility, a key driver of Trump’s populism, namely, stagnant income levels of middle class voters over the last three decades, the economy should grow by 6% a year.  The authors cited the study by Raj Chetty and colleagues who state that equally distributed growth would be more effective in improving the average person’s life chances than a simple increase in GDP growth.

The Environmental Protection Agency (EPA) is a climate change sceptic who has spent a career fighting EPA regulations.  He is likely to make as his priority striking down Obama’s environmental legislation and taking the US out of the recent Climate agreement.  His Secretary of State, Rex Tillerson, a diplomatic and foreign policy novice, who opposed sanctions against Russia and was awarded a medal by Putin, is likely to seek close relationship with that brutal and authoritarian regime.  The most frightening prospect for the world is Trump’s choice of National Security Adviser (NSA), Michael Flynn, who according to Dr Oppenheimer shares Trump’s thin skin and inventiveness with facts. Dr Oppenheimer noted that Flynn’s “preoccupation with Islamic extremism, his intolerance of dissent, and his managerial ineptitude makes him uniquely unsuited to head the NSA”.  Since we know that Trump does not bother himself with reading intelligence briefings and has started off with an acrimonious relationship with the intelligence community, Flynn is likely to have unprecedented influence on the president elect.  Dr Oppenheimer believes this appointment is a recipe for policy errors by an administration that will confront complex challenges and inevitable shocks.  It should also be noted that Trump and his NSA appointee’s views are at variance with the incoming Chairman of the Joint Chief of Staff who stated in a senate hearing that “Russia presents the greatest threat” to US national security.

The US and the world are in for some turbulence and the signs so far are pretty gloomy.  Obama rescued his country from the great recession, with the US performing better than other developed economies in terms of the speed in getting out of the recession, economic growth rate and  job creation.  He implemented a health care system that all developed countries take for granted. He rebuilt relationships with allies that had been seriously frayed under Bush, negotiated a historic agreement with Iran and mended relationship with Cuba.  Working with other world leaders, he negotiated an agreement that most scientists say is crucial to address climate change.  He worked with allies to impose sanctions on Russia for that country’s invasion of Ukraine.

Trump, in his statements and appointments will unravel many of these achievements and introduce major risks.  His economic plans and cabinet choice will not achieve his stated economic growth rate and there are serious risks involved in his protectionist agenda.  EU leaders are worried by the fact that he has lauded Brexit, suggested that more countries should follow Britain and met with fringe and extremist politicians like Nigel Farage and Marie Le Pen who oppose the EU project.  NATO members are worried about his embrace of Putin who he regards as “smart”.  In a recent interview he stated that NATO was “obsolete”.  His obsession and that of his NSA Adviser with Islamic extremists, support for the Russia’s actions in Syria and his Ambassador to Israel are likely to embolden Islamist extremists and help them in their recruitment.  IS must be very happy with these developments, because he has appointed an Israeli Ambassador who provided financial support to Israeli settlements in the West Bank and Trump’s statement that he will move the US Embassy to Jerusalem.  Breaking with US tradition and policy of the last fifty years he spoke to Taiwan’s leader soon after his victory and has questioned the one China policy.  He is likely to anger Latin America with his position on Mexico and opposition to the US-Cuba rapprochement.

Trump’s election poses serious challenges to his party, the Democratic Party, the media, civil society and the US.  The Republican Party needs to reassess its position in terms of its ideology and how it chooses its leader.  In particular, how a candidate with views that contradict its core values can end up becoming its standard bearer.  Democrats need to reassess how they can lose a natural base, White working class voters, to a candidate that has failed them even before taking office. They need to take a hard line, like the Republicans did when Obama was elected, use guerrilla strategies and tactics to obstruct every move by this administration.  One symbolic move could be to stand up and say “you lie” as the Republican Congressman did to Obama, in this case there will be much justification.  They must seek electoral reform so that the Electoral College votes are in line with the population.   The media was complicit in Trump’s victory.  Trump the serial liar was able to set the agenda, not with serious policy statements, rather by tweeting and using his showman skills.  The media should highlight lies, focus on real policy issues and ignore gimmicks.  Opponents of Trump should continue to dig and I am sure that they will find grounds for his impeachment.

The US must review its policy on interference by foreign actors in its elections.  Seventeen of the US intelligence agencies have concluded that the Russians took actions to assist Trump and he invited them to do so.  The US electoral system for candidate Trump was flawed because the winner lost by a very significant margin, assisted by a hostile country.

In considering Trump’s administration we should remember the last Republican President, George W Bush, who gave us the Afghanistan and Iraq wars and the great recession. The Iraqi war gave birth to IS.  Trump is far more toxic and he has a buddy, who helped him get the job, Putin.

J Boima Rogers is Principal Consultant at Media and Event Management Oxford (MEMO), www.oxfordmemo.co.uk

 

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