A Feast of Fools

National Review Online, May 27, 2014

Europe has long played host to strange, exuberant celebrations, from Roman Saturnalia to medieval Feasts of Fools to the bean-feasts of old Twelfth Night, when hierarchy was upended and decorum trashed. Master played slave, slave played master, and cook pretended to be king. But when the festivities ended, all was as before. Master and slave, cook and king returned to their stations. Order was restored, strengthened, and tacitly affirmed by a brief period of license that began with its end already agreed.

And that brings me to the elections to the EU parliament. These have always been a pastiche of democracy, rendered absurd by the absence of a European demos. Europe’s voters have always understood that their role in these elections was to perform as extras in a carefully choreographed drama, pay for the whole thing, pretend it was real, and then go away. A good number decided that they would rather not show up at all. There is no European nation, so why vote as if there was?

Back in 1979, the turnout for the first direct elections to the parliament was 61.99 percent. It then fell for each of the next six, reaching 43 percent in 2009. At the time of writing, the turnout for 2014 is calculated at 43.1 percent, an improvement desperately described as “historic” by one of the parliament’s spokesmen. If it was, it was only historic in the depth of the indifference that 43.1 percent represented. The EU parliament is far more powerful than it was in the past, and the catastrophe wrought by the euro has brought the EU to the center of European political debate as never before. That ought to have been worth more than an extra tenth of a percentage point. That it wasn’t says everything.

From the perspective of Brussels, this year’s show must appear to have gotten a little out of hand. An alarming number of the extras ignored their lines and noisily rewrote the script. They did so in ways too varied to list them all. Nevertheless, there were some standouts.

Over in the Sceptic Isle, Nigel Farage’s UKIP swept to the top of the poll with 27.5 percent, the first time for more than a century that a party that was neither Labour nor Conservative had prevailed in a nationwide contest. This was despite an unprecedented battering by the media and the other political parties and, it has to be said, a few own goals.

Across the English Channel, France’s Front National, a pariah for generations, won with 25 percent. In Denmark, the (somewhat) UKIP-like Danish People’s party took the top prize with 26.7 percent, and in Hungary, the conservative-nationalist Fidesz, the ruling party that Brussels most likes to hate, romped home with over half the vote, while the sinister Jobbik clung to 14.3 percent of the poll. That was a higher score than that achieved by the neo-Nazis of Greece’s Golden Dawn, who had to make do with 9.4 percent, not a bad haul nonetheless, considering that its leader and a number of its MPs are in jail. The gold medal in Greece meanwhile was grabbed by the far-left Syriza, with 26.6 percent, a result that could point to a Syriza victory at the next general election and ought to alarm Greece’s creditors. A win by Syriza in the EU elections would, its leader explained shortly before the vote, be a message to Greece’s current government “to take the memorandums [setting out the terms under which Greece received its bailouts], take the troika [the EU Commission, the European Central Bank, and the IMF, which supervise the austerity program], and go.”

And Syriza’s language found an echo in crisis-struck Spain. Establishment parties of center-left and center-right saw sharp declines in their support. Podemos, a brand-new party of the far left, and an offshoot of sorts of the anti-austerity Indignados protests, came from nowhere to take 8 percent of the vote. We will work, said its leader, “together with other partners from southern Europe to say that we don’t want to be a colony of Germany and the troika,” words that should make German taxpayers shudder.

Still, that vulnerable constituency finally has proper representation in the European parliament in the form of a young, pro-EU but anti-euro party, the center-right Alternative für Deutschland, which took 7 percent of the vote. It remains to be seen whether AfD’s success will be enough of a warning shot to stop Chancellor Merkel from selling her country down the river in the event of a revolt against austerity in the periphery and now, quite possibly, France. Probably not, if I had to guess.

Not everything went badly for those in charge in Brussels. In two “creditor” nations, Finland and the Netherlands, prominent Euroskeptic parties did far less well than expected, while in Italy comedian Beppe Grillo’s populist, and not always coherent, Five Star Movement was eclipsed by the center-left PD, now led by the charismatic Matteo Renzi, its supposedly Blair-like (be warned, Italy) new prime minister. That said, the Grillini still managed to account for 21.15 percent of the votes cast. It may be too soon to say that they have peaked.

But Brussels does not have to look as far as Rome for comfort. To start with, the low turnout almost certainly exaggerated the Euroskeptic portion of the vote when compared with the likely outcome in national elections. To be sure, a reluctance to turn up at the polling station may not show much engagement with the European project and that will distress more idealistic Eurocrats. But their more cynical counterparts know very well that apathy is not only better than outright opposition, but is, for the most part, also an ally. Large elements of the superstate-in-waiting have been able to be put in place only thanks to the unwillingness or inability of the electorate to understand where the often complex, often deliberately obscure process of European construction will lead. That still seems unlikely to change.

More than that, the European Parliament will continue to be a Euro-federalist redoubt. As José Manuel Barroso, the former Maoist who is now the EU’s top bureaucrat, announced on Sunday night, “The political forces represented in the European Commission have overall won once again. . . . They share a fundamental consensus for Europe that should now be reinforced.”

The Open Europe think tank has calculated that anti-EU and anti-establishment parties are “on course to win 229 out of 751 seats in the new European Parliament (30.5%), up from 164 out of 766 seats in the current parliament (21.4%).” That’s impressive, but in itself it is not enough to change anything. The parliament will be likely run by some sort of coalition of the center-left and -right, perhaps with an added Green tinge to make it all the more sickening. That won’t be much of a change. In an earlier piece of research, Open Europe noted that “the center-right European People’s Party (EPP) and center-left Socialist and Democrat (S&D) party families voted the same way 74% of the time in the 2009-14 parliament.” A de facto coalition will become de jure, that’s all. And its preferred approach will continue to be “more Europe” buttressed even more than before by the paranoid argument, and often paranoid belief, that Euroskepticism is some sort of fascism. After all, look at that Marine Le Pen.

The outsider parties not only lack the numbers to challenge this consensus, they lack the cohesion to do so. That reflects the fact that they spring from far more authentic — and thus more diverse — national political traditions than the unaccountable nothingness of the acronyms now in charge. The differences between the Euroskeptic parties and the nations they spring from mean that even a marriage of convenience between them (the parliament’s rules favor groupings of a certain breadth and size) can be fraught with danger. A mooted association with Le Pen’s Front National proved very damaging for Geert Wilders in the Netherlands and would be poison for Nigel Farage. The best hope is that the Euroskeptics can at least cast enough light on the workings of the parliament and the rest of the Brussels machine to stir up yet more discontent, but that will take time, perseverance, and a media that is willing to pay attention. Don’t hold your breath.

That’s not to deny that there will be talk of reform, and maybe even talk of the transfer of some power away from Brussels. There will be talk, plenty of it, but its main function will be to mask the whirring of the engine of ever-closer union, an engine that continues to drive integration along whatever the voters may say. To change that will take a revolt of the centrist parties in their domestic legislatures, provoked, perhaps, by the reality of the economic grind that continues to lie ahead and by fear of the political parties that may someday be strong enough to take advantage of it.

Until then, well, clear up the empty bottles; take down the balloons and bunting. È finita la commedia: Those in charge are back in charge, as, indeed, they always were.

Playing The Verdun Card

The Weekly Standard, May 26, 2014

In the curious pantomime that is the EU parliament, the French politician Joseph Daul is a star. He’s the president of the European People’s party (the principal center-right bloc in the parliament), an apparatchik with impeccable EU establishment credentials. He has euro-federalist beliefs, a funding scandal in his past, and a willingness to warn that Brussels is all that stands between the continent and a reversion to its warring ways. He’s also a little twitchy about the elections to the EU parliament later this month.

“I am convinced,” he announced recently, “that if Europe succumbs to the siren voices of populists and Euroskeptics, there will be a turning back towards chaos and war.”

This is an all too familiar eurocratic refrain, but it is heard even more frequently on those rare occasions when Europe’s voters are given a chance to slow down the march to a superstate. Trying to cajole his compatriots into choosing the euro in a 2003 referendum, Swedish prime minister Göran Persson recalled how Germany’s “weeping” Chancellor Kohl had told him that he did not want his sons to die in a third world war, an understandable sentiment, but an unpersuasive argument. Swedish voters stuck with the krona.

Two years later, another Swede, Margot Wallström, then the EU commissioner charged with selling the proposed EU constitution to a somewhat doubtful continent, took the opportunity presented by a visit to the Nazi concentration camp at Theresienstadt (Terezin) to observe that “there are those today who want to scrap the supranational idea. They want the European Union to go back to the old purely intergovernmental way of doing things. .  .  . Those people should come to Terezin and see where that old road leads.”

With this month’s election falling within a few weeks of the hundredth anniversary of a certain shooting in Sarajevo, the dire warnings now tend to refer to a different dark chapter in Europe’s tumultuous 20th century. Last year, José Manuel Barroso, the EU’s top bureaucrat, implied that those “who want to roll back our integration” were risking a regression to “the war [and] the trenches” of the past, a ludicrous variation on an already ludicrous theme.

If all this scaremongering were a matter of cynical calculation it might be possible to treat it with a degree of admiration. As a political tool, it has, after all, proved very effective: Fear works. And so does the manipulation of historical memory, another integral element in Brussels dezinformatsiya. If Europeans could be persuaded to blame the nation-state for their wars, they could be talked into distrusting their own patriotism and buying into the bogus made-in-Brussels “European” identity.

And, indeed, this is what we have seen over recent decades. As it came to be widely accepted that a united Europe was the key to peace, those who persisted in dissenting from the principle of a broader federalist agenda, except, perhaps, in reliably stubborn Britain, were pushed into uncomfortable and ultimately self-segregating corners far from
the electoral mainstream. Outside the skeptic isle, almost the only political parties prepared, until lately, to reject “ever closer union” were those drawn from the rougher ends of the political spectrum, an uninviting destination for centrist voters. That, in turn, made it easier to claim that Euroskepticism was, by definition, evidence of extremism and, maybe, a screw loose too.

The mantra that the EU was staving off a return to the hecatombs also operated as an unsubtle reminder to the Germans that they had a moral obligation to confine their role in the new Europe to keeping quiet and footing a large chunk of the bill. Meanwhile the rest of the continent—and, such is the power of guilt, much of Germany too—was led to believe that only Brussels could keep the Hun on the leash, a notion that rested on the absurd premise that panzers still prowled through Teutonic dreams. Such is the power of history.

The passing of time and the reemergence of German economic power have eroded some of the Bundesrepublik’s willingness to follow the demeaning postwar script, but by less than might be expected. Introducing the euro over the objections of most Germans made a mockery of their democracy. Preserving the single currency has stretched the country’s much-prized constitutional order and now threatens to become a permanent drain on its coffers, but the conservative, gently Euroskeptic (anti-euro, but pro-EU) Alternative für Deutschland is only likely to score 6-7 percent in the upcoming election, and no small portion of that support will owe more to the AfD’s mildly restrictive immigration policy than to its opposition to the single currency. Most of the rest of Germany’s political class remains in thrall to the tired myth that to retreat from ever closer union would be to advance into danger and, quite possibly, war.

But a myth it is. What kept the peace in Europe was, yes, in part, memories of Auschwitz and Verdun, but it was also, much more so, the product of the savage ethnic cleansing of Eastern Europe’s awkward German minorities, and, above all, the discipline imposed by the Cold War—by Soviet hegemony over half of the continent and American leadership of the other. The evolution of the EU was the consequence of this new, rather chilly peace, not the creator of it. Brussels subsequently performed an invaluable role in shepherding Moscow’s former European colonies back to the West after the Soviet collapse, but on foundations built by the Atlantic alliance.

Those who used and abused this myth to drive the EU forward were in many cases not so much Machiavellis as priests who had faith in a tale they themselves spun. And it proved to be a highly convenient myth. The insistence that nationalism is inherently dangerous is an extrapolation from a totally defeated, especially toxic, and specifically German form of nationalism. But it gave those in charge of the European project an ever-expanding license to remove more and more of anything that marked out the distinctiveness of a nation from the regular democratic process: The voters, poor creatures, so susceptible to “populists,” you see, could not be trusted to do the right thing.

Slice by slice, sovereignty has been transferred from democratic nation-states to a largely unaccountable supranational technocratic elite which in turn has become dangerously disconnected from the reality that encounters with the electorate might have brought, and dangerously emboldened as a result. And so the euro was put together with little regard for its own rule book, common sense, or anything resembling informed popular consent. Once launched, the currency union was run in a way that was, if anything, worse. After hubris, nemesis, and with it, old demons began to stir.

The long economic crisis has shattered the never completely convincing illusion of a continent that was leaving nationality behind. Northern Europeans resent being compelled to bail out nations of a eurozone periphery for which they feel little affinity and less respect. The eurozone’s laggards detest what they see as harsh rule by foreign diktat. Vintage stereotypes are dusted off. Greeks are thieves. Chancellor Merkel is a Nazi. Trapped in the jaws of a dysfunctional currency union, and lacking the democratic legitimacy to fix it and either the imagination or the courage to try something else, the establishment parties have little to offer but more of the same. And so the hard times grind on.

And as hard times tend to do, they are persuading increasing numbers of voters to turn to alternatives they once would never have considered. While the effect may be magnified by low turnout (which fell—the sixth consecutive drop—to 43 percent in 2009), this month’s European election is likely to see something that looks a lot like a Euroskeptic wave. Some 25 percent  of the vote could go to Euroskeptics  of one description or another, up from 15 percent or so (it’s difficult to be precise) in the current parliament. As waves go it will be choppy: This is a ragtag group, drawing from left and right and ranging from the benign (such as Britain’s UKIP) to the sinister (Greece’s neo-Nazi Golden Dawn, given its big break by the failures of an EU that once claimed it had consigned black shirts to history). It will be neither numerous nor cohesive enough to change very much in the short term. But what these parties do have in common is a determination to wrest back control of their countries’ destinies from what is rightly seen as remote, micromanaging, and alien bureaucratic control.

This month’s vote will be followed by noisy, angry, and overwrought polemics, but not by dramatic transformation or the guns of August. That said, as the Barrosos and the Dauls push on—and they will—with the trudge towards ever closer European integration, doubtless claiming that the rise of “dangerous” Euroskepticism makes it even more imperative than before, they will be ignoring a nastily inconvenient truth from Europe’s past: Imposed multinational federations don’t end well.

Sarajevo learned that a century ago. And then it learned it again.

Four-Ring Circus

National Review Online, February 9, 2014

Organized Fun, the Olympic Games, parades, the aesthetics of the Cirque du Soleil, fireworks (face it, they are dull), and just about anything to do with sport are about as low as it is possible to get on the list of things I enjoy. I was, therefore, a natural pick to write about the opening ceremony for the Sochi Games. Thank you, NRO!

So there I was on Friday evening, not in Sochi (thank you, NRO travel budget!), but on my sofa in New York City, watching as NBC showed America the recording of an event that everyone else had seen hours before. No matter; we had already shared in an enjoyable prelude played out through Twitter, BuzzFeed, that friend who e-mails you stupid photographs, and the rest of today’s media giants — double toilets, unfinished hotel rooms, bugged showers, the slaughter of stray dogs, epic corruption, a $51 billion price tag, and the announcement from Sochi’s mayor that there were no gays in his town — that suggested that these Olympics might be more entertaining than most. Who now remembers Albertville?

The evening began with Bob Costas chatting away in what looked like a room in a Golan-Globus Fortress of Solitude. There was an Obama interview. For those in the dark about Russia’s history, an NBC narrator described seven decades of Soviet despotism, mass murder, gulag, and evil empire as a “pivotal experiment,” a mealy-mouthed, carefully neutral description that made Walter Duranty’s infamous omelets look like a fearless exercise in speaking truth to power.

The ceremony itself opened rather nicely with a young girl running through the Cyrillic alphabet, using each letter to introduce someone or something from Russia’s past. Let’s be fair; this would not have been the moment for Russia — or any nation — to air its dirty Lenin, and Russia did not. Stalin’s C (as I said, Cyrillic) would have to wait for another night. Instead we were treated to a recital of some of the best of Russia’s heritage, including Chekhov, Malevich, Kandinsky, Nabokov (Nabokov!), and some icons of my own space-obsessed childhood, Gagarin and Lunokhod, that plucky little motorized bathtub that crawled across a small slice of the moon in 1970. More disreputably, the organizers slipped in a boast that the Russians had invented television, a claim that did not slip past half-Scottish me and would have annoyed John Logie Baird, the Scotsman whose achievement this really was.

Let Scotland’s Daily Record take up the tale:

“During a video taking viewers through Russia’s alphabet, a row of TV screens appeared next to the letter T and a picture of Russian-American inventor and engineer Vladimir Zworykin . . . Scots commentator Hazel Irvine was quick to reassure viewers that the achievement still belonged to her home country immediately after the clip finished.”

This view of history, at ease with elements of both the Soviet past and what preceded — and indeed opposed it — and happy to play fast and loose with accuracy was a foretaste of what was to come.

Yes, there were fireworks. Whatever.

The young girl was duly hoisted up for a flight across an impressive representation of Russia’s vast and varied landscape. In a remarkable display of diplomatic restraint, it did not include any stretches of landscape currently belonging to any other country.

Finally came the technical glitch (or, if you prefer, the last hurrah of determined Trotskyite wreckers) that schadenfreudians — out in force for these Olympics — had been so eagerly waiting for. One of the five giant snowflakes that were meant to flower into Olympic rings, well, flaked, although not, reportedly, on the Potemkin footage that played on Russian TV (oh come on, you knew there was going to be a reference to that village somewhere in this piece).

The athletes emerged (I think) from some underground lair into the stadium, each team led by a snow hottie topped with a kokoshnik (look it up; I did), as they sauntered in, nation after nation after nation after nation, Lithuanians in two shades of sharpie green, mighty San Marino, some euphemism for Taiwan, and, of course, USA! USA! decked out in Ralph Lauren cardigans that would have made Betsy Ross wish that she had just stuck to plain blue.

And what were the Germans wearing?

It sounded to me like the bunch from Belarus got a very big cheer and the Ukrainians, too. Russians have a very expansive definition of home team.

The centerpiece of the show was a pageant meant to represent the sweep of the latest approved version of Russian history. And some of it was very striking, even lovely, not least a giant, silvery troika, so evocative of the country’s vast, snowy landscapes, and, for that matter, the finest of all descriptions of Russia, “speeding like a troika” in Gogol’s Dead Souls, a passage that ends, a little ominously for the rest of us, like this:

Whither then, are you speeding, O Russia of mine? Whither? Answer me! But no answer comes — only the weird sound of your collar-bells. Rent into a thousand shreds, the air roars past you, for you are overtaking the whole world, and shall one day force all nations, all empires to stand aside, to give you way!

Nikolai Gogol (1809–1852), of course, was Ukrainian-born.

Nobody ever said that Russian history was uncomplicated, but the spectacle in Sochi was clearly designed to smooth things out a bit — no, a lot — something very much in keeping with the wider Putin project in which all of Russian history, Czarist, Soviet, and whatever it is now, is crammed into a single, supposedly unifying past in which all Russians, regardless of ideology, did the right, patriotic thing for a nation that was always a force for good.

Thus we witnessed onion domes, Cossacks, Peter the Great, the ballroom scene (beautifully done) from War and Peace, followed by glimpses of turn-of-the century technological progress cleverly used to pave the way for the passage dedicated to that “pivotal experiment.” This was presented primarily as an acceleration — continuity, you see — of the country’s drive to industrialization and modernity all drenched in red (light, not blood) and crowned by the shapes of constructivism’s bold geometry, including what looked like fragments of Tatlin’s Tower, the monument to the Third International that — like communism’s radiant future — never made it past a very rough draft.

And what was this? Two giant heads, an enormous hammer, a vast sickle, excerpted, as it were, from the sculptress Vera Mukhina’s massive, sinister and, in its way, magnificent, Worker and Kolkhoz Woman (1937). To look at, it was wonderful, to think about, not so much. Imagine if Germans hosting a (modern) Olympics had included some of the iconography that their countrymen had used back in Berlin the first time round. That it is unthinkable in a way that Sochi’s sexed-up Soviet design was not speaks volumes — volumes filled with nothing good.

Later there was a sequence showing the supposedly kinder, gentler, Soviet Union that evolved after the tyrant whose name was not mentioned had left the scene, a sort of Russian Graffiti with music that somehow, I suspect, was not entirely representative of the early Brezhnev years.

Speeches? Of course there were speeches. The president of the International Olympic Committee said something about the Olympics embracing diversity (well, there had already been a performance by the fake lesbian pop duo t.A.T.u.) and explained that the games were “never about erecting walls to keep people apart,” which may or may not also have been a reference to Sochi’s eccentric restroom construction. After that, some Swan Lake danced by what seemed to be electric jellyfish, and a confusing sequence involving escapees from the set of Tron.

The Olympic torch arrived on the last leg of its long relay, a tradition since, ahem, Berlin, and was handed over by Maria Sharapova to a posse that included Alina Kabaeva, holder of an Olympic gold medal in rhythmic gymnastics, holder of a Russian parliamentary seat, and, if the rumors are true, holder of Vladimir Putin too. Yes, that’s right, rhythmic gymnastics . . .

The flame itself was lit by another parliamentarian, Irina Rodnina, three-time winner of an Olympic gold medal for figure skating and the author of a racist tweet about Barack Obama.

The gold medal for trolling was awarded to Vladimir Putin

Vlad The Conservative

National Review, January 9, 2014 (January 27, 2014 issue)

Putin Pop-Up Store, East 20th St, NYC, October, 2014 © Andrew Stuttaford

Back in the mid 1980s, Pat Buchanan was the communications director for the Reagan White House, and Vladimir Putin was a KGB officer in East Germany. Times change: The former Soviet secret policeman — if there is such a thing as a “former” Soviet secret policeman — is, after a bogus intermission, now serving a third term as Russia’s president, and the old Cold Warrior seems to have become something of a fan. Writing in his syndicated column in December, Buchanan wondered whether, “in the culture war for mankind’s future,” Putin was in fact “one of us.”

The immediate trigger for Buchanan’s comments was Putin’s state-of-the-nation address just a few days before. Stung, probably, by criticism of gay-bashing legislation in Russia, Putin had taken aim at “the destruction of traditional values” elsewhere in the world — by which he meant the West — and, just so there could be no doubt about what he was referring to, had thrown in a reference to “so-called tolerance, neutered and barren.” No stranger to chutzpah, Putin, an unlikely champion of the ballot box, noted that these changes to “moral values and ethical norms” had come “from above” and were “contrary to the will of the majority.” As such, they were “essentially anti-democratic.”

After years of aggressive judicial activism and dramatic social change at home, those were words likely to appeal to quite a few American conservatives, some of whom might perhaps already have found themselves in unexpected agreement with the Kremlin not so long ago. After all, it was only last summer when Republican congressmen Steve King and Dana Rohrabacher made it clear that Buchanan was by no means the only figure on the American right to be offended by what he has somewhat histrionically described as “half-naked” (by Iranian standards, perhaps) and “obscene” (not so much) protest in Moscow’s Cathedral of Christ the Savior by the feminist punk-rock group Pussy Riot.

It is, of course, hardly surprising that a protest by an altar — even if brief, and largely mimed (a soundtrack was recorded later for a music video using footage from the protest) — would appall many, and not just the religious, in this country. But Pussy Riot’s critics should have taken a closer look before jumping onto Putin’s sleigh. America is not Russia, a country where an authoritarian regime has suborned the national church for its own purposes, and where that church, bribed with privilege (ask bullied Russian Baptists how that works), a degree of power, and no small amount of mammon, has for the most part gone along. That is why Pussy Riot was protesting in a cathedral. Theirs was an infinitely lesser blasphemy.

Putin may well be a Christian of sorts (the influence of his supposed dukhovnik — spiritual father — Archimandrite Tikhon Shevkunov is a source of much speculation), but then again so were the Borgias. Divorce and all the rest aside, Putin might even quite genuinely, if in a rather rough-and-ready fashion, be a social conservative, but his public declarations on these topics are likely more a matter of political calculation than moral conviction. Corruption, economic slowdown, and increasingly dictatorial rule have eroded Putin’s support among the intelligentsia and in the more metropolitan centers, and so, Orthodox Church in tow, he has — what’s the term these days? — “pivoted” toward Russia’s “silent majority” (Pussy Riot didn’t have too many local fans), a maneuver that the Buchanan of the Nixon White House would have both recognized and appreciated for its savvy.

It was also a move that dovetailed neatly with a longer-term theme running through the Putin years. The defining mistake of post-Communist Russia has been an unwillingness to come to terms with the reality of its Soviet past. Putin himself infamously referred to the break-up of the USSR as “the greatest geopolitical catastrophe” of the 20th century. Historical truth — uncomfortable, divisive, and shameful — has been replaced with a patriotic confection designed to reconcile the irreconcilable and soothe the national ego. Some excesses and mistakes — too mild words, those — are included, but other horrors are downplayed or have simply gone missing. There is, however, room for both the preservation (or restoration) of Soviet iconography and a lavish biopic about Admiral Kolchak, one of the most prominent of the anti-Bolshevik commanders in the Russian Civil War. In a large national poll organized in 2008, Stolypin, the tough, authoritarian reformer who was the last czar’s most effective prime minister (significantly, Putin gave him a shout-out during his speech), was rated the second-greatest Russian of all time. Stalin (a Georgian and a mass murderer, but no matter) came in third.

It is a narrative intended to put together what history in reality has torn apart, a fable in which czar and commissar can coexist, united in their love for the motherland and a shared sense of the messianic destiny that Holy Russia — home of Moscow, the “Third Rome,” and also the birthplace of Lenin’s radiant future — has long felt is its due, a fantasy reinforced by physical as well as intellectual distance from the Enlightenment West. The fact that such ideas have proved most congenial to authoritarian rule has not escaped Putin’s notice.

Regardless of the nods to the country’s Soviet heritage, the Commies — fear not — will not be coming back anytime soon. Too much loot is being amassed by those in charge for that. Instead, the philosophy that underpins the current regime (an admission of crude self-interest wouldn’t really do the trick) looks more and more like an updated, more subtle, more capitalist variant of the “Orthodoxy, autocracy, and nationality” first devised as a Russian state ideology for Czar Nicholas I (1825–55) as a response to the liberal challenge at home and abroad.

Well, Orthodoxy is back, what’s left of Russia’s nascent democracy is under pressure, and “nationality” never went away. In his speech Putin acknowledged the multi-ethnic nature of the Russian Federation (albeit with a swipe at “rowdy, insolent people from certain southern Russian regions”), but he went on to emphasize “the all-encompassing, unifying role of Russian culture, history, and language,” terminology that harks back both to czarist-era Russification and to the brutal Soviet approach to “lesser” nationalities.

But as he hymned the rebirth of a strong Russian state, Putin was careful (as Buchanan noted approvingly) to stress that Russia “does not encroach on anyone’s interests . . . or try to teach others how to live their lives.” Unfortunately, the first of those claims is nonsense. To take just a few instances, Russia has been throwing its weight about in northeastern Europe, it has grabbed a slice of Georgia, it is bullying Moldova, and, in what may be Putin’s most impressive coup yet, it may just have “bought” Ukraine. Russia is on a roll, with sporadic humiliations of a directionless America — from Snowden to Syria — for added spice. Yes, Putin’s grip may well be more fragile than it looks, but when Forbes magazine recently designated him as the most powerful person in the world, it was not without reason. The recent release of two Pussy Rioters and Mikhail Khodorkovsky was a declaration of strength, not weakness.

For a retro great power to behave like a retro great power is not particularly shocking, but it is essential to remember that Russia (even more than the U.S.) is a nation that considers that it has the right to play by its own rules. Thus Putin’s insistence that his country is not interested in trying to “teach others how to live their lives” is not only a rebuke (as Buchanan correctly notes) to Western universalism, but also a reminder that Russia has no intention of yielding its sovereignty to the emerging supranationalist order. That’s a reasonable, even commendable, position, but it is no reason for those on the foreign-policy right to think that they have found a friend in Putin. There are areas where American and Russian interests overlap (something that Buchanan has also highlighted). The fault for not taking better advantage of them lies on both sides and so far as is possible should be remedied, but a degree of rivalry, sharpened by Russia’s refusal to accept its loss of empire, is inevitable, natural, and, if handled with an appropriate degree of realism, not particularly dangerous.

And (hesitant as I am to give advice to this constituency) social conservatives should be warier still. To Buchanan, Putin “is seeking to redefine the . . . world conflict of the future as one in which conservatives, traditionalists, and nationalists of all continents and countries stand up against the cultural and ideological imperialism of what he sees as a decadent west,” a piece of wishful thinking on Buchanan’s part that gives Putin’s pronouncements an international significance that they do not deserve and could not sustain.

History, Mark Twain is said to have observed, doesn’t repeat itself, but it rhymes. Almost exactly two centuries ago, the devout if possibly unhinged Czar Alexander I (1801–25) was peddling the notion of a reactionary “Holy Alliance” between the nations that had seen off Napoleon. When the czar explained this idea to Lord Castlereagh, Britain’s conservative foreign minister (the no less conservative Duke of Wellington was also in the room), the meeting did not go well. “It was not without difficulty,” wrote Castlereagh later, “that we went through the interview with becoming gravity.”

Translation: It was difficult to keep a straight face.

There’s a lesson there.

Republicans Cannot Go On As 'The Party of No'

Standpoint, January 1, 2014

Times Square, New York City, October 2013 © Andrew Stuttaford

Wakes are not only for rainy days. The weather outside was glorious in that New England fall way, but the mood inside a room in Yale’s Linsly-Chittenden Hall was a touch funereal. We were a bunch of rightwingers there for a conference on the future of conservatism but, to quite a few of those attending, the past seemed altogether more promising.

The timing was not the best. Just a few days before, the ill-conceived and unpopular effort by congressional Republicans to defund Obamacare, a ploy that made the charge of the Light Brigade look well thought-out, had collapsed in an eminently predictable fiasco. This stoked fears that the 2014 midterm elections were now doomed to end in disaster. Always implausible hopes of retaking the Senate looked delusional and even GOP control of the House of Representatives appeared to be at risk.

But not long after, Republican hopes began to rise. The end of the shutdown left the Obamacare website, launched a week or two earlier amid general derision, alone in the coconut shy. As I write, healthcare.gov is a gift that is still giving. Obama’s approval ratings have sunk below 40 per cent.

But the site’s issues are being ironed out, and with the help of  supportive media, will be reclassified as teething problems to be rapidly forgotten. Nevertheless, there is a decent chance that lingering recollections of the cack-handed roll-out will poison the way in which many voters will still be viewing Obama’s signature legislation when the mid-term elections come round next November. That might give the GOP a helping hand then, but the idea that this will also be enough to propel a Republican into 1600 Pennsylvania Avenue in the 2016 elections is a stretch.

That said, Obamacare — never a particularly popular plan — may give Republicans something they can exploit in their campaign to retake the White House. The Obama administration shies away from the word, but the Affordable Care Act (ACA) is redistributionist, not only in the narrow sense (higher taxes on the wealthy), but in its broader operation: it directly or indirectly transfers healthcare resources away from a majority of Americans and reallocates them to the much smaller number previously shut out of the system. Crudely understood, there will be more losers than winners.

Simply undertaking to repeal Obamacare will not be enough to do the trick. The system being transformed by the ACA may have been better than usually understood in the UK, but it was nonetheless restrictive, bureaucratic and expensive and, thanks to the way it was often linked to employment, alarmingly tenuous to the millions of Americans who worry how secure their jobs really are. If Obamacare is to go, the GOP will have to explain what it will put in its place. Journalists and think-tank denizens on the Right have been offering up their suggestions for a while, but as two of the most recent to do so, Ramesh Ponnuru, a senior editor at National Review, and a visiting fellow at the American Enterprise Institute (AEI), and Yuwal Levin, the editor of National Affairs and a fellow at the Ethics and Public Policy Center, observed in a November article in the Wall Street Journal, congressional Republicans have “with a few honourable exceptions” failed to join in.

That’s a problem. Bobby Jindal, the governor of Louisiana and something of a Republican star, warns that the GOP cannot just be the “party of no”. Maybe, but to attempt to define what it is for is, for the Republican politician who dares to try, dangerous ground indeed.

To start with, it will involve recognising that there is rather less remaining of the America that elected Ronald Reagan than many Republicans seem prepared to accept. The US population has ballooned by more than 90 million since 1980. It has changed in ways that reflect more than the passing of the years. Usefully didactic memories of the 1970s have faded. Recollections of the Lehman collapse are all too fresh. New generations have reached voting age after a lifetime immersed in the soft-left certainties of the American education system. Meanwhile, stagnating household incomes and what look like permanently higher levels of unemployment or underemployment threaten to chip away at support for America’s free market(ish) model. Democrat Bill de Blasio’s success in winning the mayoralty of New York City was (mostly) a Gotham thing, but obvious public concern over rising inequality — the Occupy movement was an early harbinger — signals a coming shift in the ideological landscape that will not help the Republicans one bit.

Above all, decades of mass immigration have transformed the country’s ethnic, cultural and political make-up in ways that pose an enormous challenge to the GOP. It says something that if the America of 2012 had had the demographics of 1980, Mitt Romney would have won by a wider margin than did Ronald Reagan back then.

What to do? To begin with, the conventional wisdom is that Republicans need to scale back their opposition (much of it driven by the Right) to current efforts to “regularise” the position of the nearly 12 million illegal immigrants now thought to be present in the country. The argument — made with varying degrees of enthusiasm and cynicism both by the party establishment and erstwhile Tea Party darlings such as freshman Florida senator (and possible presidential candidate) Marco Rubio — is that an anti-immigration stance makes it easy for the GOP’s opponents to caricature the Republicans as a “white” party hostile to minorities. With Democrats and the media trumpeting just that tune, it’s an argument that has some weight.

Throw in some of the more inflammatory talk sometimes heard from the Tea Party and other sections of the “nativist” Right, as well as the clumsy language of Republicans often tone-deaf to ethnic sensitivities (Mitt Romney’s 2012 reference to “self-deportation” for one) and it’s easy to understand why the Republican share of the growing Latino vote fell from some 40 per cent in 2004 to 27 per cent in 2012 (Asian-Americans were even less enthusiastic: only 26 per cent voted for Romney). That minorities are more sceptical about immigration than often assumed only reinforces the point that what matters is not the policy itself, but the message that it is believed to deliver.

Yet the electoral mathematics will deteriorate still further if anti-immigration Republican congressmen who, for now, are holding the line, agree to an amnesty for illegals. For all the talk about Latinos’ attachment to enterprise and family values (more nuanced than the stereotype would suggest), their votes will tilt heavily Democratic for decades, just as did those of the Italian-Americans with whom they are so often compared. The same is true of the other immigrant groups now reshaping America, a disturbing prospect for the GOP given that the country is accepting something like one million new legal immigrants a year. That’s an inflow that the Democrats have every reason to welcome, but there is little sign that many Republicans will be prepared to stand in the way of those arriving legally, quite possibly even if that total is — as is also being proposed — significantly bumped up. The idea of the nation of immigrants has an emotional appeal that stretches across America’s ideological divide. More prosaically, there is also a bipartisan understanding that business donors appreciate the cheaper workers and increased demand that immigration brings in its wake.

Republicans are thus running up an escalator that is moving down. Resisting amnesty will slow the pace somewhat, but the longer-term trend is clear: to win, the party will have to win over more minority voters. Quite how to do so remains a mystery. The greater number of high-profile GOP leaders (Jindal, Texas senator Ted Cruz, Rubio, South Carolina governor Nikki Haley and New Mexico’s promising Susanna Martinez, to name a few) drawn from ethnic minorities is a start, but no more than that.

To be sure, the Taft-sized Chris Christie — in the derogatory sense of the word — secured re-election as Republican governor of strongly Democratic New Jersey with some 60 per cent of the vote in November, a tally boosted by his success in attracting the support of over 50 per cent of Hispanic and (it’s sad that this counts as an achievement) around 20 per cent of African-American voters.

This was a feat that owed as much to his refreshingly blunt persona as to his attempt to steer his state in a more frugal direction. For while there is still a very distinctively American constituency for smaller government — check out the “don’t tread on me” flags brandished at any Tea Party rally — it is unlikely to be enough to return the White House to Republican management. In part, this reflects the fact that the country’s finances have deteriorated to a point that leaves little room to make a good case for Reagan-style tax cuts. The number is distorted by a sluggish economy, but federal tax receipts as a percentage of GDP (approaching 17 per cent) are lower than when the Gipper left office. Meanwhile publicly- held federal debt as a percentage of GDP has risen from 26 per cent in 1980 to around 73 per cent today, nearly half of which is now held by intrinsically more jittery international investors.

Total federal debt (roughly $17 trillion) is calculated before factoring in the contingent liabilities arising out of underfunded entitlement programmes such as Social Security and Medicare that, according to Republican deficit hawks such as Oklahoma senator Tom Coburn or former vice-presidential candidate Congressman Paul Ryan, could amount to four, five or more times that figure. To be fair, those estimates are hotly disputed, but still . . .

On the other side of the ledger, that the sequester (a crude budget-bludgeoning device triggered by the current impasse in Washington) has so far not proved anything like as damaging as the Obama administration originally predicted should not be allowed to conceal the fact that any attempts to take America back to fiscal respectability on the back of expenditure cuts alone would involve taking a chainsaw to entitlements. According to a Bloomberg News poll last February, most Americans accept (or claim to accept) that Medicare and Social Security must be overhauled, but they view tax increases as part of the solution.

That’s anathema to many on the Right, an attitude enshrined in, and enforced through, the “Taxpayer Protection Pledge” designed by Americans for Tax Reform, a pressure group formed by the influential libertarian-leaning Republican activist Grover Norquist. The pledge is essentially an undertaking to reject any net increases in tax, and it has been signed by the overwhelming majority of Republicans in the Senate and House. Sadly, even if the pledge has sometimes been interpreted more sinuously than its stern wording might suggest, it no longer is in tune with economic reality, but the political reality is that declining to sign it (let alone reneging on it) is likely to cause trouble for any Republican at primary time. That will change, probably at about the time that seniors (56 per cent of the over-65s voted for Romney in 2012) realise that their benefits are in jeopardy, but that moment has not arrived.

All this almost certainly dooms the faint chances of a bipartisan grand bargain over the federal budget at least for now. Given the current balance of political forces, this may not be such a bad thing. But it also discourages Republicans from mounting any serious effort to redesign America’s archaic and destructive tax system in ways that would make it generate more revenues while inflicting, at least in some respects, less pain. In that connection, one avenue worth exploring is the introduction of some sort of federal consumption tax, partially offset by a lower, flatter, simpler income tax. From time to time, some Republican leaders have floated variants of this, including Ryan and former Indiana governor Mitch Daniels (one of the more disappointing absentees from the 2012 race). Even Mitt Romney refused to rule out the introduction of a value added tax, a position that led a staffer from the reliably shrill Newt Gingrich campaign to snipe that Romney had been looking at “European socialist ideas”. A somewhat more subtle critique has come from Norquist, long suspicious of a tax that he believes to be too efficient a money-raising machine to be trusted.

So what else is there? Republican Senator Mike Lee (Utah), cheered on by the likes of Ponnuru and the AEI’s James Pethokoukis (someone, incidentally, open to a consumption tax) is arguing for a redrawing of the tax system that incorporates a very substantial expansion of child tax credit. This family-friendly move, part of a broader drive in, to quote Ponnuru, a more “communitarian” direction, is unlikely to fly this time round, but it points to a possible future for the GOP as something closer to Western Europe’s Christian Democrats. Such an evolution in my view is not particularly desirable, but given America’s changing political environment, may be wise.

A better guide to what may come next comes from Pethokoukis’s observation in National Review Online that the 2012 campaign saw a plethora of tax-cutting proposals by Republican hopefuls seemingly “more interested in signalling their supply-side bona fides to primary voters than in offering realistic blueprints for governance”.

Ah yes, the primaries: the road to the nomination runs, of course, right through them, and I mean Right. White evangelicals and Tea Party supporters (they are not always the same people) represent a very large percentage — well over a half — of the primary vote. They are not in the mood for compromise. According to a July 2013 Pew Center survey, 69 per cent of Tea Partiers believe that the best course of action for the GOP is to move in an even more conservative direction. To design an alternative to Obamacare and a plausible budgetary fix that both manage to appeal to those voters and have a chance of convincing the wider national electorate is a very tall order, and that’s before we have begun to look at the question of the so-called “social issues” (primarily abortion and same-sex marriage) that weigh so heavily in Republican primaries.

The rise of the Tea Party was a classic populist insurgency, a revolt of country against court, propelled by disgust over the bailouts that followed the financial crisis, anxiety over the state of America’s finances, contempt for the Republican establishment and fear of what Obama might be planning. It revitalised a party sunk in deep depression after Obama’s trouncing of John McCain, and made an enormous contribution to the GOP’s bounce in the 2010 midterms. The contrast with the not entirely dissimilar folk at UKIP “pissing into” (to borrow LBJ’s entertaining terminology) the Tory tent is one that British Conservatives tut-tutting over the Tea Party would do well to note. As revolts tend to do, however, the Tea Party has not infrequently overshot, most notably by promoting candidates more on the basis of their ideological purity than their ability to win.

In doing so, they were encouraged by a segment of the conservative hierarchy already, ironically, well entrenched in Washington. To a degree unimaginable in the UK, the Right in America has a lively, powerful and well-financed intellectual, media and political infrastructure. That’s generally to the good, but it has come at a price. One or two speakers at the Yale conference complained about conservative neglect of that most essential of political skills — persuasion. Instead of reaching out to the unconvinced, conservatives have primarily been pursuing a conversation with themselves. Such conversations have a way of degenerating into a contest designed primarily to show who can be more pur and who more dur.

There was no better example of this than conservative (and famously socially conservative) South Carolina Senator Jim DeMint’s comment in early 2009 that he “would rather have 30 Republicans in the [100-strong] Senate who really believe in principles of limited government, free markets, free people, than to have 60 that don’t have a set of beliefs”, an expression not of conviction, but of a fanaticism unmoored to any realistic plan for winning back power. When the Tea Party moment dawned, DeMint and others like him jumped in front of the parade, reinforcing the revolutionaries’ zeal to purge so-called RINOs (Republicans In Name Only) and throwing some money their way too. To be sure, this has led to the injection of useful new blood into the party’s ranks, but it has also led to the selection of some candidates so inept, unsuitable or outright strange that the GOP threw away hopes of winning or retaining a series of crucial senate seats — from Nevada to Delaware to Indiana and beyond — that could have transformed the political calculus of recent years. Regrettably, there are signs — not least in the aftermath of DeMint’s move to the Heritage Foundation, formerly the most influential of all the conservative think-tanks — that excesses are not yet through.

No less destructively, some of the more outlandish candidates on the Right have tarnished the broader Republican image, especially when they have sounded off on social issues. Would-be senator Todd Akin blew his chances of winning a Missouri seat in 2012 when, in defending his opposition to abortion in cases of rape, he explained that victims of “legitimate rape” rarely became pregnant, a view that held some sway in the Middle Ages, but is today something, shall we say, of an outlier in obstetric circles.

Social issues have for years been essential to the Republican party’s ability to compete (there is no majority for the socially liberal, economically conservative programme favoured by libertarian-leaning or many moderate Republicans) but they have come with costs, hitting the party’s capacity to attract elite support and its appeal to women (particularly single women), the young and voters in the north-east and west. These costs are likely to rise. Same-sex marriage has won the acceptance of roughly half of all voters, and in another reminder of how the country is changing, roughly a third of all under-30s describe themselves as “religiously unaffiliated” (Pew Research, October 2012), the highest total ever. On the other hand, roughly 50 per cent of Americans now claim to be “pro-life” (Gallup, May 2012), although that’s a stance that comes with plenty of loopholes: more than half of these pro-lifers believe that abortion is acceptable under certain circumstances.

What seems to matter to centrist voters is how social issues are framed. They are prepared to vote for anti-abortion candidates, say, but not for those who push the issue beyond what is rather mistily defined as reasonable, or if they detect a wider agenda at work, such as the distaste for contraception displayed by former senator Rick Santorum, an oddball Beltway Savonarola who enjoyed a brief and alarming surge in the 2012 primaries. When they notice executive competence, as so often they do in the ranks of the GOP’s expanding tally of governors (30 in all, close to the record set in the 1920s), they appear to be willing to live with a conservative social agenda so long as it is not pushed à l’outrance.

So what now? More budget fights in 2014 will enable the Democrats to rekindle memories of this past autumn’s shutdown and, with them, images of the Republicans as mad, bad and dangerous to vote for. A dose of class warfare is sure to be on the agenda too. Against that, the fallout from Obamacare’s uncertain launch may still be reverberating and the programme’s deeper problems may be coming into sharper focus. The economy is likely to be walking rather than running-the labour force participation rate is the number to watch-and a foreign policy foul-up cannot be eliminated. The best guess at the moment is that the midterms will leave matters pretty much as they are now.

The ideological divisions between and within the Right and the remaining “moderates” in the Republican Party, stirred up further by would-be presidential candidates out for primary votes, will mean that a credible alternative to Obamacare and a sound fiscal plan will both remain elusive even after the midterms. Being the “party of no” may well have to do. The longer-term outlook for the GOP will continue to deteriorate, but if “events” co-operate, nay-saying buttressed by at least some ideas on what might replace the ACA could, fingers-crossed, just possibly be enough to do the trick in 2016 if the primary process can avoid the own goals of 2010 and 2012. At the presidential level, the primaries need to avoid attracting the clown posse that we saw last time (Santorum is said to be contemplating another run), or selecting a candidate (Cruz, say, or Kentucky’s Senator Paul) too hardline to have any prospect of winning back the White House, a temptation made more difficult to resist (what’s to lose?) by the failures of establishment Romney and establishment McCain. Even a more conventionally viable candidate will have to avoid being dragged into unelectability by the positions he has to take to prevail at the primaries. Despite conservative suspicion, some baggage from his past, and an occasionally spiky and difficult personality, Chris Christie might just be tough enough to pull it off.

But 2016 is a long way off. And then there is Hillary.

 Note: Bridgegate broke about two days after this article went to press in late December, but before the issue appeared on newsstands. Them’s the breaks.

Wilkommen, Bienvenue

The Weekly Standard, December 30, 2013

Riga, Latvia, November 2013 © Andrew Stuttaford

They take austerity seriously in Latvia. After each meeting with a government official he or she would turn off the lights as we walked out of the room. More than five years after the global financial crisis finally burst Latvia’s fragile economic bubble, scrimping is second nature. Given the direction this small, resilient Baltic country took after Lehman fell, that’s no surprise. The usual prescription for cleaning up the mess that overheating leaves behind, particularly in an export-oriented economy (exports amount to some 60 percent of Latvian GDP), centers around a sharp devaluation of the currency to restore international competitiveness. There were quite a few (including within the IMF) who suggested that Latvia should break the peg fixing its currency—the lats—to the euro, leaving the lats to sink to a level that more accurately reflected uncomfortable new market realities.

Riga, Latvia, November 2013 © Andrew Stuttaford

That’s not what Latvia did. The relatively low value added within Latvia to its exports, and the difficulty that it would have faced in satisfying domestic demand with domestic production, meant that a conventional devaluation would have struggled to work its naughty magic, even if the export markets had been there (by no means assured after the slump in the international economy). Tipping the scales further, local business and the nascent middle class—most of whose boom-bloated -borrowing had been in euros—would have faced catastrophe had they had to repay those debts in suddenly depreciated lati. That would have threatened both social disaster and a dangerous breach with the Nordic banks responsible for a large portion of that lending—banks that would now have a vital role to play in maintaining financial liquidity in the country (the only sizable Latvian bank had foundered).

Base of Freedom Monument, Riga, Latvia, November 2013 © Andrew Stuttaford

So Latvia stuck with the peg and opted for “internal devaluation,” shorthand for an attempt to mimic the competitive benefits of a traditional devaluation, but by squeezing costs (primarily labor costs) and excess demand out of the local economy rather than by depreciating the currency. This won Latvia financial backing from a group comprising the World Bank, the IMF, the EU, and the Nordic countries, support that had to sugar some very bitter medicine. Government expenditures were slashed (large numbers of public sector employees were fired and many of those who hung on saw their salaries cut by 20 percent or, indeed, much more) and, to a lesser extent, taxes increased. Between 2008 and 2012 total fiscal consolidation amounted to some 17 percent of GDP.

Most of the pain was front-loaded, both as a matter of practical politics (better to strike before austerity fatigue set in) and a matter of practical economics: Latvian interest rates had soared to damaging heights and confidence had to be rebuilt.

Central Market, Riga, Latvia, November 2013 © Andrew Stuttaford

Seen in that context, the 2009 declaration by Valdis Dombrovskis, the dourly impressive center-right prime minister, that Latvia would continue to seek membership in the eurozone (and, more specifically, get there by 2014) made sense. Whatever the mounting problems in the EU’s gimcrack currency union, it appeared to offer a comparatively safe haven from the Baltic storm. For investors and lenders, the obvious seriousness of this commitment, together with the external support that the government had won, significantly reduced the exchange-rate risk associated with doing business in Latvia. It was no coincidence that with the “devaluation ghost” (as the central bank delightfully puts it) held at bay, lats-denominated interest rates started to tumble.

On top of that, targeting eurozone membership provided a benchmark against which the performance of the Latvian economy could be measured. The country would only be eligible to switch over to the euro if it met the currency union’s “Maastricht criteria.” Its budgetary position would have to be on a sound footing, its inflation subdued, and so on.

Perhaps most important, the march towards the single currency signaled to Latvians that their reconnection with Europe would not be derailed by the economic crisis. Austerity was a means to an end, not just an end in itself. Many Latvians had (and have) their doubts about the wisdom of adopting the single currency (over half are still—to a greater or lesser extent—opposed), but the broader aim of anchoring their state more firmly in the West helped them to stay the course through the brutally tough times that followed the financial collapse.

Central Market, Riga, Latvia, November 2013 © Andrew Stuttaford

There are plenty of dismal statistics to choose from, but unemployment stood at over 20 percent in early 2010 (compared with an average of 6.5 percent in 2007), and GDP shriveled by 18 percent in 2009, after a 4.2 percent decline the previous year. Despite this, Dombrovskis was able to prevail in the October 2010 general election and then weather (albeit precariously) a snap election called in slightly murky circumstances the following September. The fragmented and incomplete development of political parties in Latvia means that general elections are not the best gauge of public opinion, but Dombrovskis’s survival (he went on to become Latvia’s longest-serving democratically elected prime minister) says something. He resigned only in late November, after the deadly collapse of the roof of a Riga supermarket, a tragedy for which he took “moral and political responsibility.”

But by then the economy was well on the mend, bolstered by a revival in global demand partly stimulated, of course, by less austere policies elsewhere. Quite why Latvia was able to resume its pre-boom trajectory as quickly as it did remains the subject of lively academic debate, but a low level of public debt was one crucial advantage: Latvia could persist with its tough approach without falling into the debt-deflationary trap that is crippling recovery in Greece and other grisly corners of the eurozone’s ER.

Latvia’s GDP growth began to turn positive during 2010, coming in at a total nicely above 5 percent for both 2011 and 2012, and is on schedule to be comfortably over 4 percent in 2013, the fastest growth in the EU. The current account deficit is again at a manageable level, the unemployment rate has shrunk to a number marginally below 12 percent, inflation is running at less than 1 percent (as opposed to nearly 18 percent in May 2008), and the budget deficit has returned to respectability after coming close to 10 percent of GDP in 2009. In 2012 it was only a little above 1 percent, while government debt stood at around a modest 40 percent of GDP, easily below the Maastricht requirement of 60 percent.

It is no surprise that Latvia’s formal application to join the euro in March was approved by the relevant EU authorities within a few months. Ordinary Latvians were not given an equivalent say. Calls for a referendum were rejected, not least on the grounds that the matter had long been decided. Any country joining the EU after the Maastricht Treaty came into force in 1993 (Latvia became a member in 2004 after—it is fair to note—a referendum) is obliged to sign up for the euro as soon as it meets the Maastricht tests, a proviso that the Swedes (joined 1995)—who wisely retain their krona—have ignored. Some seats at the EU’s table are more equal than others.

Central Market, Riga, Latvia, November 2013 © Andrew Stuttaford

In any event, Latvia will swap the lats for the euro on January 1 at the rate, to be precise about it, of 0.702804 lati per euro, although it will still be possible to pay for goods and services in lati for another two weeks thereafter. The conversion process within the public and private sector is well under way, as is an extensive program of public education (meetings, leaflets, advertising). Most visibly to the visitor, all prices now have to be given in both lati and euros, and from what I could see in Riga, that was happening everywhere. Even in the converted zeppelin hangars (history here is complicated) of the capital’s picturesque (and somewhat law-unto-itself) central market, everything was properly priced: I had been issued a nifty lenticular currency conversion card and could check that that was so. Watchdogs are in place to stop the changeover being used to hike prices (a common, if exaggerated, fear that has accompanied the introduction of the euro in other countries). To reinforce this, dual pricing will be mandatory until the end of June.

After the changeover, lati will be convertible into euros (at the fixed rate) at rural post offices for three months, at commercial banks for six months, and at the central bank in perpetuity. This matters. Ask officials why there is still so much opposition to the switch, and—perhaps a little condescendingly—they cite folk-memories of the damage caused by previous currency conversions, especially the abrupt introduction of a “new ruble” in 1961 during the Soviet era.

But there is more to it than that. Geopolitical realities (yes, we are talking about Russia), the size—and open nature—of the Latvian economy, and inadequate domestic capital formation all make a decent, if downbeat, case for Latvia to enter the eurozone, despite that currency union’s profound problems. Its flaws (to use a gentle word) have not escaped the attention of the man in the Latvian street. He also does not appreciate the fact that if there is another eurozone bailout (Greece, yet again?), frugal, hardscrabble, post-Soviet Latvia, one of the poorest countries in the EU, will have to chip in.

For a country to abandon its own money is to throw away an essential attribute of sovereignty. In a lovely but manipulative gesture, Latvian 1 and 2 euro coins will bear the image of Milda, the “Latvian maiden” who adorned prewar Latvia’s gorgeous—and emotionally resonant—5 lati piece. This time she is decorating a symbol not of hard-won independence but of a sadly withered autonomy.

And the eurozone’s long agony may bring with it another twist of the knife. The convenient fiction that made it politically possible to establish the euro in the first place was that this was a shared currency that could work with a minimum of pooled sovereignty, a stretch at the best of times, an impossibility in the case of a monetary union that is very far from being an optimal currency area; Germany is not Greece, Finland is not Portugal. If the euro is to survive in its current form, the eurozone will require much deeper fiscal and budgetary integration. Quite what will be left of Latvia’s low tax, fiscally responsible regime or, in any real sense, its self-determination, by the time this process is finished is anyone’s guess.

And what is to remain of Latvia itself? It emerged from nearly half a century of cruel Soviet occupation with its identity savagely battered—not least by the presence of a large Russian settler population (even today ethnic Latvians account for only some 62 percent of the country’s two million inhabitants)—but its heart intact. Membership in the EU has represented a kinder, subtler challenge. The opportunities it has brought to live in lusher lands to the west has led to a steady stream of emigration, a stream that became a torrent during the slump before dwindling again today. All told, the population has shrunk by over 10 percent since 2000. Exporting surplus labor helped Latvia manage the crisis, but at what longer-term cost?

Riga Castle, Latvia, November 2013 © Andrew Stuttaford

I spent the evening of November 11 down by Riga Castle. It was Lacplesis Day, the anniversary of the victory in 1919 by freshly cobbled-together Latvian forces (helped by Royal Navy guns) over a Russo-German army (as I said, history is complicated here) in the battle that effectively secured the new state’s independence after centuries of foreign rule. An ever-swelling crowd, talking quietly, proud to be there, had gathered, lighting row upon row of candles that flickered against the old castle walls, a tribute to the men who had fought so courageously for their country’s right to be. Bonfires did their best against the cold, clear northern night; once-banned flags—carmine and white like the ribbons everyone seemed to be wearing—waved in the chill breeze. A group of children sang folk songs of simple, crystalline beauty.

Behind us a series of tiny vessels had been launched into the River Daugava. Each bore a candle and some a miniature flag, too. They formed a brave, bright, glowing flotilla that sailed off into the dark, its destination unknown.

A Case Of The Vapers

National Review Online, December 26, 2013

What was it again that Mencken once wrote? Google, enter, click. Ah yes, it was this: “Puritanism: The haunting fear that someone, somewhere, may be happy.”

On Thursday, the New York City Council made room in its legislative agenda — it was also busy commissioning a study on polystyrene foam — to pass by a vote of 43–8 (that lopsided majority an indicator of idiocy afoot) a measure that will, once Mayor Bloomberg signs it (oh, he will) shortly prohibit the vaping (that’s the word) of e-cigarettes anyplace where smoking is now banned in Gotham, bars, restaurants, offices, parks, the beach, you name it. Technically speaking, the ban will take effect as an amendment to the city’s Smoke-Free Air Act. That e-cigarettes do not emit any smoke was an irrelevance.

To vape is to inhale a vapor from a plastic facsimile of a cigarette, battery-powered, bought for $10 at a local store, and good, it is claimed, for 400 puffs. The business end is fashioned to look like a filter. In another nod to nostalgia, the tip typically glows as the user inhales. It’s not the real thing, nothing like. Plastic is neither leaf nor paper. It holds no memories of that old bar down on the Lower East Side, that conversation once upon when. There’s no tobacco, no combustion, none of the warmth, none of the evocative transience, none of the mouth-feel of cigarette or cigar, and it looks just a bit dumb. Walk into Rick’s with an e-cigarette and Rick would laugh. Then again, Bogie died at 57.

Whatever the aesthetics of e-cigarettes, as nicotine-delivery systems go, they are a lot safer than the cancer sticks of old. There’s no carbon monoxide, no tar, very little, in fact, of tobacco smoking’s carcinogenic stew. To be sure, the Food and Drug Administration has detected tobacco-specific nitrosamines (a carcinogen) in the e-cigarette cartridges that contain the treats to come. A 2009 study revealed about the same quantity of TSNAs in cartridges as might be found in a nicotine patch, a total about one-nine-hundredth of the level found inside Joe Camel. The vaper (I know, I know) will inhale an even smaller portion, a tiny fraction of a minuscule amount. Furthermore, TSNAs were the only carcinogens detected in this study. Boston University’s Dr. Michael Siegel, a 25-year veteran of tobacco-control work (and a Centers for Disease Control alumnus), has noted that smokers of conventional cigarettes may inhale maybe 40 other carcinogens, not to speak of “thousands of [other] chemicals.”

It is true that at the end of November a study by Holland’s National Institute for National Health (RIVM) triggered a few headlines like “Dutch sound alarm about possible risks of e-cigarettes” (Reuters), but within the body of that Reuters story there was this: “The institute said it was concerned about a lack of evidence on the possible health effects of e-cigarettes…”

As a reminder: Don’t know is not the same as know.

The RIVM did note that the dread nicotine was involved and referred to reports of nausea and throat irritation by some users. Indeed, it recommended (Reuters writes) that “as a precaution [e-cigarettes] should not be used by pregnant women or in the vicinity of children.” For a health warning nowadays, this is on the mild side. The scientific concerns it reflects are not enough to justify a heavy-handed ban of the type now headed New York City’s way.

But what about the antifreeze? This substance, more happily associated with autos than lungs, has seeped into the e-cigarette debate, setting up a scare or 50. The truth is that the FDA found some diethylene glycol — an important ingredient in antifreeze — in just one of the cartridges surveyed in the 2009 study, a dismaying result but almost certainly a rogue finding. E-cigarettes generally do contain, however, a base of propylene glycol to “hold” the nicotine and any added flavoring. Propylene glycol is used in antifreeze, but as a kinder, gentler alternative to its rough diethylene cousin, particularly when there is any danger of contact with food. As is explained in the compound’s Agency for Toxic Substances and Disease Registry toxicological profile (September 1997), “the [FDA] has classified propylene glycol as ‘generally recognized as safe,’ which means that it is acceptable for use in flavorings, drugs, and cosmetics, and as a direct food additive.” Move along, there’s nothing to see here.

As an alternative to propylene glycol, some e-cigarettes use vegetable glycerin as their base. This common food additive will affect their taste, but not your health.

And so far as the ingredients lurking in an e-cigarette are concerned, that ought to be about it. This is not, of course, a reason for arguing that research on these products should cease, or that stricter quality control should be opposed. Nor is it a claim that e-cigarettes are risk-free. They may, for example, inhibit lung capacity, at least temporarily. Beyond that and those pesky TSNAs, there is also the matter that most e-cigarettes will (as the astute folk at the RIVM had noticed) be used to deliver nicotine, a potentially addictive substance — albeit one that has been given up by tens of millions. Then again, much of nicotine’s famously powerful addictiveness can be attributed to the fact that it is being delivered via tobacco, a medium with naturally occurring monoamine oxidase inhibitors that seem to have a great deal to do (it’s a long story) with the difficulty of quitting smoking. Divorced from its leafy accomplice, nicotine is not that addictive, nor under those circumstances is it, to quote John Britton, who leads the tobacco advisory group for Britain’s Royal College of Physicians, even a “particularly hazardous” drug.

What about secondhand smoke, butcher of innocents, enricher of laundries? E-cigarettes give off little or no odor, and, although the research is still at an early stage, the health risks of secondhand vaping likely rest somewhere between zero and infinitesimal.

Considering all this (Dr. Britton has been quoted as saying that if everyone switched over to e-cigarettes it could save “millions” of lives), the medical world ought to be cheering the swift rise of a hugely safer alternative to demon tobacco. E-cigarettes are, so to speak, catching fire. In the U.S., sales are expected to hit $1 billion in 2013, twice the total of a year ago. That’s still only about 1 percent of the total spent on tobacco products, but it says something that Altria Group Inc. (parent company of Philip Morris USA), Reynolds American Inc., and Lorillard Inc. (which paid $135 million for blu eCigs in 2012) have all entered this market. Non-U.S. e-cigarette sales have been expanding rapidly too, reaching an estimated $2 billion in 2012.

But e-cigarettes have given tobacco’s fiercer foes, well, the vapors. Brazil, Norway, and Singapore have banned them. Others have imposed strict controls, including the prohibition of vaping in public places. Some British railway companies have exiled vapers from their carriages on the carefully considered grounds that they make other passengers “uneasy.” Such stupidities are not, as New Yorkers now know, confined to abroad. Their city is by no means alone. A growing number of America’s politicians, bureaucrats, and other nuisances are on the offensive against e-cigarettes. Thus bans similar to that now looming over New York City have already been introduced in New Jersey and Utah, states that would not normally agree on very much.

There are some legitimate concerns. There is a wide range of e-flavors, some of which, cherry crush, say, or chocolate (I’m not sure — on many grounds — about maple bacon), might appeal to a younger set. Meanwhile the anxious RIVM frets (according to Reuters) that e-cigarettes “might be attractive to young people because of bright colors, flashing lights and jewelry-like appearance.” Dutch e-cigarette design must have taken an exotic turn.

Such worries could be addressed by prohibiting the sale of e-cigarettes to minors, but that would not have been enough for New York councilman James Gennaro, a key promoter of the ban (and also a sponsor of legislation that recently increased the minimum age for buying tobacco in New York City to 21), who wants us all — of course he does — to think of the children. He worried (the New York Times reported) “that children who could not differentiate between regular and electronic smoking were getting the message that smoking is socially acceptable.” Combine the RIVM with Gennaro and the message is clear. E-cigarettes are a menace when they look like cigarettes. And they are a menace when they do not.

Other objections — that e-cigarettes might act as a gateway to the real thing (in reality, they are more likely to represent an exit from it) or that they might reglamorize smoking — are feeble stuff. This suggests that the real agenda is driven by the precautionary principle run amok, or, ominously, by something darker still.

And that something is not the prospect of the loss of valuable tobacco tax revenues (although that will not have gone unnoticed by some of those looking to bring vaping to heel). What is at work here is, at least in part, altogether more profound, and more disturbing, than that. The campaign against tobacco began with the best of intentions, but it has long since degenerated into an instrument for its activists both to order others around and to display their own virtue. And with that comes an insistence on a rejection of tobacco so absolute, so pure, that it has become detached from any logic other than the logic of control, the classic hallmark of a cult. So mighty is the supposed power of this anathematized leaf that anything — even when tobacco-free — that looks like a cigarette or provides any approximation of its pleasures is suspect.

It’s too much, of course, to expect any respect these days for the principle that adults should be left to decide such things for themselves, but the chance that the e-cigarette could save an impressive number of lives should count for something. Europe’s sad snus saga suggests that that might not necessarily be so. For generations Swedes have taken a form of oral tobacco, a snuff known as “snus,” cured in a way that sharply reduces its TSNA content. Snus is available in the U.S., land of dip and chaw, but, within the EU, where no such tradition exists, it can be sold only in Sweden. Taking snus is not without risk, but it’s far less harmful than smoking. Its popularity in Sweden, especially with the guys, goes a long way to explaining why that country has Europe’s lowest incidence of lung cancer among men. It has been estimated that introducing snus elsewhere in the EU could save some 90,000 lives a year, but the EU’s capnophobic leadership has rejected the idea. Anti-tobacco jihadists are quite content, you see, to accept that the perfect can be the enemy of the good.

As America’s vapers are now finding out.

Note: This article updates “Vaper Strain,” an article that appeared in the September 2, 2013 issue of National Review.

Yes, Conservatives Can Be Godless Too

Politix, December 8, 2013

Reading the jubilant response on the left to the news that Pope Francis appears to be one of them (the truth is much more complicated than that, but the lefty label will do for now), it’s easy to detect a strong note of Schadenfreude: God bites (conservative) man.

The argument runs like this: Right-wingers are forever proclaiming how devout they are, so how awkward for them that the leader of the largest Christian denomination has been badmouthing the free market.

Yes, that’s snarky, simplistic, and there are plenty of rebuttals available (for example, Christianity is an exuberantly syncretic faith, with room for multiple interpretations of its founder’s reported teachings). But judging by what some of my fellow rightists have been saying there is undeniably some – how shall I put this – discomfort on display.

Not where I’m concerned. My lack of any religious conviction – not a scrap, since you asked – may make for trouble with St. Peter at some future date, but, as the punch-up over the pope continues, it’s a plus. I don’t have a god in this fight.

And that surprises people. To be sure, it’s well-known that the Ayn Rand crowd casts a cold eye on the idea of a deity, and there’s a widespread suspicion that those wacky libertarians will believe in anything or nothing, but, as for the rest, well, religious right. There’s something to that, of course: Many conservatives are indeed religious, but this is frequently as much a matter of culture as it is of ideology.

America is a religious country, and so traditionalists (and conservatives are by definition traditionalists) tend to be religious, a tendency that has been sharpened – and made much more visible – by the way society has been changing since the 1960s. Half a century ago you would not have noticed the religious believer who was opposed to same-sex marriage, because back then “everyone” was (if they thought about it at all).

But the idea that it is essential philosophically for conservatives to be religious believers is nonsense. Dig around a bit, and you will discover quite a few here in America who have declared that they are not (although none of them – how odd – hold significant elective office). Look across the Atlantic (I am British-born) and you will find many, many more.

Godless conservatives however are rarely anti-religious. They often appreciate religion as a force for social cohesion and as a link to a nation’s past. They may push back hard against religious extremism, but, unlike today’s “new atheists” they are most unlikely to be found railing against “sky fairies.” Mankind has evolved in a way that makes it strongly disposed towards religious belief, and conservatism is based on recognizing human nature for what it is.

That means facing the fact that gods will, one way or another, always be with us. They may not be real, but their followers will be. What they believe matters.

And how they treat those who don’t matters even more.

Vaper Strain

National Review, September 2, 2013

As I write, I am vaping — yes, that’s the word — inhaling an odorless vapor from a plastic facsimile of a cigarette, battery-powered, bought for $10 at a local store, and good, it is claimed, for 400 puffs. The business end is fashioned to look like a filter. In another nod to nostalgia, the tip glows as I inhale. It’s not the real thing, nothing like. Plastic is neither leaf nor paper. It holds no memories of that old bar down on the Lower East Side, that conversation once upon when. There’s no tobacco, no combustion, none of the warmth, none of the evocative transience, none of the mouth-feel of cigarette or cigar, and it looks just a bit dumb. Walk into Rick’s with an e-cigarette and Rick would laugh. Then again, Bogie died at 57.

Whatever the aesthetics of e-cigarettes, as nicotine-delivery systems go they are a lot safer than the cancer sticks of old. There’s no carbon monoxide, no tar, very little, in fact, of tobacco smoking’s carcinogenic stew. To be sure, the Food and Drug Administration has detected tobacco-specific nitrosamines (a carcinogen) in the e-cigarette cartridges that contain the treats to come. A 2009 study revealed about the same quantity of TSNAs in cartridges as might be found in a nicotine patch, a total about one-nine-hundredth of the level found inside Joe Camel. The vaper (I know, I know) will inhale an even smaller portion, a tiny fraction of a minuscule amount. Furthermore, TSNAs were the only carcinogens detected in this study. Boston University’s Dr. Michael Siegel, a 25-year veteran of tobacco-control work (and a Centers for Disease Control alumnus), has noted that smokers of conventional cigarettes may inhale maybe 40 other carcinogens, not to speak of “thousands of [other] chemicals.”

But what about the antifreeze? This substance, more happily associated with autos than lungs, has seeped into the e-cigarette debate, setting up a scare or 50. The truth is that the FDA found some diethylene glycol — an important ingredient in antifreeze — in just one of the cartridges surveyed in the 2009 study, a dismaying result but almost certainly a rogue finding. E-cigarettes generally do contain, however, a base of propylene glycol to “hold” the nicotine and any added flavoring. Propylene glycol is used in antifreeze, but as a kinder, gentler alternative to its rough diethylene cousin, particularly when there is any danger of contact with food. As is explained in the compound’s Agency for Toxic Substances and Disease Registry toxicological profile (September 1997), “the [FDA] has classified propylene glycol as ‘generally recognized as safe,’ which means that it is acceptable for use in flavorings, drugs, and cosmetics, and as a direct food additive.” Move along, there’s nothing to see here.

As an alternative to propylene glycol, some e-cigarettes use vegetable glycerin as their base. This common food additive will affect their taste, but not your health.

And so far as the ingredients lurking in an e-cigarette are concerned, that ought to be about it. This is not, of course, a reason for arguing that research on these products should cease, or that stricter quality control should be opposed. Nor is it a claim that e-cigarettes are risk-free. They may, for example, inhibit lung capacity, at least temporarily. Beyond that and those pesky TSNAs, there is also the matter that most e-cigarettes will be used to deliver nicotine, a potentially addictive substance — albeit one that has been given up by tens of millions. Then again, much of nicotine’s famously powerful addictiveness can be attributed to the fact that it is being delivered via tobacco, a medium with naturally occurring monoamine oxidase inhibitors that seem to have a great deal to do (it’s a long story) with the difficulty of quitting smoking. Divorced from its leafy accomplice, nicotine is not that addictive, nor under those circumstances, to quote John Britton, who leads the tobacco advisory group for Britain’s Royal College of Physicians, is it even a “particularly hazardous” drug.

What about secondhand smoke, butcher of innocents, enricher of laundries? E-cigarettes give off little or no odor, and, although the research is still at an early stage, the health risks of secondhand vaping likely rest somewhere between zero and infinitesimal.

Considering all this (Dr. Britton has been quoted as saying that if everyone switched over to e-cigarettes it could save “millions” of lives), the medical world ought to be cheering the swift rise of a hugely safer alternative to demon tobacco. E-cigarettes are, so to speak, catching fire. In the U.S., sales are expected to hit $1 billion in 2013, twice the total of a year ago. That’s still only about 1 percent of the total spent on tobacco products, but it says something that Altria Group Inc. (parent company of Philip Morris USA), Reynolds American Inc., and Lorillard Inc. (which paid $135 million for blu eCigs in 2012) have all entered this market. Non-U.S. e-cigarette sales have been expanding rapidly too, reaching an estimated $2 billion in 2012.

But e-cigarettes have given tobacco’s fiercer foes, well, the vapors. Brazil, Norway, and Singapore have banned them. Others have imposed strict controls, including the prohibition of vaping in public places. Some British railway companies have exiled vapers from their carriages on the carefully considered grounds that they make other passengers “uneasy.” Such stupidities are not confined to abroad. A growing number of America’s politicians, bureaucrats, and other nuisances are on the offensive against e-cigarettes, including — if recent reports are true — New York’s nanny-in-chief, Michael Bloomberg. And he won’t be the last.

There are some legitimate concerns. There is a wide range of e-flavors, some of which, cherry crush, say, or chocolate (I’m not sure — on many grounds — about maple bacon), might appeal to a younger set, but such worries are best addressed by prohibiting sales to minors. Other objections — that e-cigarettes might act as a gateway to the real thing (in reality, they are more likely to represent an exit from it) or that they might re-glamorize smoking — are feeble stuff. This suggests that the real agenda is driven by the precautionary principle run amok, or, ominously, by something darker still.

Cynics might point to the loss of valuable tax revenues as the motive, but there’s much more to it than that. The campaign against tobacco began with the best of intentions, but it has long since degenerated into an instrument for its activists both to order others around and to display their own virtue. And with that comes an insistence on a rejection of tobacco so absolute, so pure, that it has become detached from any logic other than the logic of control, the classic hallmark of a cult. So mighty is the supposed power of this anathematized leaf that anything — even when tobacco-free — that looks like a cigarette or provides any approximation of its pleasures is suspect.

It’s too much, of course, to expect any respect these days for the principle that adults should be left to decide such things for themselves, but the chance that the e-cigarette could save an impressive number of lives should count for something. Europe’s sad snus saga suggests that that might not necessarily be so. For generations Swedes have taken a form of oral tobacco, a snuff known as “snus,” cured in a way that sharply reduces its TSNA content. Snus is available in the U.S., land of dip and chaw, but, within the EU, where no such tradition exists, it can be sold only in Sweden. Taking snus is not without risk, but it’s far less harmful than smoking. Its popularity in Sweden, especially with the guys, goes a long way to explaining why that country has Europe’s lowest incidence of lung cancer among men. It has been estimated that introducing snus elsewhere in the EU could save some 90,000 lives a year, but the EU’s capnophobic leadership has rejected the idea. Anti-tobacco jihadists are quite content, you see, to accept that the perfect can be the enemy of the good.

As America’s vapers might be about to find out.

City Under Siege

The Weekly Standard, July 1, 2013

Take a visit to the cyber-belly of the beast, to a website run by the European Commission, the EU’s bureaucratic core, and you will be told that “the financial sector was a major cause of the [economic] crisis and received substantial government support.” Soon it will be payback time, in the form of Europe’s new Financial Transaction Tax (FTT), set to be levied at a rate of 0.1 percent on equity and debt transactions, and 0.01 percent on trades in derivatives. It will ensure that the financial sector “makes a fair and substantial contribution to public finances.”

We’ll see. This new “contribution,” potentially much more onerous than those fragments of a percent suggest, may or may not be substantial (taxes of this type have a record of backfiring), but the revenues predicted by the commission ($45 billion or so, but the math is fuzzy) could be eclipsed by the punch that the tax delivers to economic growth.

Whether the FTT is “fair” is fuzzier still. That’s because the real objectives of the tax​—​to be introduced by 11 eurozone countries in 2014​—​have little to do with that. To start with, the FTT is about​—​dread word​—​the narrative. Problems within the banks were the immediate cause of the crisis​—​it’s not called the financial crisis for nothing​—​but working out what caused those problems is a messier matter altogether. The number of plausible suspects rivals the haul on Agatha Christie’s Orient Express. Prominent among them is something for which the commission bears a great deal of responsibility​—​the euro, a reckless, politically driven piece of financial engineering that has outdone the worst of Wall Street’s mad science. With the single currency still the focus of potentially dangerous debate, it makes sense to keep attention focused on fat cat bankers and away from Brussels’s more discreet architects of financial destruction. Similar thinking helps explain why​—​when the euro’s troubles grew too big to ignore​—​there was so much talk of dodgy markets and dark Anglo-Saxon plotting.

Sadly, in a way, not all of this was​—​or is​—​deliberate disinformation. Much of continental Europe’s leadership class​—​across the political spectrum​—​distrusts “financial capitalism” of the Anglo-American kind, a venerable suspicion that appeared to have been vindicated by the fiascos of 2008. Why there is this distrust is a topic for another time​—​Roman Catholicism, socialism, and the twists of history have all played their parts​—​but that it exists is undeniable. The idea that free markets are the least bad way of allocating resources has limited appeal in a political culture still in thrall to the notion that some authority somewhere knows best, a belief that remains the essence of what the EU stands for. This is more than a matter of philosophical disagreement. So far as Brussels is concerned, Anglo-Saxon finance is not just objectionable, it’s in the way.

The euro was an attempt to override the market. A nation’s currency is a measure of its relative economic performance. If its value falls that’s a signal to investors and, in time, a chance to restore international competitiveness. By abandoning marks, francs, lire, and all the rest, the creators of the currency union junked a useful economic tool, replacing the collective sense of the market with crude administrative fiat. France was Germany was Portugal, and that was that.

As millions of jobless Europeans know, the market bit back. But the instinct of those managing the currency union was not to revert to market discipline, but to move farther away from it. There were bans on the short-selling of certain securities, attacks on credit ratings agencies that were at last telling some inconvenient truths, and, crucially, a vow by European Central Bank president Mario Draghi to do “whatever it takes” to save the euro, a declaration buttressed by the prospect of significant intervention in the sovereign bond market. Markets are far from perfect, and some of what has been done can be justified on pragmatic grounds, but it’s not difficult to notice the direction of a broader ideological current, one that is not good news for the City​—​London’s Wall Street​—​or, indeed, American financial firms interested in European business.

That current is sweeping an increasingly burdensome, increasingly made-in-Brussels regulatory regime, expensive and rigid, into the City and beyond. Much of it is profoundly antithetical to the intuitive, principles-based, flexible, and often self-regulatory approach that has done so much to transform Britain’s financial sector into a world-beating business. That some of these rules​—​such as the new Alternative Investment Fund Managers Directive​—​will (effectively) weigh even more heavily on enterprises headquartered outside the EU is bound to damage London’s status as a global financial entrepôt, diverting business beyond the reach of Brussels.

The commission doesn’t appear to be particularly concerned where that business goes. In fact, it would probably like much of it to go away altogether. Many of Britain’s continental partners agree. And jealousy is only a part of it. The inherently unruly (markets are like that) and, to them, morally suspect financial sector is an obstacle to the ideal of a technocratic, tightly controlled Europe. Meanwhile the “island sewer” (to quote a deputy director of the supposedly serious El País, Spain’s highest-circulation newspaper) acts as a low-tax, lucrative lure for some of the continent’s best and brightest: some 300,000 to 400,000 French citizens now live in the U.K., mainly in London. Perhaps most annoyingly of all, financial services’ large contribution to the U.K.’s ramshackle economy (directly and indirectly perhaps at least 14 percent of GDP, and a badly needed export earner) helps fund Britain’s fondness for going its own way, an independent-mindedness that its European partners could do without.

But if the pie is to be smaller, that doesn’t mean that those partners don’t want a larger slice of it. National rivalries still flourish beneath that shared EU flag. The mechanism of “ever closer union” is not infrequently used by one member-state against another. It is, of course, only a coincidence that the (Frankfurt-based) European Central Bank is seeking to introduce rules that would force the relocation of clearing houses that handle euro-denominated instruments (in any significant quantity) out of London into the eurozone, to Paris, say, or, uh, Frankfurt. The U.K. is suing to prevent this, but if the currency union deepens, or banking union comes into being, there will be more of the same to come.

Taken as a whole, Europe’s financial sector will shrink further​—​even after the bloodletting of the last few years. London, as its hub, is bearing, and will continue to bear, the brunt. Jobs in the City have fallen by roughly a third and now stand at a 20-year low. In part this is natural, the product both of hard times and the necessary reconnection of the financial sector to economic reality. In part too it’s a matter of mathematics. Tougher capital requirements and more restrictive limitations on leverage (and, possibly, areas of business) are a reasonable response to some of the disasters of recent years, but they will make much of the banking sector less profitable than in the mirage years, and that’s before we begin to factor in the costs of Brussels’s wider regulatory onslaught.

The FTT adds both further insult and injury. The belated realization that the tax may be even more destructive than its supporters intended (the governor of the Bank of France has warned of the damage it could do to the Frenchfinancial sector) may mean that it will be diluted prior to its planned introduction, but two key features​—​some targeting of trading volumes and extraterritoriality​—​will remain, and both will hurt London disproportionately. The extraterritoriality is particularly galling. A trade will bear the tax even if only one counterparty is in the FTT-zone, and so will a transaction where both counterparties are outside the FTT-zone (in London and New York, say) but trading a security (a Peugeot share, for example) where the issuer is based within it. The U.K. and the United States will be acting as the collectors of a tax that hurts one of their key industries​—​and they won’t get a penny for their pains.

As if all that were not enough, the intervention of Europe’s reliably authoritarian parliament means that new caps on bonuses have recently been approved. The bonuses of bankers classified as “material risk-takers” (including anyone who earns over $660,000 a year) will be capped at one times salary, or two times with the approval of a supermajority of shareholders​—​an arbitrary diktat at odds with more subtly designed measures preferred by the U.K. The possibility that similar limits may be imposed on asset management firms (a group that received no bailouts from the European taxpayer) gave the lie to the never convincing argument that these changes are about risk control. Rather, like the Swiss referendum in March that also imposed restrictions on executive pay, they are both an exercise in collective punishment and a manifestation of the neo-egalitarianism growing on either side of the Atlantic. There is something else at play. Members of the European parliament see themselves as the continent’s elite (check out the deeply discounted tax rates that most of them pay), the vanguard of a new Europe. Earning so much less than those arrogant, unnecessary bankers maddens them: The chance to put a brake on financial sector pay is difficult to resist.

That’s more bad news for the City. The cap will​—​surprise​—​hit London hardest (that’s where most of the EU’s “material risk-takers” are to be found) and will make it a less hospitable place for the type of international business that could just as easily be located in New York, Hong Kong, or Zurich. Not only that, mandating less flexible wage structures will discourage hiring, the last thing that London needs now. And if these changes do end up crimping total compensation, that will be a blow to Britain’s cash-strapped treasury, long accustomed to raking in a good bit of that income, among other large “contributions” (to use that fashionable word) from the financial sector.

And so British prime minister David Cameron finds himself in another European swamp. All he can do about the FTT’s extraterritorial reach is protest (the United States is also objecting) and maintain a fingers-crossed legal challenge. He could (very) arguably have vetoed the bonus cap under the Luxembourg compromise, a severely eroded understanding dating to 1966, which might still permit a veto in defense of a vital national interest even where no veto power formally exists. That would have been a long shot, but Cameron didn’t even attempt it. Going to the mat “against Brussels” in defense of bankers’ bonuses would have played no better in euroskeptic Britain than anywhere else.

But one important, and generally Conservative, section of the electorate might have supported him. Traditionally nervous about political uncertainty and understandably wary about being cut off from European markets, the City’s grandees have long endorsed​—​if on occasion through gritted teeth​—​British membership in the EU. That’s not going to change quite yet, but some of them must be beginning to see that staying in an EU fixed on its current course could well be riskier than taking their chances outside. Whatever he is now claiming, Cameron is not going to be able to nudge the EU in a different direction, and he does not have the imagination to see that Britain would be better off out. Sooner or later, the City will have to confront the fact that if the EU is the problem, Cameron is not the answer.

A sign that it may be starting to was a high-profile event hosted last month by London hedge funder Crispin Odey and designed to introduce Nigel Farage, the leader of the uncompromisingly Euroskeptic U.K. Independence party, and a former City trader himself, to financial types. A long-term and generous, if sometimes critical, member of the Conservative party, Odey has not switched his support to UKIP, but this looked a lot like a warning shot.

Cameron would do well to pay attention. The 3 percent scored by UKIP (which up until now has principally drawn its support from the right) in the 2010 general election cost his Tories their chance of an absolute majority. UKIP is now polling in the mid-teens or higher, a feat it has managed on a shoestring. If UKIP can begin to attract City money, and the credibility that can come with it .  .  .

It’s not easy being David Cameron.