I See No Ships

Having encouraged Britain to throw the first punch, by seizing the Iranian tanker in the straights of Gibraltar, the US has told its new vassal to fight its own sea battles, after Iran unsurprisingly responded by seizing a UK oil tanker.  Having spent years abusing the EU, and saying how little Britain needed the EU, and how much the EU needed the UK, Britain having been shafted by the US, now turns to the EU to ask if they would please help out the UK, by creating a fleet protection force.  Not surprisingly, the EU have not jumped at the opportunity.

The truth was quite apparent.  The US encouraged its UK vassal to seize the Iranian tanker as part of Donald Trump's petulant spat with Iran, which is actually more to do with his tantrum against everything Obama did.  Obama, the EU, China and Russia established the Iran Nuclear Deal, so Trump has to describe it as the worst deal in history, despite the fact that as with much else, he seemed to know very little about it.  Trump, enamoured by his own self-importance, believed that having scrapped the deal, Iran would soon come to him to establish some new deal.  He thought the same with his approach to North Korea.  But, Trump is a terrible negotiator let alone a terrible politician.  President Kim took all of the adulation, and global recognition that Trump provided him for free, whilst giving Trump zilch.

A similar picture can be seen with Trump's terrible decision to withdraw from the Paris Climate Agreement.  The economy of tomorrow is being built today on the basis of new green technologies.  Those economies that develop these new technologies will not only reduce their own costs, but they will also be able to dominate the global markets for these technologies as they rapidly undercut old fossil fuel based technologies.  Trump has put the US on the wrong side of history, as that development unfolds.  It will be companies in Europe and Asia that take the vanguard in that technology, and gain a competitive advantage over the US.  Trump's response on that, as on much else, as with every such approach which looks backwards rather than forwards, is to try to protect the US position, by bureaucratic and forceful methods, which is what his trade war is also all about.  In the end that will not work, and will simply mean the US falls even further behind.

Trump's position on Iran is similar.  The Iranians understandably did not buckle as he reimposed sanctions.  As with North Korea, if Trump wants to get Iran to the negotiating table, it is him that will end up having to make concessions.  In the meantime, he is happy to let his UK rubbing rag do the dirty work for him.  The EU, which does not have to kowtow to Trump in the way that Britain now does, as it floats off into the mid-Atlantic, has tried to keep some semblance of continuity with Iran, which abided by the terms of the Nuclear Deal, even after Trump withdrew.  The EU, indeed has tried to find means of getting around the US attempt to impose its sanctions on EU companies.

In fact, when Britain seized the Iranian tanker, Britain was criticised by the EU, and particularly Spain for having done so.  The EU itself confirmed the point I made yesterday, which is that the EU sanctions imposed on Syria only applied to EU flagged ships, and could have no legal validity against ships from other countries.  Its clear, therefore, that the British action was neither encouraged by the EU, or seen as legitimised by its sanctions against Syria.  The UK was simply acting as Trump's tame poodle. 

That Trump would then hang the UK out to dry, when one of its tankers was seized, should have been no surprise, but the UK, now increasingly dependent on Trump and the US as it drifts aimlessly and becalmed towards a Brexit backwater, could only suck it up.  The UK needs others to back it up, in the Gulf, because it no longer had the military wherewithal to protect UK shipping across the globe.  But, the EU has no reason whatsoever to lend support to the UK, especially now that it is headed towards the Brexit door.  The EU is not in danger of having its ships seized by the Iranians, because the EU is not seizing Iranian ships.  The Iranian action against Britain was only in retaliation for its own previous action.  Indeed, the EU has every reason to try to work with Iran to try to keep as much of the Nuclear Deal in place as possible, because US sanctions on Iran, are hurting EU trade, and pushing up the cost of its energy.

The new Tory Leader, like his opponent, Jeremy Hunt, is promising more defence spending, but the truth is that the UK cannot afford that additional spending now, let alone after Brexit drains the UK coffers.  Defence spending is a direct drain of profits, which puts no value back into the economy.  When a government, taxes profits - and as Marx explains all real taxes are a drain from profits - it diverts those profits from potential use for capital accumulation.  If the government uses the revenue it obtains from the tax to build roads, railways or other such infrastructure, the value of that is piecemeal fed back into the economy.  Businesses who transport their goods using these new facilities, thereby obtain the value they represent.  But, revenue spent on defence is just dead money.  The government might just as well have taken the money profits of companies, and burned it.  No one consumes the commodities that comprise defence spending either productively, or to reproduce themselves, none of the value, is thereby returned to the economy.  In fact, by draining these resources from the economy, it both restricts capital accumulation and growth, and causes inflation and interest rates to rise.

The UK economy is already experiencing stagnant growth.  Draining more resources from it for Defence spending can only make things much worse.  And, in fact, because of the UK's low wage, low productivity economy, as demand in the economy has steadily risen, it has meant that firms chose to employ more of this cheap labour, rather than invest in productivity raising capital equipment, so that low wage employment increased further - the reason for high levels of employment, but of high levels of in work poverty -  and now with Brexit, firms have doubled down on that even further.  But, now, they have the worst of all worlds.  Having failed to invest in productivity raising equipment, they have continued to employ additional labour, and retain existing labour, to the extent that now labour shortages are beginning to emerge.  There is a shortage of around 75,000 truck drivers, for instance.  Brexit is creating further shortages in agriculture, in health and social care, and the consequence if now that wages are necessarily rising as firms compete for the available workers.

In some spheres capital is ready to respond with new technology.  The hopes of the Brexiters that reduced immigration will lead to increased employment will be dashed, as a result, but not immediately.  Britain's love affair with cheap labour means that its economy is not geared to a rapid introduction of all of this labour-saving technology.  With lots of liquidity sloshing around the economy from all of the past QE, with the Pound set to falls even further, pushing up imported inflation, and with wages set to rise due to labour shortages, Britain is set for an inflation shock in the near future, before it suffers from an asset price crash, due to rising interest rates, and a subsequent recession.  That is not the conditions in which a massive increase in defence spending is possible.

But, even if it were, Britain could not spend the amount of money required to enable it to act in the way that is being suggested.  The truth is that Britannia ceased ruling the waves many decades ago.  When Britain went to war against Argentina in the Falklands, Britain won, but only just.  Had Argentina acted more decisively to enforce its positions on the island before the taskforce arrived there, its unlikely that Britain could have prevailed.  As it was, at the time the Argentines surrendered, Britain's troops were about to run out of ammunition.  But, even in the 1970's, when Britain fought the Cod Wars against Iceland over fishing rights in the North Sea, Britain lost, because it was unable to impose its will.

In fact, even at the time of WWII, Britain was already a much diminished power compared to what it had been in WWI, when its power was already on the wane, compared to a rising Germany, US, and Japan.  The truth is that in WWII, Britain was in all but name already defeated by Germany in 1940.  When the real fighting began in 1940, Britain was embarrassingly defeated at Dunkirk, in part because of the treasonous acts of Edward VIII.  Britain was penned into its island bunker, only able to survive on the back of provisions sent to it from the US.  In the Far East, at the start of 1942, British forces were overrun by the Japanese military in Malaya and Singapore.  Even Churchill described it as "the worst disaster and largest capitulation in British history."

Churchill had thrown most of Britain's military force into defending its oil supplies from North Africa.  But, when the Italian forces were supplemented by the German forces commanded by Rommel, the British were again thrown back, penned into Tobruk.  Yet, anyone would think that Britain's history during WWII, was one of victory after victory, with the plucky Tommies, fighting through against all adversity.  In reality, Britain was defeated by 1940, and would have been starved and frozen into submission were it not for the fact that, Hitler attacked the USSR, bringing them into the war, from which point on, Germany was thrown on to the defensive, and that after Japan attacked Pearl Harbour, it brought the US into the War, which with Hitler then declaring war on the US, sealed his and Germany's fate.

Britain was saved primarily by the USSR, which sacrificed 30 million of its people in the process, and by the economic and military might of the US.  Yet, it is the jingoistic myth of "Great" Britain, and its fantasy about these war efforts that has fuelled much of the same nationalistic sentiment surrounding Brexit.  Something like Brexit is probably needed to shatter once and for all that British arrogance and fantasising.  If Boris Johnson insists on taking Britain out of the EU without a deal, and if parliament lets him - he is no doubt hoping with all his might that parliament stops him to get him off the hook -  the EU may well, and should decide to just let him.  It would put an end to British hubris for good.