The West must respond to the use of chemical weapons in Syria

Alexander Pannett 1.15pm

There are growing reports that the Syrian regime of President Assad has been using chemical weapons against his own people. If true, it would herald the crossing of a “red line” for the US and may lead to military intervention from Western forces.

The use of chemical weapons currently appears to be small-scale, tactical deployments. A few chemical shells targeted at rebel bunkers. The danger is that the use of chemical weapons reveals the growing desperation and determination of the Assad regime to resort to any methods necessary to survive. Now that a precedent has been set, it is no longer unthinkable that Assad’s forces would use chemical weapons against civilians on a larger scale. They have certainly shown no compunction in causing mass civilian casualties with more conventional weaponry.   

Assad has shown his disdain for threatened international reprisals if he uses chemical weapons. He has gambled that there will be no direct Western intervention in retaliation and that as Western intelligence agencies are already indirectly aiding rebel groups, there will not be any major escalation in the rebellion. He is correct that the West is reticent.

Considering the quagmire that Syria has descended into, with its kaleidoscope of factions and interests, the West should be cautious about getting directly involved. Iraq and Afghanistan have demonstrated the cost and strategic dangers of being drawn into wars in the Middle East. Previous Western intervention has exacerbated regional rivalries and sectarian divisions, raising the threat of terrorism, not diminishing it.

However, the wider issue is that the West must demonstrate to the world that it is serious in its stance against the use of chemical and biological weapons. It must also make it clear to Assad that any escalation in the use of such weapons against civilians would herald direct intervention. Otherwise Assad may believe he can act with impunity, which would have tragic consequences for the Syrian people.

Despite understandable reservations, the West should announce that it is now directly aiding secular rebel groups and it should also impose a no-fly zone. With air assets deployed to enforce the no-fly zone, the West can more easily resort to a direct air war if Assad escalates his use of chemical and biological weapons. If direct intervention is required, use of ground forces should be limited to special forces working in tandem with rebel forces as in Afghanistan in 2001. Their main priority would be to secure all biological and chemical weapon sites to stop such weapons from falling into the hands of extremists.

Obama is right to be cautious and will be loathe to commit American forces to an area of the world that is a distraction from the much more strategically important Pacific. But a leader does not choose the events that he or she faces. For now the West should limit its actions to aid and a no-fly zone. But it must do all it can to dissuade Assad from deploying chemical and biological weapons against the civilian population. Only the imminent threat of force will do this.

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The growing threat of drug resistant bacteria

Alexander Pannett 12.15pm

Professor Dame Sally Davies, the Chief Medical Officer, has published an annual report that has made headlines by claiming that the rise in drug resistant infections is comparable to the threats of global warming and terrorism. She has called for the threat to be listed on the government’s National Register of Civil Emergencies.

The report highlights that, while a new infectious disease has been discovered nearly every year over the past 30 years, there have been very few new antibiotics developed to counter-act diseases that are evolving and becoming resistant to existing drugs.

This means that routine operations could soon cause infections that may prove fatal. Modern advances in health could be reversed as hospitals again resemble the mortality-stricken abattoirs of Victorian times.

We are already seeing this crisis unfolding throughout hospitals in the UK. The MRSA superbug made headlines with its prevalence amongst hospitals and resistance to antibiotics. MRSA has since been tackled by improved hygiene procedures at hospitals. But its presence heralds the threat of the worse that will come unless urgent action is taken now by world health authorities.

In evidence to the science select committee in late January, Professor Davies told MPs that the supply of new antibiotics had collapsed, and that the market model for delivering new antibiotics was broken.

New drugs are potentially a useful solution against resistance, but the drugs are often not available. Drug companies are not interested in developing a drug that, with widespread use, could be obsolete long before it has turned a profit; or a drug that is so effective that it is reserved as a final solution. New antibiotics that are developed are slight variations of existing drugs. Some classes of bacteria are not getting any new antibiotics at all.

An additional problem is that bacteria evolve at such a rate that any new antibiotic that is developed has only a short window in which it will work. In fact our very use of antibiotics encourages the development of resistant bacteria. Resistant bacteria may be rare, but rare mutations benefit the most when drugs kill off their competitors. Tests on mice with malaria have shown that the susceptible strains of bacteria win out over the resistant strains in the absence of antibiotics. However, after treatment the resistant strains re-develop at a faster rate and in greater numbers. The boost was biggest for mutant bacteria that were rare to begin with.

This, combined with the knowledge that governments are actively attempting to keep antibiotic prescriptions to a minimum, disincentivises pharmaceutical companies from investing in new drugs.

One answer is to develop new business models to encourage the development of new antibiotic drugs. Regulations can also be relaxed to allow pharmaceuticals to rush out antibiotics after targeted sample tests rather than the more lengthy current testing requirements.

However, for now the most immediate answer to alleviate the impending crisis is to restrict the use of antibiotics to only the most pressing of needs. The course of antibiotic treatment should be re-evaluated to limit the use of antibiotics to shorter durations where possible and eliminate antibiotic use where it is not necessary, such as viral infections and use in livestock. Better hygiene methods should also be used to prevent infections.

The growing resistance to antibiotics is a timely reminder that we must constantly review the tools we use to maintain a healthy society. Each of us has an obligation as members of a community to ensure that the advances we have made are bequeathed to future generations. The medical progress that has made life-saving operations a common feature of modern societies is a vital social imperative we must not surrender.

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A misguided cap on Bankers’ bonuses

Alexander Pannett 3.30pm

And so they are marching again. The restless European Parliament is finally getting its revenge against the unscrupulous “Anglo-Saxon” capitalists in London. It has voted to reign in bankers’ bonuses, reducing permitted amounts to the base salary of bankers.

The rules would apply to Europe-based employees of any bank, as well as to staff of European banks wherever they are located. That means a Barclays trader working in New York would be subject to the cap, as would a Goldman Sachs banker based in London.

I am sceptical of the bonus cap’s effectiveness. The reduction of bonuses will mean that remuneration will be granted in the form of higher salaries.  This adds inflexible costs to financial institutions which, in a crisis, will have to reduce head-count rather than being able to cancel bonuses in order to preserve capital levels. It will lead to the increased use of temporary contracts as banks seek to maintain flexibility.

Increased salaries, rather than bonuses, also moves the City away from performance related pay. Bankers will receive salaries despite the poor risks and mistakes they make. Failure will be rewarded. This is also unnecessary as recent claw-back regulations have been introduced which are designed to ensure remuneration is performance linked. Bankers whose trades made losses in the long-term would see their bonuses reclaimed, which incentivises bankers to consider long-term risks. Higher salaries do not ensure that bankers mitigate risks.

I also have an intrinsic revulsion at politicians who interfere with business for political or even emotive reasons. Do these politicians understand or even care about the effect that these changes will have on London’s financial services, which is a considerable European strategic asset? I suspect they do not.

Despite my above concerns, we must not ignore the considerable antipathy that the British public holds for the financial sector. It is almost satirical that RBS, which was saved with taxpayer’s money, has posted 2012 losses of more than £5 billion whilst paying out £600 million in bonuses last year. This European cap on bonuses may be mis-guided but that does not mean the City now smells of roses.

A reform of the bonus culture may indeed be needed, such as substituting locked-in equity for current bonus structures or changing the criteria for awarding bonuses so that they are more strongly linked to the overall performance of a financial institution. However, this European cap on bonuses is not helpful and will be counter-productive as it harms the international competitiveness of one of Europe’s few remaining engines of economic growth. The prime minister is right to resist.

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The transatlantic trade pact is a death knell for euroscepticism

Alexander Pannett 1.15 pm

On Wednesday, the EU and US announced plans to forge a free trade area within two years, that would see tariffs removed and markets liberalised between the two largest economies in the world.

It is estimated that, if the agreement is successful, the free trade area would improve competitiveness, create jobs and generate billions in trade for the two economic areas. This is vital during a time of lagging global economic growth.

Combined together the economies of the US and EU account for over 54% of world GDP in terms of value and 40% in terms of purchasing power. Increased trade would also lead to a greater exchange of both human and intellectual capital. This would re-invigorate the trans-Atlantic ties that underpin that elusive idiom of the “West”.

Domestically, the proposed trade agreement has huge implications for the UK’s relationship with both the EU and US. If successful, the free trade area would mortally wound the eurosceptic movement.

British eurosceptics rue the perceived Byzantine tentacles of EU bureaucracy and instead advocate closer ties with the more economically liberal and culturally similar US.  Whilst ideologically supportive of a European single market, they question the worth of suffering a multitude of EU regulations for the dubious benefits of a free trade area with hemorrhaging European economies.

However, leaving the EU will mean being outside the proposed EU/US trade area. Considering the complexity and length of negotiations, there will be no opportunity for the UK to leave the EU and then enter the EU/US trade area as an equal third party. The EU/US free trade area would be a carrot that should not be given up.

Economics aside, abandoning the EU/US trade pact would be an absolute rejection of British foreign policy over the past 70 years. We have consistently seen ourselves at the main bridge between the US and Europe and our geo-political aims have focused on forging closer trans-Atlantic ties. A US presence in Europe assures both our security and our prosperity. It is the bedrock of the UK’s international relations.

Bizarrely, eurosceptics trumpet the foreign policy goal of closer US relations as the reason to leave the EU. They have ignored what America seeks from the “Special Relationship”. The Obama administration has been quite clear that an assertive UK in a strong Europe is what is most useful to the US. They desire an integrated Europe that can be a useful ally, and the UK’s role inside Europe is vital to achieving this.

The referendum proposed by David Cameron will allow the British public to fully engage with the pros and cons of EU membership. As John Major iterated in his backing of Cameron in a speech at Chatham House yesterday, "It will be healthy to let the electorate re-endorse our membership, or pull us out altogether. At present, we are drifting towards – and possibly through – the European exit.”

This is why the launch this week of European Mainstream, by pro-Euro Conservative MPs such as Robert Buckland and Laura Sandys, is a necessary reminder that there are many in the Conservative party who understand the importance of our relationship with the EU. This group supports the Prime Minister’s position on Europe; that both the UK and the EU are stronger with the UK inside Europe.

The proposed EU/US trade agreement is a timely reminder of the huge opportunities that the EU provides and will continue to provide. We have allowed the eurosceptics in politics and the media to dominate the debate for too long. The EU needs reform. I believe this as sincerely as many eurosceptics. But from the recent EU budget concessions to the enlarging of the EU and liberalising of the single market, the UK’s vision for the EU is bearing fruit.

The world is changing and Britain’s global interests must change with it. We are right to seek out new markets and partners and to review our existing relationships. But we must not be blind to the importance of our relationship with Europe. The British public deserves to know all the facts.  

It is time for pro-Europeans from across the political spectrum to announce themselves.

Is our fear of dirty bombs leading us to disaster in Mali?

Alexander Pannett 11.50am image

The crisis in Mali has reached new heights with the announcement that the UK will be sending 350 troops to the region.

The task of the soldiers is to train the Malian army and their deployment is seen as signaling a more long-term commitment to the region by the UK.

The use of soldiers is an escalation of the UK’s support for France, which had previously been solely logistical with the provision of two RAF transport planes. It inevitably raises fears of mission creep at a time of severe cutbacks to the UK defence budget.

However, there is a contradiction between the direct intervention in Mali and the less overt anti-terrorist approach taken in Yemen and Somalia. Why the sudden urgency and build up of Western troops?

The main issue which has not been widely reported in the Western press is the uranium mining area of north Niger, which borders Mali.

According to a 2008 report by a French parliamentary committee, about 18 per cent of the raw material used to power France’s 58 nuclear reactors came from Niger in 2008.

If the uranium mines fell under the control of Islamic fundamentalists then nuclear dirty bombs could become a real terrorist threat to Europe. This is especially worrying considering the relative ease of smuggling illicit goods into Europe from the North African coast.

The mines are also located in an area controlled by the Tauregs, a nomadic tribe that spreads across south-west Sahara and whose alliance with Islamic extremists has formed the backbone of the Malian rebels.  The Tauregs have been fighting for autonomy against a Malian army that has been accused of extrajudicial killings and other human rights abuses against Taureg civilians by Amnesty International.

The Algerian hostage crisis underlined the threat of Islamic extremism in the Saharan region.  It is important to the security and peaceful development of the world that any extremism is countered and exposed for the narrow and cruel bigotry that it is.

However, too often the West has papered over complex local economic and cultural issues with its simple response to extremist views.

The Tauregs appear to be fighting against an unjust Malian government that arose to power after an army coup in 2012. The Tauregs crave self-determination much as Americans, Irish, Polish and other Western peoples have in the past. To ignore their plight is immoral and short-sighted. It could lead to a calamitous strategic blunder as the Malian campaign descends into bitter guerrilla warfare against impoverished but tenacious people fighting for their freedom.

It would be folly to let the ideological fight against religious extremism force the West against uprisings that cloak their vocabulary with Sharia law but are nationalistic in their ambitions not religious. The analogy of Vietnam is disturbing.

After Afghanistan and Iraq, the West should be careful that it is not entering a hornet’s nest of complex secular and tribal divisions.  Whilst concern over the security of uranium mines in the region is rational, Britain and France should not predicate such concern with the vicarious brutalization of persecuted peoples to further the distasteful ends of corrupt and illegitimate regimes.

In a campaign that lacks specific goals, ensuring autonomy for the Tauregs would do more to bring peace and stability to the region than the re-conquest of isolated desert towns. A political and cultural solution is preferable to a military reaction.

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Does the Mayan calendar predict Britain’s European divorce?

Alexander Pannett 12.20pm

A clever bunch those Mayans. Built lots of intricate temples and invented a stone-henge version of basketball. Of course the losing team captain gets beheaded but then shaving adverts for lauded sportsmen were more popular in those days than brylcreem commercials.

The other magnificent legacy of the Mayans was a calendar that runs for 5,125 years. I’m not sure why it encompasses such a lengthy and specific period. It may have started off like one of those charity calendars that feature nudes in domestic settings before being hijacked by some rampant exhibitionist who was keen to display 5,125 photos of himself making euphemistic shapes with a garden hose. I guess we will never know.

What we do know, or at least are told by the more hairy and wild eyed amongst us, is that the world as we know it is coming to an end on 21 December 2012. Armageddon. The final goodbye. The last drink in the final saloon of life with possibly ten minutes for a game of darts. If you’re quick.

The issue with this latest world-ending prophecy is that the only truly earth shattering event that seems to be hitting the news at the moment is the Tories’ and media’s rampant obsession with removing the UK from the EU. The pressure cooker surrounding our relationship with Europe has reached such a point that it has clearly reverberated back through space and time to influence the creation of the Mayan’s dire and ancient predictions.

Unfortunately, upon leaving Europe, it is not exactly clear what we will do once we have left. Over half of our trade is with Europe. The City, which provides the bulk of our tax revenues, would be hard pressed to remain Europe’s financial capital. Many businesses, such as our renascent car manufacturers, currently use the UK to access the single market and would move business to the continent. Even Eurovision Song contestants may stop singing in the language of Shakespeare.

We could join NAFTA, but then our trade would be dominated by the whim of Washington. We could increase trade to emerging markets outside Europe, like Asia, but then we would be competing against other countries that do not have to transport their goods to the other side of the world. Whilst both options have merit, and should be pursued in any case, they cannot seriously be considered as a replacement for Europe as our main market.

Damian Green, vice-president of the TRG and Minister for Police, rightly spoke out about this yesterday. Using entirely different words, his message was that it was a fantasy to think we could endulge in a crazed financial bender, hit our carefully constructed Euro-pantheon with an intoxicated debt tsunami, before hiding in our dorm-room until all the damage had been moped up by others. I tried a similar strategy once (or several times) at University and I can assure you that it never ends with Christmas cards.

But of course it is pointless to quibble. The dice were already cast 5,125 years ago when the UK last separated itself from the Continent with the end of the Ice Age (or a Mayan leaking pipe) forming the English Channel. How can you fight fate with rational arguments?

As for me, I’ve already stocked up on an array of continental wines for the 21 December and beyond (courtesy of Nik’s new wine business). One last toast and then I will settle down to half a millennium of Only Fools and Horses repeats.

Ode to Joy indeed.

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Syrian rebels must accommodate Russia to end the civil war

Alexander Pannett 12.30pm 

The civil war in Syria has entered a new chapter of vicious proportions. In the past week a government plane and helicopter have been shot down and suicide bombs have erupted through the capital, Damascus. The rebels have now acquired heavy weaponry and surface-to-air missiles, underlining their growing proficiency and power.

Worryingly for the West, foreign Jihadists have been reported amongst the rebel ranks, including such al-Qaeda linked groups as the Al Nusrah Front. Fourteen of these groups based in the city of Aleppo recently rejected the newly formed National Coalition of Syrian Revolutionary and Oppositional forces, instead calling for an Islamic State. In a country with vast stores of biological and chemical weaponry, the threat of Islamists gaining control of such dangerous reservoirs is particularly chilling.

These developments re-affirm the importance of the recent establishment of the National Coalition as the political leadership of the rebellion. It offers hope that a national government can be formed after Assad’s fall that will represent all the disparate elements of the rebellion and prevent Syria fracturing into chaos.

However, the Assad regime’s demise is far from certain. As each day goes by, Syria falls more and more apart as mounting atrocities splinter societies and allow extremist elements to gain support. Now that there is an established opposition government, the West must send arms and funds to secular rebel groups that support the National Coalition. But it must and can do more to speed the downfall of Assad. The quickest way to achieve this goal is to use old-fashioned realpolitik to both cut away Assad’s international support and to offer him a personal exit and sanctuary.

The major supporter of Assad that is preventing any action by the UN Security Council is Russia. I have written before about why Russia supports Assad and it is one reason above all others, Tartus. The Russian naval base at Tartus on the Syrian coast grants the Russian navy access to the Mediterranean and influence over the vital water-ways that lead to the strategically important Middle East. The West must press the National Coalition to assure Russia that it will retain its naval base after the fall of the Assad regime. This will encourage Russia to allow a UN mandate to impose no-fly zones in Syria.

For their part, the Russians are worried about direct military intervention in Syria, citing the sovereignty of nation states to resolve domestic disputes. This is a smoke-screen dilemma that hides Russia’s anxiety about losing influence in the Middle East to the US. These fears can be allayed by the West’s encouragement of the National Coalition to announce that palatable representatives of the Assad regime will have a place in the future of Syria. The National Coalition must also emphasise that minorities will be protected and could even gain autonomy.

Russia is also concerned about the advent of Jihadist elements amongst the rebels. The West also shares these security concerns. It should therefore share intelligence with Russia in order to isolate these extremist elements. It is in Russia’s interests as much as the West to ensure that the post-Assad regime is secular and not extremist. Russia must be encouraged to see that the National Coalition is an answer to its concerns, not an enemy to its interests.

Finally, the West should allow Assad a sanctuary to encourage him to end the fighting. Despite being a betrayal of the rights of the victims of his atrocities, if he is denied escape he will resist until the last and will likely resort to chemical and biological weapons as he becomes more desperate. For this Russia could be approached to facilitate Assad’s safety. He will be more likely to respond to assurances from such a powerful protector. Allowing Assad to avoid immediate punishment may be a distasteful solution but it will save many lives and Syria from further ruin if it brings the war to a swifter end. It should also be added that sanctuary offers only temporary safety, and as Mladic and other war criminals have discovered, justice not politics is a friend of time.

Civil wars erode the fabric of society that forms the basis of any functioning state. They run in negative correlation to the abstract legitimacy of a national identity. Now that the National Coalition has formed, Western support must crystallize around its secular aims. However, to achieve a quicker end, Russian interests must be consulted and accommodated. The National Coalition can isolate the Assad regime from international support if its guarantees Russian influence in post-Assad Syria. It can also end the war before extremists become too strong by granting Assad sanctuary to Russia.

Realpolitik may be an ugly solution but, at times, it saves lives.

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A true One Nation party would support Social Investment Funds

Alexander Pannett 1.30 pm

The re-election of Obama was less about support of his policies than about a rejection of extremist Republicanism. Both American and British voters remain unconvinced that any of the political parties can create a fairer and more prosperous society.

Despite all the announcements of Hope and One Nation politics, there has not been a real policy drive to suggest practical solutions for reversing the growing gap between rich and poor in much of the Western world. Much of the laudatory policies of the Coalition, such as raising the lower income tax threshold, do not do enough to mitigate against the disastrous effects of the Great Recession upon the more disadvantaged in society. More can and must be done to create a fairer economy that places greater emphasis on achieving both social and financial value. Policies that will create a true One Nation society.

One major innovation that could bring real social and financial dividends, is to allow some of the trillions that flood the financial sector to be invested in social finance. Allowing investors to allocate resources towards social investment vehicles that make both social and financial returns could be a revolutionary new form of social finance.

One of the major barriers to success for social enterprises is access to funding , especially funding that understands their business models. Social investment funds would be able to tap financial markets to provide such funding and it would be managed by specialists in social finance. They would be able to invest in equity or debt securities of social enterprises in order to make a financial return but also to stimulate the funding of social value. Social investment funds could also leverage their positions, as commercially-minded funds do, to magnify the amount of money that could be invested in social activities. Currently, approximately £60-100 billion of assets held by charitable trusts and foundations in the UK are not being deployed by charities to leverage more private investment into the social economy.

Unfortunately, there are various obstacles to the creation of social investment funds:

1.                       there is no existing UK legal structure that allows for the creation of a social investment fund. Directors of investment funds have a duty to maximize financial returns for investors rather than also make a social return;

2.                       current charities law prevents charities from providing private benefit to individuals or businesses;

3.                       the costs of establishing existing fund structures also preclude the establishment of social investment funds whose assets under management would be significantly lower than commercially driven investment funds; and

4.                       current UK financial services law would require social investment funds to abide by expensive and onerous red tape if they wish to market to retail investors.

Under the current UK regulatory environment, the risk of making donations is encouraged and the less risky activity of making social investments is penalised. This needs to change if we are to create a new industry of social finance and allow the third sector to tap the financial markets for funding.

The government should amend current financial services law to allow for the recognition of a social investment fund structure. This new type of investment vehicle would be allowed an investment mandate that generated both social and financial returns and which could leverage its position by having access to financial markets. The current financial promotion rules should also be amended to allow social investment funds to market to retail investors. Once financial services law has been changed to recognise social investment funds, a bespoke fund structure can be created for the social finance industry that will lower fund formation costs.

If a social investment fund is created, it would be a huge boost to social finance and would stimulate the emergence of new social asset classes, such as social impact bonds. It would also allow investment in public sector spin-outs and mutuals and would support the localism agenda, especially community right to buy and community right to challenge. Social enterprises would have access to much-needed finance and it would improve the UK’s development as a global hub for philanthropy and social investment.

Developing a social investment fund industry is an obvious and easy policy for any party that is serious about One Nation politics. It is these pragmatic and progressive policies that British voters will be looking for in 2015. Empty rhetoric will not be enough. 

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