The news of Margaret Thatcher’s death has provoked the predictable ocean of commentary so I may as well express my own view of her.

My own view of Thatcher, which was formed whilst she was Prime Minister and which has never changed, is that she was in person a much overrated figure.  Her opinions remained those of the 1940s (the decade she reached adulthood) and she never transcended or evolved beyond them.  Thus she was always strongly antagonistic to Labour and the unions, reflecting the intense Conservative middle class resentment of Labour’s victory in 1945.  She was basically hostile to the National Health Service, not from any well developed ideological reasons but because Labour created it. It began to be seriously neglected whilst she was Prime Minister and has never fully recovered.

Thatcher remained strongly attached to Friedrich Hayek, who she would have known as a prominent right wing anti Labour publicist in the 1940s, and who was an otherwise largely forgotten figure until shortly before she became Conservative leader.  However in my opinion she never had the fundamentalist free market views on economic questions that people attribute to her.  Her government’s economic policies were a mixture of improvisations (for example the privatisations that got underway in the mid 1980s) or made up by others (for example the disastrous monetarist experiment of the early 1980s, whose real author seems to have been Keith Joseph).  As she showed by her refusal to privatise the Post Office or to abolish tax relief on mortgage interest, Thatcher at no time let her notional commitment to free market economic ideas threaten the interests of her middle class supporters.

She was a good politician.  She possessed in abundance the personal charm that is indispensable for a successful career in politics, though it was used to manipulate those around her rather than being projected to the nation as a whole.  Above all though she was extremely careful to look after the interests of her core middle class constituency whose prejudices she shared and articulated.  Only towards the end as she began to lose her touch did she start to infringe on its economic interests, for example by the introduction of the poll tax, in a way that brought her crashing down.  However it is important to say that the secret of Thatcher’s political success was the failure of her opponents rather than her actions.  Though never popular she had the extreme good fortune to be Conservative Prime Minister at a time when the Labour Party was going through an acrimonious split, which made it unelectable.  That more than anything else accounts for her election wins in 1983 and 1987.

Thatcher’s opinions on international questions were also shaped by her experiences of the 1940s.  Thus she despised the French who capitulated to the Germans, liked the Greeks who stood up to them, supported the Israelis, who represented the nation the Germans persecuted (she also had an unusually large number of Jews in her Cabinet), was in love with the US, which came to Britain’s rescue and despite her occasional anti Communist rhodomontades actually liked the Russians rather a lot (Russia was the first country she visited as Prime Minister when she annoyed the Americans by stopping off at Moscow airport to meet the Soviet Prime Minister Aleksei Kosygin on her way to a G7 summit).   By contrast her hostility to Germany (the wartime enemy) never faded.  Her sympathy for the apartheid regime in South Africa, which is today notorious, was also a function of opinions shaped by the 1940s.  Though she was no racist the white South Africans were always for Thatcher allies who fought alongside Britain in the Second World War and who could not therefore be abandoned.

She was no intellectual despite what people say.  Both her speeches and her memoirs (the latter of course heavily ghost written) are banal.  Other than the odd sound bite (many of which originated with her speechwriters and which are anyway often wrongly remembered) no one today reads a Thatcher speech.  I remember how disappointed I was when I did.  Thatcherism as an intellectual system, to the extent that it existed at all, was in my opinion more the creation of people like Nigel Lawson and John Redwood and of some of the others who worked for her than it was her own.

She was a remote figure and I doubt that she knew much of what was going on or would have liked it much if she did.  I doubt for example that she would have approved of the flamboyant and amoral lifestyles or practices of some of her supporters in the City of London, which were so much at variance with the austere conduct of her father  that she was brought up with.

She was fortunate (if that is the right word) in being the object of a very un British personality cult orchestrated by her media advisers and Rupert Murdoch that created an image of her that she struggled to live up to.  Thus she worked excessively long hours, got by with far too little sleep and (as became known only much later) drank altogether too much.  I suspect that alcohol fuelled some of her more emotional performances in the House of Commons, which remain in the memory.  The struggle to sustain her image also made her very nervous and insecure.  This surely is the main reason why she rarely travelled outside Westminster.  It was also what was surely behind her fraught relations with some of her ministers, which led to constant plotting against them on her part and by her supporters, in a way that was big news and which seemed very shocking at the time but which is largely forgotten today.

It is largely however through the confected image of her personality cult that people remember Thatcher today.  Paradoxically, this image was reproduced even by her critics, for example by the satirical television programme Spitting Image, in a way that undoubtedly helped her politically.

She was hardworking and was within certain limitations a competent though hardly an outstanding administrator.  Though the business of government was never as dysfunctional as it became under Blair, as an administrator she was definitely inferior to her two predecessors, Wilson and Callaghan.  Again the record of this is largely forgotten, with the “banana skins”, the bungled introduction of the national schools’ curriculum and various other administrative failures making waves at the time but having vanished now down a memory hole.  Similarly, though she dominated parliamentary debates and Prime Minister’s Questions, the same had been equally true before of Wilson and Callaghan in a way that today is also forgotten.

In saying all of this I do not deny the tremendous importance of what happened both in Britain and elsewhere in the 1980s.   The point I am trying to make is that it is important to reduce Thatcher herself to her true dimensions.  That way the changes that happened in the 1980s can be better understood and her contribution, such as it was, better appreciated.


The Commercial Court in London on Friday gave its verdict in a case brought by the fugitive Russian oligarch Boris Berezovsky against the Russian billionaire businessman Roman Abramovich.  The full Judgment has not yet been delivered.  The Judge has however provided a summary of the Judgment:

The case

I do not propose to discuss the case itself.  The case was simple and the Judgment explains it.  Berezovsky claimed Abramovich owned or acquired interests in various companies on trust for Berezovsky who was the true owner of these interests. No issues of law were involved.  It was for Berezovsky to prove the truth of what he said.  Berezovsky had no evidence but his uncorroborated word.  The Judge did not believe him.  The Judgment is based entirely on fact.  An appeal is therefore hopeless.

Reports in Britain speak of the case providing an insight into Russia.  The case does say a lot about Russia though mainly about the Russia of the 1990s.   The case however says a lot more about Britain.  It is that I want to discuss.

The Judge’s assessment of Berezovsky

The case was one for Berezovsky to prove.  The Judge could have confined herself to saying that he had failed to prove it.  The Judge went much further.  I will set out what she said about Berezovsky in full:

“…..I found Mr. Berezovsky an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes.  At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events.  On occasions he tried to avoid answering questions by making long and irrelevant speeches, or by professing to have forgotten facts which he had been happy to record in his pleadings or witness statements.  He embroidered or supplemented statements in his witness statements, or directly contradicted them.  He departed from his own previous oral evidence, sometimes within minutes of having given it.  When the evidence presented problems, Mr. Berezovsky simply changed his case so as to distance himself from statements and in witness statements which he had signed or approved, blaming the “interpretation” of his lawyers, as if this somehow diminished his pleadings and witness statements.  His “I blame my lawyers” excuse was not convincing.”    

In a case Berezovsky brought in order to make himself and his associates lots of  money the Judge says he went to Court and lied on oath.  The Judge says he is “inherently unreliable”, regards truth “as a transitory, flexible concept, which (can) be moulded to suit his current purposes” and can delude himself “into believing his own version of events” even when this is obviously untrue.  In effect the Judge says that nothing Berezovsky says whether inside or outside a Court room can be assumed to be true.

The only other time I have heard a British Judge speak about a party to a case in this way the Judge confiscated his papers and sent them to the Director of Public Prosecutions to assess whether criminal charges should be brought in view of the attempt to mislead the Court.  That did not happen in that case and will not happen in this case.  However it gives some idea of how severe the Judge’s comments about Berezovsky were.

Berezovsky’s reputation

The Judge’s comments will come as no surprise to anyone in Russia.  Berezovsky’s reputation there is toxic and has been so for a long time.  Even the most militant sections of the anti Putin opposition keep a wide distance from him.  When a photograph appeared a few months ago in a provincial Russian newspaper purportedly showing Berezovsky in the company of Alexei Navalny the Russian opposition activist and blogger Navalny went to great lengths to expose the photograph as a fake.

In Britain it has been an entirely different matter.  Here Berezovsky has had no shortage of believers.  To an extent I think few people even in Russia realise it is Berezovsky and his publicity machine that is the source of many of the critical stories that appear in the British press about Russia and which have formed the British view of Russia.  To understand the extent to which this is so a number of examples of such stories will suffice:

FSB Berezovsky “Murder Plot”

Berezovsky alleged in the autumn of 1998 that the FSB planned to kill him.  He staged a press conference in Moscow in which several masked men appeared who he claimed were FSB agents opposed to the plot.  The starring role in the press conference was played by Litvinenko who did not wear a mask and who was at this time an FSB agent but who had already been moonlighting for Berezovsky for some time and who subsequently became full time Berezovsky’s employee.

The British media has accepted the truth of this plot.  The former BBC reporter Martin Sixsmith in a book he wrote about the Litvinenko affair actually claims to have deduced the identities of several of the masked FSB agents who attended the press conference.  The plot is often cited in connection with the Moscow apartment bombings and the Litvinenko affair as evidence of the murderous character of the FSB.

A number of vague comments by certain former members of the FSB are sometimes cited as corroborating the existence of this plot though on examination they are pure hearsay and do no such thing.  The evidence for the existence of the plot actually originates entirely with Berezovsky himself or with Litvinenko who already at this time appears to have been closely associated with Berezovsky and who subsequently became Berezovsky’s employee.  The only evidence the masked men who attended the Moscow press conference were FSB agents is that Berezovsky and Litvinenko say they were.  Since Berezovsky’s evidence is “inherently unreliable” and since for Berezovsky the truth “is a transitory, flexible, concept” which can be “moulded to suit his current purposes” there is no reason to accept his or Litvinenko’s word for it that there was a plot by the FSB to kill Berezovsky or to believe that the masked men who attended the Moscow press conference were FSB agents.  It is just as likely they were actors put up to do it by Berezovsky himself.

Moscow apartment bombings

Over the course of the summer of 1999 a series of bomb attacks were carried out against a number of apartment buildings in Moscow.  The Russian authorities have accused jihadi rebels from the northern Caucasus of carrying out the bombings.  At the time the leaders of the jihadi rebels including their most famous fighter Shamil Basayev openly admitted jihadi involvement in the bombings.  Subsequently the Russian authorities identified the actual persons they say carried out the bombings.  Most were killed in the fighting in the northern Caucasus.  A number have been captured and were tried and imprisoned for the crime.

Notwithstanding the overwhelming evidence that jihadi terrorists were behind the apartment bombings the myth has persisted that they were the work of the Russian authorities.  Since the bomb attacks according to this theory were the work of the FSB, supposedly the lineal successor of the former Soviet KGB in which Putin once served and of which Putin had until just a few months before been the head, it is assumed he was involved.  Whenever the subject of the apartment bombings comes up the British media invariably implies that there are doubts about who was responsible and several British journalists have at various times hinted that Putin was involved.  Putin’s most recent biographer, Masha Gessen, says she believes Putin was involved.

I had occasion to research the Moscow apartment bombings seven years ago.  I quickly concluded that neither Putin nor the FSB nor any other branch of the Russian government were involved and that the bombings were the work of jihadi terrorists just as the Russian authorities say they were.

More to the point it became obvious to me that even if Berezovsky was not the actual originator of the myth that the Russian authorities were behind the apartment bombings he was the person who was largely responsible for keeping the myth alive.  Witness after witness to the supposed involvement of the Russian authorities in the bombings turned out either to have connections to Berezovsky or to people connected to Berezovsky who could be plausibly described as members of his network. Always and invariably the trail led back to Berezovsky.  Even witnesses who initially seemed to be genuinely independent proved to have had been in contact with Berezovsky or his agents.

I remember being impressed at the time by the amount of energy and resources Berezovsky had invested in the affair.  The most detailed account of the Russian authorities’ supposed involvement in the bombings was a book co authored by Litvinenko who was at the time Berezovsky’s employee.  The book was worthless as evidence as shown by the fact that around half the interviews in it were anonymous.  It remains however the often unacknowledged source for many of the details that regularly appear in the western press about the affair.

Berezovsky Putin’s patron?

Berezovsky has repeatedly claimed that Putin was originally his protégé and that it was he who recommended Putin to Yeltsin first to head the FSB and then for the post of Prime Minister and eventual successor.  If one is to believe Berezovsky it is Berezovsky who is responsible for Putin’s rise to power.

This story is universally believed I believe even in Russia itself.  It has become the accepted narrative of Putin’s rise to power.  Corroboration is sometimes said to be provided by records that supposedly show an unusually large number of meetings between Berezovsky and Putin.  It is of course also the case that Berezovsky’s television and radio stations and newspapers strongly supported Putin in the December 1999 parliamentary elections and in the March 2000 Presidential elections.  Not only is it widely assumed that Putin was originally Berezovsky’s protégé but the speed with which Putin turned against Berezovsky once he became President is regularly cited at least in Britain as evidence for Putin’s ruthless and treacherous personality.

It has always puzzled me that this claim is so widely believed.  The only evidence for it ultimately comes from Berezovsky himself.  All the accounts one reads of Berezovsky’s meetings with Yeltsin in which he is supposed to have recommended Putin to Yeltsin and of Berezovsky’s actions on Putin’s behalf appear to originate with Berezovsky.

In the recent case the Judge had to decide whether to believe Berezovsky’s account of meetings Berezovsky claims to have had with Abramovich.  The Judge decided that Berezovsky’s account of these meetings was false.  If Berezovsky’s account of these meetings with Abramovich is false why suppose his account of his meetings with Yeltsin is true?

The difficulty in believing that Putin was Berezovsky’s protege is that in the autumn of 1998 when Berezovsky claims he was lobbying Yeltsin on Putin’s behalf Berezovsky claimed the FSB was planning to kill him (see above).   Putin at that time was the head of the FSB.  In other words, if one is to believe Berezovsky, he was lobbying for the promotion of the man who headed the organisation that was trying to kill him.

The claim Putin was Berezovsky’s protégé looks to me like another example of Berezovsky’s grandiosity (very obvious during the trial) and his propensity, mentioned by the Judge, “to make things up as he goes along” and to change and contradict his own story when it suits him.

As for the numerous meetings between Putin and Berezovsky these do not prove that Putin was Berezovsky’s protégé.  What they show (if they really happened) is Berezovsky’s importance at the time in the dysfunctional Russian power structure and the need for even senior officials like Putin to pay him court.  As to Berezovsky’s support for Putin in the parliamentary and Presidential elections of 1999 and 2000, it tends to get forgotten that the alternatives to Putin in those elections were Primakov and Zyuganov both of whom were Berezovsky’s sworn enemies.  Indeed Primakov is supposed to have wanted to have Berezovsky arrested.  What choice did Berezovsky therefore have?

Berezovsky champion of the free press?

Berezovsky has represented his falling out with Putin as a consequence of a power grab by Putin who supposedly wanted to take Russia in a more authoritarian and anti democratic direction to which Berezovsky as a democrat was naturally opposed.   Putin supposedly also wanted to gain control of the Russian media, which was at this time largely divided between Berezovsky and his former associate and erstwhile rival Guzinsky.  According to Berezovsky it was this that made Putin turn against him causing Berezovsky and Guzinsky to flee into exile.  Putin’s “seizure” of the Russian media from Berezovsky and Guzinsky is according to this narrative, which is universally believed in Britain, a key event in the consolidation of Putin’s power.

To assess the truth of this claim it is necessary to consider the Judge’s assessment of the other party to the case, Roman Abramovich.  Since the case could have been decided purely on the Judge’s assessment of Berezovsky’s truthfulness or otherwise the Judge did not need to assess Abramovich’s honesty and truthfulness as a witness.  The Judge nonetheless did so and here is what she said:

“….Mr. Abramovich gave careful and thoughtful answers, which were focused on the specific issues about which he was being questioned.  At all times, he was concerned to ensure that he understood the precise question, and the precise premise underlying, the question which he was being asked.  He was meticulous in making sure that, despite the difficulties of the translation process, he understood the sense of the questions which was being put to him.  To a certain extent that difference, no doubt, reflected the different personalities of the two men, for which I gave every allowance possible to Mr. Berezovsky.  But it also reflected Mr. Abramovich’s responsible approach to giving answers which he could honestly support.


In conclusion I found Mr. Abramovich to be a truthful, and on the whole reliable, witness.”

In his evidence at the trial Abramovich, who the Judge says is a “truthful, and on the whole reliable, witness” said that Berezovsky in the 1990s ran what was to all intents and purposes a gigantic protection and extortion racket which obliged people like Abramovich to pay him enormous sums of money in return for protection.  Abramovich also said that Berezovsky’s demands were backed by the threat of Berezovsky’s widely believed connections to Chechen terrorists and gangsters.  According to Abramovich Berezovsky used the enormous sums of money people like Abramovich paid him to live a lifestyle that would have embarrassed a Roman emperor.

The Judge said in her Judgment that there was more to the relationship between Berezovsky and Abramovich than had come out in Court.  Nonetheless she called Abramovich a “truthful, and on the whole reliable, witness”.  Abramovich’s description of Berezovsky’s conduct in the 1990s was part of his evidence in the case and was an essential part of his defence so when the Judge said that he is a “truthful, and on the whole reliable, witness” she was saying she believed him.

Is an individual who extorts billions of dollars through a protection racket a fit and proper person to run national television stations and newspapers?  The short answer is no.  Abramovich, who the Judge says is “a truthful, and on the whole reliable, witness”, says that that is exactly the sort of person Berezovsky was.  Seen in this light Putin’s actions to relieve Berezovsky of control of his television stations and newspapers was not a sinister authoritarian power grab but a public service.


Berezovsky has claimed ever since he left Russia in 2000 that he was threatened by Putin and by the Russian government into transferring his interest in the Russian oil company Sibneft to Abramovich.

This claim has been universally believed in Britain.  The Financial Times in a somewhat plaintive article published following the Judgment says the forced transfer of Berezovsky’s interest in Sibneft to Abramovich is part of the accepted narrative of events in Russia after Putin came to power.  The incident is routinely cited as evidence for the disregard of private property rights and legal processes in Russia and of Putin’s personal involvement in such matters and of his brutal methods.

There is no need in relation to the Sibneft affair to draw any inferences from the Judge’s assessment of Berezovsky’s personality since the Sibneft affair was actually part of the case Berezovsky brought against Abramovich which the Judge had to decide.  Her decision is that Berezovsky’s account is untrue.  The Judge said that Putin and the Russian government never threatened Berezovsky to force Berezovsky to transfer his interest in Sibneft to Abramovich.  A British Judge heard what Berezovsky and Abramovich had to say and decided that a key part of the accepted narrative of recent Russian history as believed in Britain is false.


In 2006 the former FSB agent Litvinenko died in London in murky circumstances.  The British authorities claim he was poisoned with polonium and have named a former KGB officer Andrei Lugovoi as his killer.  The British authorities have not however as of the time of writing released the autopsy report and the circumstances of Litvinenko’s death are currently under investigation by a British Coroner.

What gets overlooked in British accounts of the Litvinenko affair is that all the main individuals involved in the affair, Litvinenko, Lugovoi and Goldfarb are connected to Berezovsky.  At the time of his death Litvinenko was living in a house owned by Berezovsky and had been associated with Berezovsky since at least 1994 though shortly before his death he had stopped actually working for Berezovsky.  Goldfarb who orchestrated the blizzard of publicity around the case following Litvinenko’s death and who produced what he claims is a deathbed declaration of Litvinenko’s which accuses Putin of his murder is a long time associate of Berezovsky’s who heads a New York based charity founded and funded by Berezovsky.  Lugovoi once provided security services for Berezovsky’s television and radio company.

Over the course of the police investigation into Litvinenko’s death polonium traces were found in buildings occupied by businesses belonging to Berezovsky.  Notwithstanding this and notwithstanding Berezovsky’s known connections with the most important persons involved in the case the British authorities refused a Russian request for Russian investigators to interview him about it.

What the publicity campaign orchestrated by Goldfarb following Litvinenko’s death succeeded in doing, whether intentionally or otherwise, was to divert attention away from Berezovsky towards Putin who unlike Berezovsky has had no known connection to any of the persons involved in the case and who is unlikely to have met any of them.

Eventually Berezovsky himself joined in.  A book that subsequently appeared about the Litvinenko affair written by the former BBC Moscow correspondent Martin Sixsmith draws heavily on interviews with Berezovsky.

Sixsmith’s book is a testament to the boundless credulity of western journalists and their unshakable faith in Putin’s wickedness and in the wickedness of the Russian government.  It refers to Berezovsky as the leader of the Russian opposition, which is absurd, and as Putin’s greatest enemy, which is also absurd.  It accepts a building Sixsmith was driven past in Moscow as an FSB secret poisons laboratory on the word of the driver though since Litvinenko is supposed to have been poisoned not with some secret poison but with polonium the relevance of this to Litvinenko’s death is not obvious.  It treats a comment by a Russian prosecutor that the Russian authorities had no reason to kill Litvinenko as an admission that the Russian authorities kill people when they have reason to.  It contains other similar speculations and non sequiturs too numerous to count. 

With a very few honourable exceptions (Mary Dejevsky in the Independent being a case in point) the rest of the British press has followed suit.  Both the Times and the Guardian shortly after Litvinenko’s death published editorials that stated baldly that Litvinenko had been murdered in London by the FSB.  This also seems to have been the operating assumption of the police when they investigated Litvinenko’s death.  It continues to be what most people think about the case including one person who has posted a comment on my blog.

I do not know who killed Litvinenko or how he was murdered or even whether he was murdered at all.  I do however wonder whether the British media and the British police would have been quite so willing to assume that Putin and the FSB murdered him if they knew that the person who has been the most enthusiastic proponent of this theory is someone for whom truth is “a transitory, flexible concept”, which can be “moulded” to suit “whatever his current purposes are”.

Berezovsky protected by Britain

Despite his appalling reputation in Russia the British authorities not only granted Berezovsky political asylum, a doubtful but defendable decision, but inexcusably have also given him British travel documents under the name “Platon Elenin”.  These mean that when Berezovsky travels abroad with these documents he does so with the British government’s protection.

This person to whom Britain has given travel documents has been exposed by a British Judge in a British Court as a dishonest person who regards truth as a “transitory, flexible concept” which he seeks to mould “to suit his current purposes”.  He is also someone who is prepared to go to Court and lie on oath in a case he has brought which has cost British taxpayers millions of pounds and in which his objective was to make for himself and his associates lots of money.

This is a person who though living in Britain and in possession of British travel documents the Judge says remains resident in Russia for tax purposes, which must mean he only pays a limited amount of tax in Britain.  How much tax does he pay in Russia?

This same person to whom Britain has given travel documents has been described by the other party to the case (someone who the Judge said was a “truthful, and on the whole reliable, witness”) as running in Russia a gigantic protection racket for his own private gain.

Some years ago the British government refused the Egyptian businessman Mohammed Al Fayed British citizenship notwithstanding that unlike Berezovsky Mohammed Al Fayed was resident in this country and owned major businesses here such as Harrods and Turnbull & Asser which provided employment to thousands of British workers and which paid substantial amounts of money to the British state in tax.  I never heard anyone say things about Mohammed Al Fayed that come anywhere close to some of the things that were said about Berezovsky in the Commercial Court.

Stories have circulated about Berezovsky for years so the British authorities when they gave Berezovsky British travel documents could not have been unaware of the things that have been said about him.   In 2000 a book about Berezovsky came out which was written by the American investigative journalist Paul Klebnikov, who was subsequently killed.  This book gave a detailed and extraordinary account of Berezovsky’s career until then.  It also named him “the godfather of the Kremlin”.  The British authorities cannot therefore say that they had no warning about the person they were giving travel documents to when they gave them to him.  In the light of this and in the light of what the Judge and Abramovich have said about Berezovsky during the case I cannot help but ask myself what Berezovsky has done to deserve British travel documents when Mohammed Al Fayed did not deserve British citizenship.

Conclusion – Berezovsky and the British fantasy of Russia

Over the last decade the British media and the British political establishment have bought into a vision of Russia as a “gangster” or “mafia” state ruled by a corrupt and ruthless kleptocracy presided over by Putin himself.  Berezovsky has been an enthusiastic proponent of this vision.  He is also its key witness and in so far as belief in it has enabled him to avoid extradition to Russia and to obtain British travel documents is its biggest beneficiary.

When questioned in a British Court by a British Counsel before a British Judge the fictions Berezovsky peddles have been exposed for what they are – his own fantasies.  Yet these fantasies have been key building blocks in constructing the vision the British media and establishment have of Russia.

As a witness Berezovsky is now discredited.  The British establishment and the British media have however invested far too heavily in the image of Putin and of Russia Berezovsky has played such a big part in fabricating to jettison it.  I have no doubt this image will outlast Berezovsky even though he, its main witness, is now discredited.  Certainly it will never occur to anyone in Britain to change their view of Russia simply because Berezovsky has been discredited or to consider that what Berezovsky has been doing is falsely accuse others of doing the very things he has been accused of doing himself.  Britain as the country that prefers Berezovsky’s fantasies to the truth is the loser.


The news today is dominated by the story of how David Cameron supposedly exercised a veto to prevent Britain becoming involved in the German proposed treaty to set up a fiscal union.

Media reporting is wrong.  What happened was far more significant.  Cameron did not wield a veto.  Had he wielded a veto there would be no new treaty.  Instead there will be a new treaty only Britain will not be involved in it.

This is so extraordinary that I can only assume that what happened is that Cameron sought to wield a veto but was told by the others that if he did his veto would be simply ignored.  In other words Britain’s veto was overriden by the other EU states.  To disguise Britain’s humiliation Cameron is presenting what happened as his decision even though it was one that was forced on him. 

In other words Britain has to all intents and purposes been expelled from the inner councils of the EU.  Whatever happens next it is difficult to believe that the other member states will ever let it back.  Even if Britain were to elect a pro Europe Labour government it is doubtful that the other EU states would trust Britain’s long term commitment to Europe and the EU sufficiently ever to let it back.  Given that this is so one has to wonder for how much longer Britain will remain a member of the EU.

This is all pretty momentous and its implications for Britain, Europe and the world will take some time to think out.  I would however make just a  few preliminary points.

1. The new EU treaty will not create a fiscal union.  As I said in an earlier post, it merely re asserts the old Maastricht criteria in a far more stringent form.  EU states are now given deadlines to bring their debt to GDP levels down to 60% and will supposedly be obliged to limit their budget deficits over the lifetime of an economic cycle to just 0.5% of GDP.  All this is to be administered by the European Commission and enforced by the European Court of Justice.

Various commentators have correctly pointed out that this will impose unprecedented and indefinite austerity on Europe.  No commentator has so far pointed out that what is being proposed is actually impossible.  There is no possibility that the targets will be met.  Italy has been running a primary budget surplus for years and yet its debt to GDP level is still 120%.  How can it bring it down to 60% in anything like the kind of time frame that is being talked about?  Yet that by law is what Italy is now be obliged to do.  The same point can be made about all other EU states.

One has to wonder whether those involved in drawing up these targets have any idea what they are doing.  What they are doing is planting a bomb under the European project.  Not only will what is proposed fail but it also entirely fails to address or indeed show any understanding of the eurozone crisis, which is a banking not a sovereign debt crisis.  At the same time by using laws and treaties to impose targets that cannot be met the European leaders are ensuring that those laws and treaties will be broken.  Given that the EU system is ultimately no more than a web of laws and treaties creating arrangements that are bound to fail and which will result in those laws and treaties being broken all but guarantees that this web will unravel.  The people of Europe will in the meantime have to pay the price.

2. Cameron has presented his attempted use of the veto as intended to protect the financial community based in the City of London.  This is untrue.  There is nothing in the treaty that would have threatened the financial community of the City of London in any serious way.  The real reason for Cameron’s opposition is that he knows that the government and his leadership would not survive the inevitable backlash from euroskeptics.  

3. I have always known that there was a possibility that Britain might leave or be ejected from the EU.  The one thing I never expected is that it might happen under a government with Liberal Democrat ministers.  Unless they now act that is the position the Liberal Democrats might now find themselves in.


I understand that UNISON the public sector union is calling for Jeremy Clarkson to be sacked for saying on BBC television that he wanted to shoot public sector workers in front of their families. Jeremy Clarkson has since apologised and excused himself for making what he claims was an unfortunate joke.  In this he has found support from the Prime Minister, who is apparently a personal friend, who says that Jeremy Clarkson “obviously did not mean what he said” (who thought he did?) and was merely making a “silly joke”.

For my part I find it incomprehensible that the BBC, which is a public service broadcaster, should employ this reactionary and misogynist imbecile.  Before making his “joke” Jeremy Clarkson bragged that he does not know any public sector workers.  All he needs to do is look in the mirror.  His absurdly over generous salary is paid by the BBC, which is a public service broadcaster funded by the British people through the licence fee.  Once upon a time the BBC was proud that it provided a public service.  Today it pays millions to Jeremy Clarkson, its licenced clown, so that he can abuse other public sector workers who unlike him do something economically and socially useful with their lives.


In the light of the public sector strike today I can do no better today than to repeat the post I wrote on the day of the last public sector strike in June:

I find most of the press and political commentary with its scapegoating of public sector workers frankly offensive.  It seems that much of the political class (which includes the journalistic community) rather than address the real problems in the economy, which are to be found in the financial and banking system, are intent instead on waging a class war against the country’s most dedicated workers most of whom are absurdly low paid for the work they do. 

Public sector workers are in no sense responsible for the present crisis and have had to face wage and recruitment freezes for almost as long as I can remember.  A friend of mine who works in a critically important department of the Revenue, which deals with tax fraud, told me today that because of a wage and recruitment freeze that has been going on for years the staff are not only absurdly overworked and underpaid but also do not include a single worker under 35 so that when the current workforce retires there will be no one with the knowledge or experience to take its place.  Two other friends of mine, who have the critically important jobs of teaching in universities, work in a profession where wages have stood still since 1970 so that real incomes have steadily fallen.

Let me say it clearly that the work that public sector workers do is the toughest, most necessary and most underappreciated that is done in the country.  If public sector workers were permanently to withdraw their labour the entire country would come to a stop in a way that is true of no other group of workers.  Public sector workers are not responsible for the economic crisis.  It is beyond unfair that they should be expected to pay a disproportionate share of the burden now that things have gone wrong especially when those who caused the crisis continue to be so grotesquely over rewarded in spite of what they have done.  Speaking for myself but also I think for many others I say that the public sector workers who are striking today deserve full support in their strike and from me at least they have it.


George Osborne’s Autumn Statement has made clear as crystal that the coalition government’s economic strategy has been reduced to deficit reduction in an effort to defend Britain’s AAA credit rating.

This is hopeless.  Even if Britain’s economic performance is no worse than projections there is no possibility that the coalition government will be able to sustain this level of deficit reduction for the seven years that is now planned.  As has been pointed out by numerous commentators there is simply no precedent in modern British history for this.  In fact it was already clear from the comments of Danny Alexander the Chief Secretary to the Treasury on Newsnight that the deficit announcement in the Autumn Statement is no more than an aspiration since the details of many of the actual spending cuts have not yet been agreed. There is of course no realistic possibility that many of these spending cuts ever will be agreed much less implemented on anything like the scale that would be needed to meet the target.

This means that unless there is a major change in economic conditions the coalition government is certain to miss its deficit reduction target  By constantly harping on the need to meet this target the coalition government has however boxed itself into a corner.  Its constant refrain that unless the target is met Britain’s credibility in the financial markets will be lost means that when the target is missed Britain’s credibility may indeed be lost.  If so a credit downgrade is inevitable.  Whether this will have quite the catastrophic consequences some predict is of course another matter. In the meantime and until this happens the attempt to meet the target will however ensure that any growth in the economy is choked off thereby deepening the existing recession.

This all reminds me very much of 1992 when a previous Conservative government pinned its credibility to an unachievable target, in that case maintaining sterling’s value within the European Exchange Rate Mechanism, even though the price was a severe economic recession.  That government’s reputation for economic competence never recovered when the target was missed.  One wonders what will be the case this time.


Wolfgang Munchau, who judging by how often Paul Krugman quotes him in his posts appears to be one of Paul Krugman’s favourite European commentators, has written another in his long series of articles in the Financial Times advocating a common eurobond as the solution to the euro crisis.

Whether a common eurobond would solve the euro crisis is debatable but no one should be under any illusions about what it means.  It is in fact nothing more nor less than yet another device to get Germany to guarantee the whole of the eurozone’s sovereign debt. 

A government bond is simply a pledge (like an IOU or a post dated cheque) to repay a debt at a certain date and a certain rate of interest, which is given to a lender by a government that is borrowing money.  The extent to which a lender is prepared to accept such a bond in return for a loan depends on the solvency of the government that issues it.  If the government that issues the bond is able to pay the debt out of money it is raising through taxes the government is solvent and the lender can be confident the bond will be honoured and the debt repaid making the bond low risk.  If however the government that issues the bond has to borrow more money to honour the bond and pay off the debt then doubts about the government’s solvency might arise.  In that case the lender might start to worry that the bond might not be honoured and the debt might not be paid in which case the lender might treat the bond as higher risk and might decline to accept it or might only accept it and lend against it at a higher rate of interest. 

In practice some governments because of accumulated goodwill are seen as better risks than others.  If so they may for a time be cut more slack and allowed to borrow for longer and on better terms than other governments.  The underlying principle nevertheless holds true.  To argue otherwise (as some extreme Keynesians seem at times to do) amounts to saying that government can be indefinitely run as a Ponzi scheme in which debt is paid by taking out more debt.  

A common eurobond would however be different from every other bond trading in the sovereign bond market.  This is because the issuer of a common eurobond would not be a government.  The eurozone has no government .  It would have to be some central eurozone institution, possibly the new stability fund or conceivably the European Central Bank.  Neither however has any tax raising powers since the eurozone has no tax raising powers.  In the absence of such tax raising powers the common eurobond could only be honoured from funds provided to the institution that issued it by eurozone governments.  In practice that of course means the German government since the German government is the only eurozone government that could conceivably find the necessary money to honour the debt represented by the common eurobonds that had been issued.  

What this means in practice is that the only way that a common eurobond could work would be if the German government publicly underwrote it.  Since the purpose of the common eurobond would be to pay off other eurobond sovereign debt this would in effect mean that Germany would be accepting a transfer union and would be guaranteeing the whole of the eurozone’s sovereign debt.  In my previous post I explained why Germany might not have sufficient resources to do this. 

The problems in fact only start there.  Germany would not just be guaranteeing the whole of the eurozone’s existing debt.  The logic of common eurobonds is that Germany would be guaranteeing future eurozone debt as well.  Moreover it would be debt over which Germany would have no control.  How could Germany prevent say Italy from borrowing more if it wanted to?  If eurozone governments such as Italy’s were to take advantage of the German guarantee implicitly provided by the issue of German backed common eurobonds at what point would Germany say that enough was enough and it was no longer prepared to underwrite the issue of still more common eurobonds to cover still more eurozone debt?  What  would then happen not just to Italy and the eurozone but also to the creditworthiness of Germany if that point were ever reached?  The short answer is that there would be a default and Germany, which would be seen to have caused it, would see its creditworthiness destroyed.

In other words the idea of the common eurobond is every bit as flawed and as dangerous as the idea of allowing the European Central Bank to buy eurozone bonds by printing euros.  As with that idea if everything were so simple it would surely by now have been done.  That it has not been done is not because of German obduracy but because of the very real dangers inherent in this idea.

Before I finish with this post, I do want to make two further points:

1. One of the most troubling things about Wolfgang Munchau’s article is that he devotes a great deal of space explaining why a common eurobond is necessary because it creates the sort of “safe investment vehicle” the eurozone supposedly needs.  I find this comment remarkable.  As I hope I have shown in this post a common eurobond is not a safe investment vehicle.  Besides, if the financial crisis has proved anything it is that there is no such thing as a “safe investment vehicle” and that to believe in such a thing is to believe in a mirage.  Ultimately what caused the financial crisis was that people traded in financial instruments, which they believed were safe and which it turned out were not safe.  It is alarming that four years after the start of the crisis in 2007 a reputable financial commentator such as Wolfgang Munchau still seems oblivious to this fact and continues to indulge in this fantasy.

2. In his blog Mark Chapman has suggested that one reason why there might now be some interest in integrating Russia into the European institutions is because with its massive financial reserves (currently the world’s third largest) Russia would be able materially to contribute to a eurozone bailout, which Germany by itself probably lacks the resources to do. 

My own rather sour comment to this is that whilst the eurozone governments would doubtless be delighted to accept Russia’s help (in fact they have already asked for it) past experience shows that any promises they made in return for such help would be so much worthless currency.  Recent articles by liberal journalists in Russia (including one discussed and commented upon by Mark Chapman on his blog) show that the fantasy of Russia joining the European Union is once again undergoing something of a revival in liberal circles in Russia.  Given that this is so Russia can count itself lucky that it does not have a liberal government.  Judging from these articles such a government would at this moment be busy bargaining away Russia’s hard earned financial reserves on a eurozone bailout in return for promises of eventual EU membership that would never be honoured.