Daniel Hannan: Trade sanctions are a counterproductive foreign policy tool – which play into the hands of oppressive regimes

17 Feb

Lord Hannan of Kingsclere is a Conservative Life peer, writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.

What can one country practically do to halt crimes against humanity in another? The answer is far from obvious. At one end of the scale, it might decide that it has an absolute duty to intervene against genocide, and that the only choice is therefore to invade the offending state, with or without a coalition of allies, halt the killings or be defeated in the attempt. At the other, it might conclude that there is nothing much it can do beyond moving a condemnatory resolution at the United Nations, offering sanctuary to refugees and possibly withdrawing its ambassador.

Obviously, there is a huge spectrum between those two approaches. But there is surprisingly little discussion of what the optimum point on that spectrum is – the point at which exercising proportionate pressure is likeliest to result in a policy change in the other country. Perhaps inevitably in an age of performative anger, some commentators are more interested in signalling their horror at human rights abuses than in pondering the most effective way to tackle them.

The very first vote I cast in the House of Lords (electronically, under the current lockdown rules) was on this issue. An amendment moved by the crossbench peer, Lord Alton, would effectively have allowed British courts to determine whether any country trading with us was guilty of genocide and, if so, to trigger economic sanctions.

No one has ever accused Alton, a former Lib Dem MP, of performative anger. He is a decent and thoughtful man who manages – a rare thing in politics – to be moral without being moralistic. His amendment has attracted supporters from every party in both chambers – most of them, too, actuated by good and sincere motives. But, in the end, it seems to me that their proposed remedy is misplaced.

Ministers argue that issues of this kind ought not to be referred to courts. The question of whether another country is committing such atrocities within its borders as to constitute crimes against humanity should be one for our elected government. If, as would surely sometimes happen, our judges ruled that there was insufficient evidence to make a determination, the offending regime might seize on that judgment as vindication: “Britain has cleared us of genocide”.

All this is true, as far as it goes. We should be very careful about drawing judges into political questions – and drawing them into issues of foreign policy would be quite a step. But it seems to me that there is a more fundamental objection to the proposal. Put simply, trade sanctions are a terrible foreign policy tool. They are not so much useless as counterproductive, serving to hurt ordinary people in the other country as well as your own while propping up the regime of which you disapprove.

At the very least, trade sanctions – including the suspension of a free trade agreement, which we might consider the softest trade sanction – push people in the targeted state towards their leaders. One reason why Communism survived in Cuba when it fell in most of the world was that American sanctions had created a siege mentality. The embargo allowed Fidel Castro to tell his countrymen that their poverty was caused, not by Marxist economics, but by the yanqui blockade.

Vladimir Putin knows how to exploit the same phenomenon, triggering constant conflicts which are primarily intended, not to absorb bits of Georgia or Ukraine, but to foment confrontation with the West, so keeping Russians in a mood of defensive and angry patriotism – precisely the state of mind that makes them likeliest to rally to Putin.

More than this, though, economic sanctions create lucrative opportunities for elites within the countries at which they are aimed. In an open and competitive market, with low barriers to entry, prices fall – to general benefit. The more restricted or distorted a market becomes, the more opportunities are created for monopolists, especially those who are politically connected. States subject to sanctions – Iran, Russia, Venezuela – form a nexus, doing deals with each other which allow a few brokers to get very rich while doing nothing for the general population.

To see what I mean, think back to the oil-for-food regime that operated during the UN sanctions against Saddam Hussein. Notionally designed to allow food and humanitarian supplies into Iraq, it became a racket, allowing favoured Ba’athists and their allies in other countries to make a fortune.

If trade sanctions don’t work, what does? As I said at the start, that is not an easy question. But it surely makes sense to target sanctions at the guilty, something Western countries have become much more adept at doing over the past 20 years. Micro-sanctions vary in severity: travel bans, asset seizures, arrest warrants – possibly even, in extremis, Eichmann-style judicial kidnappings. As a general proposition, though, keyhole surgery must be more effective than hacking blindly with a cleaver.

I was struck, during that first House of Lords debate, by how many people still see trade in essentially mercantilist terms – as a favour to be bestowed rather than as a growth strategy. That fundamental misunderstanding distorted the coverage of the EU-UK trade talks. (“Why”, asked commentators “should the EU grant us access to their markets?” – as though doing so were an act of kindness.) But, more seriously, it distorts our approach to unfriendly regimes.

We often stumble into trade sanctions because of the most dangerous sequence in politics: “Something must be done; here’s something; let’s do it”. In fact, commercial restrictions take from the many to give to the few – and the tyrants know it.

Kristian Niemietz: What difference does the size of the state make to how is deals with Covid? None.

9 Feb

Kristian Niemietz is Head of Political Economy at the Institute of Economic Affairs

We are not having a very good pandemic so far.

With over 1,500 deaths per million people, Britain has one of the highest Covid death rates in the world. You can quibble a bit with those figures, but only at the margins. The number of excess deaths – that is, the number of deaths over and above what we would expect in a normal year – matches the number of Covid deaths far too closely for this to be a statistical fluke.   

In addition to having a higher Covid death rate, we have also had a worse economic downturn than most comparable countries. The UK economy shrank by about 10 per cent in 2020, compared to a European average of seven per cent, and about five per cent in North America and Japan.

And it is not as if we had lighter or shorter lockdowns than others. Our only redeeming feature so far has been the very fast approval, procurement and rollout of the vaccine. But there can be no denying that at least until the end of 2020, the UK has been coping extremely badly with this pandemic. The question is why.  

Britain’s left-wing commentariat was quick to ascribe all this to “austerity”. For example, Polly Toynbee, the Guardian columnist, talks about “an incapacitated public realm, naked in the blast of this epidemic. It wasn’t just the NHS and social care […] but every service crippled by cuts: public health, police, local government, the army and Whitehall – all denuded.” 

Owen Jones, the arch-Corbynite writer, asserts: “a state hollowed out by austerity and market dogma is, in large part, to blame: it cannot be stressed enough that it is mostly because of these ideologically driven failures that Britain has been – is – one of the worst-hit countries on Earth.”

Michael Marmot, the “inequality czar”, wrote a Guardian article with the self-explanatory title “Why did England have Europe’s worst Covid figures? The answer starts with austerity.” 

I could easily find dozens of similar quotes, but you get the gist. It is a highly fashionable opinion. But as is usually the case with fashionable opinions, it is also completely baseless.

“Small-state Britain” is a myth. Despite all the waffle about “austerity”, in 2019, UK public spending still stood at about 40 per cent of GDP. This is a perfectly normal figure for an OECD economy, neither unusually high, nor unusually low.

But that is beside the point anyway. As I show in my new report Viral Myths: Why we risk learning the wrong lessons from the pandemic (published by the Institute of Economic Affairs), the size of the public sector is completely unrelated to how well, or how badly, different countries have been coping with the pandemic.

If the size of the state were the critical factor, Belgium, where government spending accounts for over half of GDP – one of the highest levels in the world – should have been superbly prepared for the pandemic. Alas, they were not. With a Covid death rate of over 1,800 per million, they did even worse than Britain, and their economy also shrank by over eight per cent.

In Italy, where public spending accounts for almost half of GDP, both the Covid death rate and the economic “growth” rate are about the same as Britain’s. France, which has perhaps the largest state in the world (unless you count North Korea and Cuba) fared somewhat better than Britain, but not by a huge margin.

Australia and New Zealand, on the other hand, fared better than most developed countries, with public spending levels that are (moderately) lower than the UK’s. South Korea, with public spending levels of less than a third of GDP, was one of the star performers, and so were Taiwan, Hong Kong and Singapore, where public spending stands at less than a quarter of GDP.

It was not government largesse that saved the best performers. It was specific policy packages, containing measures such as early travel restrictions, a rapid roll-out of mass testing, effective test-and-trace-and-isolate systems, and a rigorous enforcement of quarantining requirements (combined with financial support to make this economically viable).

This is, of course, Captain Hindsight speaking. Being right with the benefit of hindsight is, admittedly, not very impressive. But it is still better than being wrong despite that benefit.

Jason Reed: Taiwan, Britain and the UN. It’s time to rethink the One-China Policy.

25 Sep

Jason Reed is External Communications Officer at the British Conservation Alliance.

The World Health Organisation (WHO), which is an arm of the UN, has come under a great deal of scrutiny this year as a result of its disastrous leadership throughout the pandemic, the most troubling aspect of which is its close links with China.

When the Coronavirus first emerged, transparency of information in government was suddenly more pivotal than ever before. But little to no information sharing occurred between countries at that crucial time, thanks to the combination of the WHO being at Beijing’s behest and the Chinese Communist Party’s aversion to openness of any kind. The cost of that failure was tens of thousands of lives.

The CCP’s tentacles extend far beyond the WHO, of course. The Chinese government has spent the last several decades worming its way into every corner of the UN. Perhaps the most obvious manifestation of that is the UN’s persistent refusal to recognise Taiwan as anything other than Chinese territory.

Imperialism is alive and well in the twenty-first century. China, a modern colonial power, still claims sovereignty over Taiwan, despite the fact that Taiwan has been an independent country for over 70 years, and its government was democratically elected by its population of 24 million.

Taiwan’s exclusion from the UN has nothing to do with Taiwan itself. It’s not as if the UN considered Taiwan’s request to join and rejected it on merit. Even North Korea is a member, after all. The UN simply refuses to acknowledge Taiwan’s existence. It is so beholden to the will of the Chinese government that it does not dare contradict anything that comes out of Beijing. What is the point of an international peace project if it reliably does the bidding of a communist dictatorship?

If there was ever a time to put our foot down and begin to roll back China’s power on the world stage, it is now. “De-Sinoficiation” will define international relations in the coming decades. The Coronavirus coverup, along with flagrant assaults on democracy in Hong Kong and the appalling genocide of the Uyghur Muslims in Xinjiang, mean that the world has no choice but to begin to distance itself from the CCP.

This will be an almighty task. For at least forty years, our politics and our economies have gradually become more and more intimately connected with those of China. Disentangling ourselves from that relationship will be a lengthy and arduous process. Finally deciding to exclude Huawei from our 5G network was the first step on a very long road.

But it is a journey we must make. De-Sinoficiation is a necessary task. The entire western world has effectively turned a blind eye to China’s wrongdoing for far too long. The watershed moment has now passed – there is no going back. In order to preserve any semblance of a liberal, globalised world order, China must be knocked off its omnipotent pedestal and held accountable for its actions.

Taiwan’s right to exist as an independent nation seems a good place to start. The right and wrong of the issue is clear-cut and it has always been a touchy area for the CCP, whose greatest fear is its sweeping authority being undermined.

In the Economist’s democracy index, Taiwan ranks third in Asia and 31st in the world (higher than Italy and Belgium). Meanwhile, China languishes among the fifteen least democratic countries, making it more authoritarian than Cuba and Iran. While Taiwan was legalising same-sex marriage, making it the first country in Asia to do so, China was writing ‘Xi Jinping Thought’ into its constitution.

Taiwan stands ready and able to become a fully-fledged member of the international community. There ought to be no question about its validity as an independent country. You might even argue that the island nation, which calls itself the Republic of China, has a much stronger claim to be the Chinese government than Beijing.

On top of everything else, Taiwan is a trailblazing Covid success story. Its total death count from the pandemic to date is seven. The Taiwanese government is also going above and beyond any reasonable expectations in order to build friendships with other democracies around the world, including the UK.

Despite the western world unfairly shunning it in favour of China’s economic might, Taiwan continues to behave courteously towards its would-be allies. For instance, the Taiwanese government donated over a million face masks to the NHS at the height of the British coronavirus outbreak.

Since then, Taiwan has – politely – asked to join the UN and be recognised as an independent nation, calmly pointing out the enormous body of evidence and precedents in its favour. Those calls have gone unheard. Some bridge-building is going on – such as through UK Export Finance investing in a Taiwanese renewable energy project – but it will never go far enough while China is still in the picture.

The British left is beginning to stake its flag in Beijing apologia. Now is the time for Conservatives to demonstrate what post-Brexit Global Britain could look like by standing up for freedom on the world stage. The first step ought to be reconsidering the long-outdated One-China Policy, which would surely cause a ripple of similar actions across the west and – potentially – force the UN to reconsider its close relationship with China.

The Government has an opportunity to lead the world on de-Sinofication and create a valuable new ally for Britain in the process. Let’s not waste any more time.

Alexander Woolf: My economic views are mainstream – but have been almost impossible to air at Britain’s universities

2 Aug

Alexander Woolf is a PhD researcher in political economy and a former parliamentary assistant. 

During my years as an undergraduate politics student, I gradually learnt how writing assignments from a free market perspective was like asking to be failed. By my final year, I acquiesced to writing through a socialist lens and I received high Firsts every time.

The fact that I had to pretend to be somebody else in order to succeed frustrated me and violated every belief I had about individuality and meritocracy. At that moment, I decided that my career goal would be to enter academia and teach political science objectively, helping students to understand not just the few flaws of capitalism but also the many benefits. Like today’s political philosophers and political economists, I would continue to teach Marx, but I would also teach Hayek, Mises, Smith and Rothbard. After all, what is education when it is only half-taught?

After finishing my degree and my Masters, and gaining a few years’ experience of working in Parliament, I was accepted on to a PhD course, the final step towards entering the academic world. Finding a British university as a Conservative, libertarian, or classical liberal is no easy feat. I was told by every like-minded scholar I encountered to apply for King’s College in London or cross the Atlantic to attend George Mason University in Virginia. Anywhere else was a waste of my time.

This seemed strange to me. My views about the economy are mainstream among economists and businesses, who champion a system of limited government involvement. My views about wider issues are also shared by the majority of British voters, who have elected Conservative governments for the last decade – and even delivered an unexpected Brexit result. However, I was told that people like me are unwelcome in the vast majority of political science departments in this country.

Despite being driven for so many years to help correct the ideological bias in our universities, I still hadn’t fully grasped the gravity of this problem. As soon as I started my PhD, I grabbed the first opportunity to teach by becoming a seminar tutor. I was given classes in a module called “The Politics of Global Capitalism”. Despite the objective title of this class, however, I soon learnt that the lecturer in charge of the module is a proud Marxist. In our introductory meeting, the lecturer joked how he hoped the students would “throw their iPhones out the window and raise the red flag” by the end of the semester.

In hindsight, I should have recognised the red flag that was raised by his ideological comments and dropped the class, but this just made me more determined. And since Tory students are highly unlikely to secure funding from the ESRC funding council, I frankly needed the money.

I was pleasantly surprised during my months of teaching subjects how mature, rational and open-minded the students can be. However, my Marxist class had two self-confessed communist students who were problematic, to say the least. Other students would confide in me that they felt uncomfortable getting involved in discussions because these students would shout people down, scoff and laugh at them, or call them stupid.

During one particular rant about how “we” should raid businesses and seize their profits, before kicking Jeff Bezos out of the country (for what reason, I’m still unsure), I decided to probe with some intellectual questions. What signals would it send to other businesses? What would happen to our economy when we’re seen as a volatile place to invest? I received no response.

Within one week, I was informed that two students had complained about me for being biased, and since the lecturer had let me teach on the assumption that I was also a socialist, I was advised to drop the class. As with the 2011 riots and the militant tactics of Momentum, the theme is clear: when socialists inevitably lose an intellectual or political debate, they turn nasty.

However, two 18-year olds aren’t the problem here; the responsibility lays with our educational institutions. Students learn what they are taught, and if they are only taught by socialists, then we can’t be surprised when they refuse to tolerate a conservative teacher.

Universities were founded as institutions for creating new ideas and spreading knowledge, but our social science faculties peddle propaganda and incite young people with their own prejudices. My university department, for example, has a research centre dedicated to furthering “public understanding of politics”, an important and admirable task. The fact that this centre is named after a socialist, however, raises serious questions about whose understanding is being publicised.

Approaching the final year of my PhD, my desire to teach has evaporated and I have turned down offers to tutor again. I came to realise that the lack of “people like me” in academia stems from the fact those people don’t want to work in the modern-day university; ones that pride themselves as being “safe spaces”, but safe spaces for whom, when evil, climate-destroying Tories are not welcome? Why would anybody subject themselves to this kind of work environment?

There is cause for conservatives to be concerned about the future of voting in this country. Yes, it’s a blessing that a centre-left Keir Starmer is Britain’s current worst-case scenario, considering his predecessor. However, we cannot forget the perplexing irony that tech-savvy millennials were captured so easily by Corbyn’s 1970s solutions to modern world problems.

The next generation of voters won’t know how socialism worked out in Russia, China, North Korea, Venezuela, or Cuba. They won’t understand that government bureaucrats can’t design a smartphone to rival the iPhone. They won’t realise that arbitrarily punishing businesses might mean an end to the next-day deliveries of their favourite products, forty-minute deliveries of their favourite restaurant food, or instant streaming of their favourite TV shows.

Economic knowledge is important in an advanced economy, and this knowledge needs to be based on facts rather than myths or ideological hyperbole. If we want to ensure that the next Jeremy Corbyn suffers the same fate as the last, it is vital that we ask questions of our schools, colleges, and universities about the accuracy and objectivity of their lessons and lectures on issues of citizenship. Opponents will say that this threatens independent science, but what I have seen both as a politics student and teacher is far from science.