Where do they hide the budgets?

In the foothills-of-apocalypse position we now occupy, this may seem a prosaic concern: but where do they hide the budgets?   Well, this was always conceived of as basically a business blog, so we can't take responsibility for solving Ukraine, Gaza, Taiwan, small boats, climate change etc.  

Here are a couple of examples.  Firstly, the mighty Afghan refugee cockup.  What do they reckon - £7 billion and counting?  How come no canny forensic budget-bore spotted that one on the HMG books?  Clever old Sir Humphrey, eh?

Second, and you'll permit me my local interests here - I give you Drax plc.  Outwardly just a regular UK listed company going about its chosen mission of incinerating the forests of the world using UK subsidies on the pretence this is helping to solve the aforesaid climate change.   But behind the scenes it has to fight legal action after legal action: that's what happens when you are aggressively living a lie which you've determined to brazen out at all costs.  The other day I happened on some evidence that they are spending tens of millions annually in legal fees for litigation, amounts dwarfing what they spend on their annual statutory audit plus associated consultancy.  The latter, you will find laid out in detail in the Annual Report and Accounts: the former you will not.  The ordinary shareholder would never know.

Finally, and this one won't be even remotely surprising, I've had some correspondence that invites me to believe there is a fairly substantial renaissance getting underway of our nuclear deterrent.  Yes, there are indeed project line-items in the MoD budget for some of this.  But I'm being told it's a fraction of the true total.  Still, this probably goes back at least as far as the two Harolds, Macmillan and Wilson ...  (Maybe those two aircraft carriers didn't cost quite as much as we'd thought?)

Somebody signs off on all this stuff, supposedly with great solemnity and a straight face, with liabilities theoretically involved.  Where's an honest accountant to be found?  On the job market, I suppose. 

ND

Budgetting for defence & deterrence

There was a Labour Chancellor, Hugh Dalton, who took the view that his purpose at the Exchequer, like that of the treasurer of a club, was simply to come up with whatever money the committee decided it needed for its purposes.  I don't know if Ben Wallace considers what extra dosh Hunt has found for defence spending as adequate: but at least the reportedly immediate £5bn has been correctly allocated: £3bn for something-or-other "nuclear", and £1.9bn for replenishing ammunition stocks. 

Never has the wisdom of retaining a nuclear deterrent been clearer.  NATO studiously avoids anything that represents a genuine nuclear-escalatory threat to Russia; and, equally clearly, doesn't have the will to generate the scale of conventional forces required to deter Russia by the latter means alone.  (Views that Russia has no designs on anything outside the borders of the Russian Federation look a little silly now: and the fact they'd get a bloody nose is obviously nothing that worries Putin: he has been vigorously doubling down** on bloody noses for 12 months now.)  Conversely, behind its own nuclear shield NATO is doing a great deal to incommode Russia materially.  Of course the exact status of the UK's deterrent vis-à-vis independence is a vexed issue - but for another occasion.  The basic point stands.

Financing costly nuke-related stuff has long been shrouded in fog.  The diligent chaps at the SPRU at Sussex University have long maintained that the whole point of the apparently bottomless government support for the UK's "civil" nuclear industry is to subsidise the military nukes, and they may very well have a point (though personally I reckon Keynsian job creation explains quite a lot, too).  Rolls Royce probably didn't endear themselves to HMG when their initial sales pitch for SMRs said as much.

One current and rather high-profile thrust of UK defence policy is the new AUKUS thing, which is also in the news.  I can't help wondering whether this is as much as anything to come up with a rationale for the ridiculous new aircraft carriers Gordon Brown saddled us with.  What a git that man is.  A bigger waste of money is hard to envisage (would the Aussies like to buy them?) and, as we've said before, naming one of them Prince of Wales was presumably some bright spark's brutal / witty way of underlining the point.  It says much for the total lack of knowledge of history these days, that nobody put a stop to that little piece of devilment.

ND

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 ** OK, sometimes this is useful shorthand.  Sorry about that.  But no leaning in or curating, I promise you. 

UK Nukes, part 3: FFS, why?

OK, so HMG is hell-bent on Sizewell C, to the extent that they are kissing the Frenchman's arse to get it done.  Since last week's announcement there has only been bad news from France, on Flamanville and the operations of the existing French fleet.  This follows upon well over a decade of nothing but bad news on the EPRs; so why SZC will be any better, no man can tell.  If ministers had half a wit, but were still that determined to go ahead, they'd be striking a much harder bargain than appears to be the case - and experience tells us the actual bargain will be even worse than anything that's ever made public prior to the inevitable public inquiry that will follow when everything goes pear-shaped.   (For a modest fee, I offer to act as commercial consultant in the matter.) 

Even if were to be concluded on intelligent commercial terms, literally nobody would dare hazard a guess as to when this chunky bit of capacity would come on line.  That's pretty dreadful for long-term planning in a perilously-balanced sector of crucial national importance; and gives the lie to the "only nukes deliver predictable baseload electricity at scale" line, which is about all EDF has to offer.

The question therefore arises: why in the name of Hell is HMG so bent on SZC?

Here are three answers:

1. Keynesian job creation.   That's the explanation I have always favoured.  You can see the attraction of HPC, for example: a project creating thousands of fairly decent civil engineering jobs (albeit the workforce holed up in portakabin hotels in the middle of Zummerset is not a particularly happy body of men) that drags on for year after year, being paid for by the French & Chinese, at their ultimate risk.  RAB-financed SZC, though, looks to be under-written by HMG and paid for concurrently on electricity bills - a rather different equation.
2. Support for the UK nuclear deterrent.  They bang on about this at great length at SPRU (Sussex University), essentially suggesting that the civil nuke programme is tacitly subsidising the military.  Maybe: it's not something I've ever studied: and I'm instinctively suspicious of deep-state conspiracy theories.  But the logic is obvious enough: you can take a look for yourself.  
3. A new one:  getting HMG off the legal hook.  So I now add this 3rd explanation: HMG can use SZC as something rather concrete** they can adduce in front of the judge as evidence they are actually doing something - however crass.  I've written here before about the stupidity of legislating for targets like Net Zero 2050 by making them "legally binding".  It simply invites court actions by the Green Blob, and indeed the courts gratify it by entertaining them, and sometimes finding in their favour.  Just last week, the High Court agreed that HMG's NZ2050 strategy was too woolly and has given it a few months to sort it out (plus costs for the Blob).  This is of course bloody ridiculous, but what does anyone expect?

What do readers think?  What other explanations might there be?  Is anyone convinced by SPRU's military hypothesis?  

Over to you.

ND  

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** and I do mean concrete - unbelievable amounts of the stuff, even more than at HPC: 40% of the new plot they'll be building on at the northern end of the site is bog, with very poor and deep underlying bedrock.   EDF screwed up the geology at Hinkley, so the scope for real and very costly nonsense at SZC is huge. 

Iran: Green Shoots on Good Friday

The question posed in CU's excellent post last week - Is an Agreement With Iran Wise? - is a whole large step closer to being operative, after another Good Friday agreement of potentially enormous consequence.

As Easter approaches, the optimist in me sees quite a lot of very welcome green shoots appearing in significant places:

• further downward pressure on oil (though $20 seems a tad unlikely):  $50 for half a decade would be great for getting growth back on track
• as a piece of pure schadenfreude, it would also annoy the greens a lot:  coal will be phased out all the quicker in the West, being displaced increasingly by gas rather than renewables (not so much green shoots as shoots greens ...)
• Iran, potentially a much more civilised place than certain of its neighbours (significant numbers of the middle classes there have been educated in the West) can be encouraged to take that path
• this, as one of our Anons noted on Monday, means lots of business opportunities for both sides: business that western oil & gas companies really need
• a more mature approach to foreign policy might start to suggest itself to the US and EU, meaning (as Suffragent commented) getting round to the issue of Putin, who really must be allowed to rejoin the mainstream.  At $50, he'll be willing to make the odd pragmatic concession, too

There will be plenty of people quick to observe that, once again, western policy in the region seems to be All About Oil.  To a certain degree, that's true - so what?  Lefties and their new greenie friends - who could find themselves a bit lost for words on this deal, I should imagine - had better just grow up a bit.  That, or just go back to chanting something or other in the corner and let the grown-ups get on with it.

ND

Is an agreement with Iran wise?

It may well be the first day of the UK election campaign today, but there will be plenty of time to consider that (notwithstanding your 3 editors here are somewhat indisposed the next two weeks so blogging may be lighter!).

A much more pressing issue for any incoming Government, should we elect one, will be what happens with Iran. It is no secret that President Obama has decided that the best way forward with the Country is to try to get it away from international pariah status to see if it can be re-integrated in a less hostile way. In this view he is aligned with the EU, Russia and China.

On the other side of the table are perhaps those who have more to lose. Israel, faced with Iranian backed militia in Lebanon and Gaza constantly firing rockets at them and brainwashing all children to believe in eradication of the Jews and Israel, is not happy to deal with Iran. Saudi Arabia too, moving swiftly to be an ally of Israel, is concerned at Shia backed militia in Yemen which it is poised to invade. Of course, the Yemeni Shia are backed by Iran.

Then there is Iraq, the Shia south is leading the resistance to ISIS in the Sunni north - an unfortunate turn of events for Saudi, Qatar, the UAE and Jordan - perhaps showing that money to back terror groups always leads to unintended consequences which they should have learned from their sponsorship of Al-Qaeda in the 1990's. But Shia Iraq needs help to defeat Isis, which surely is even more of a threat than Iran.

Then of course there is the economic issue, Iran has plenty of crude to export and even with Sanctions is a functioning state which could quickly re-integrate into the world economy, boosting itself but also applying further long-term pressure onto the oil prices.

Finally, there is the nuclear issue. Iran really wants a nuclear bomb and from time to time seems to elect leaders stupid enough to perhaps use it. Hence the clear focus on stopping it acquiring one. I am loathe to agree with neocons who say Iran already has it or sanctions won't work - their spectacular wrongness in Iraq on the effectiveness of sanctions must always be considered. Sanctions hurt, Governments will do a lot to be rid of them.

Overall then this is a very thorny issue, personally I am with Obama that the total exile of Iran pushes it further to extremism than trying to re-integrate it somewhat. If a deal can be done to ensure it does not develop nuclear weapons then perhaps it is doable. The wider politics of the Shia/Sunni civil war in the Middle East will not be fixed just by the West siding with the Sunni's (who, of course gave birth to Al-Qaeda and ISIS). Getting Israel onside/reassured will be harder, but that is the bit Obama will miss given his visceral hatred of Netanyahu.

Always a Pleasure to Disagree with Noam Chomsky

Ah, Chomsky, one of those really clever people who somehow always leave their brains at the door when it comes to politics.

It's the 69th anniversary of Hiroshima and Nagasaki and here he is, opining that it has been the merest good fortune we haven't been plunged into atomic war.  Somehow we have dodged the bullet every day, every hour, every second for 69 years of foam-at-the-mouth nuclear madness - particularly American madness, you'll not be amazed to learn.

Here's an alternative view.  Actually (and even if a little surprisingly), politicians in all countries who have a nuclear briefcase at their disposal find this very sobering, and act fairly responsibly when push comes to shove.

Perhaps we'd expect that of, well, the Brits ?  France ?  the USA ?  But how about Russia, China, India, Pakistan, South Africa, Israel ...  No shortage of political extremists in the list, and yet somehow no-one has pressed any buttons.  This ain't chance, Mr Chomsky - this speaks well for all concerned. 

[As it happens I have a little theory about the Communist nuke-owners:  as good Marxists they have - in the past -  been sufficiently gripped by the inevitability of their ultimate victory, they never saw much advantage in pushing their luck and hazarding it all.  But hey, that all ended in 1989, and still they've stayed sober.]

I'm not complacent.  Iran is a proper country (measured by the standards of the above), but North Korea ain't.  ISIS (if it ever gets a stable base) is in Pol Pot territory: capable of anything and with a broader 'vision' than ever a Cambodian nutter could manage.  

And we may be putting little Volodya to the test in Ukraine quite shortly.  But he'll pass.  At the end of the day, for all his angry nationalism there are some very venal, very pratical men looking over his shoulder at all times.  They all want to retire to spend more time with their money.

Ordinarily it's conservatives that hold pessemistic views on human nature, and radicals the hopeless optimism.  But on this issue ?  No Mr Chomsky, it's not luck.  It's that human nature is a bit better than you think. 

ND