Search This Blog

Thursday 4 July 2019

Inside the 21st-century British criminal underworld

There are almost 5,000 criminal gangs in the UK. But the old family firms are gone – today’s big players are multinational, diversified and tech-savvy writes Duncan Campbell in The Guardian


Who rules the underworld today, and where do they conduct their business? Once there were the familiar mugshots and Runyonesque nicknames, the clubs and pubs where the usual suspects gathered, plotted and schemed. Now organised crime is run like any other business, and its leading figures look like every other broker or tycoon. We have entered into a world of what Sir Rob Wainwright, until recently Europe’s most senior police officer, calls “anonymised” crime. The underworld has become the overworld.

The National Crime Agency has estimated that £90bn of criminal money is being laundered through the UK every year, 4% of the country’s GDP. London has become the global capital of money-laundering and the beating heart of European organised crime. English is now the international underworld’s lingua franca. Crime is an essential part of the British economy, providing hundreds of thousands of jobs, not just for professional criminals – the NCA reckons there are 4,629 organised crime groups in operation – but for police and prison officers, lawyers and court officials, and a security business that now employs more than half a million people.

Just as the names of familiar shops have been departing from the high street, the old family firms of criminals are disappearing, whether in London, Glasgow, Newcastle or Manchester. And just as British football fans have had to learn how to pronounce the names of the legions of new foreign players, detectives have had to learn to do the same for the increasing number of new criminals. Britain was once dealing with drugs imports from half a dozen countries; now it is more than 30. A young person who would in the past have sought an apprenticeship in a trade or industry may now find that drug dealing offers better career prospects. And, apart from drugs and guns, British trading channels now facilitate the trafficking of women from eastern Europe and Africa for prostitution and children from Vietnam as low-level drug workers.

The underworld’s modus operandi has shifted in the past quarter century. “The international nature of crime and technology are probably the two biggest changes,” says Steve Rodhouse, the NCA’s head of operations. Speaking at the NCA’s unprepossessing headquarters in Vauxhall, south London, Rodhouse explains how the agency’s work has mushroomed. “Pretty much all of the NCA’s most significant ‘high-harm’ operations now involve people, commodities or money transferring across international borders. The days of having a drugs gang, a firearms gang or a people-trafficking gang have changed because of the concept of polycriminality. Groups satisfying criminal markets, whatever they may be, is now much more common. These are businesses and people are looking to exploit markets, so why confine yourself to one market?”

Wainwright, who served as Europol chief for nine years, has also noted this internationalisation of crime. Addressing a Police Foundation gathering just after his retirement last year, he said that Europol, the European equivalent of Interpol, having expanded since its foundation in 1998 when “it consisted literally, of two men and a dog – admittedly, a sniffer dog – in Luxembourg,” now dealt with 65,000 cases a year. By 2018, he reckoned that 5,000 organised crime groups were operating across Europe and the mafia model had been replaced by a “more nimble” model, with 180 different nationalities operating, mixing legal with illegal business and working with between 400 and 500 major money-launderers. This was multinational business with specialists in recruitment, movement, money-laundering and the forging of documents.

The internet, of course, is a major factor. Wainwright likened its effect on crime to that of the motorcar in the 1920s and 30s, when suddenly criminals could escape at speed and take advantage of new markets. He cited the dark web, which he said was selling 350,000 different illegal items – 60% of which were drugs – but including everything from guns to pornography and even operating a ratings system for speed of dispatch and quality. The combination of new faces of whom the British police – and often Interpol and Europol – were unaware, along with an increasingly tech-savvy pool of criminals able to disguise their identities, made for a toxic cocktail. Crooks anonymous.

One group with little interest in anonymity are the Hellbanianz, a gang of cocky young Albanians based in Barking, east London. They went online in spectacular fashion in 2017 via Instagram and YouTube rap videos to flaunt their ill-gotten wealth and firepower.

Their most prominent member, Tristen Asllani, who lived in Hampstead, was jailed for 25 years in 2016 for drug dealing and firearms offences which included possessing a Škorpion submachine gun. He was caught after a police chase in north London which ended when he crashed his car into a computer repair shop in Crouch End. A photo of Asllani, showing him stripped to the waist after he had apparently spent long hours in the prison gym, appeared on a social media page called My Albanian in Jail, with a caption saying “Even inside the prison we have all conditions, what’s missing are only whores”.

The flashy cars and bundles of banknotes on display in the Hellbanianz videos were the result of the importation of cocaine and cannabis, but the gang was also involved in the weapons trade. The pictures showed £50 notes wrapped around a cake and their HB logo written in cannabis. After they were arrested and jailed, other gang members have posted pictures of themselves, taken with smuggled mobile phones, from inside prison where they cheerfully inscribe their gang name on the walls.

Muhamed Veliu, an Albanian investigative journalist, who knows London well, says that the Hellbanianz have been on the crime scene in east London for many years. “They are sending a bad message to young Albanians. By seeing such photos, they think the streets of UK are paved with gold … Bizarrely, despite the fact they are in the prison, they show the outside world photos of their life behind the bars.” He said that there was a concern that the British media stereotyped all Albanians as criminals but, he added, the 2006 Securitas robbery, in which two Albanians played key roles in the theft of £53m from a depot in Kent, was regarded with some national pride back home. “It was ‘the crime of the century’, it was seen as very different from making money from prostitution, which is the lowest form of crime. It is wrong, of course, but they did need bravery to get involved, and at least they went for a bank – that was the feeling in the Albanian community.” There are currently around 700 Albanians in British jails.

“Albania is Europe’s largest producer of cannabis,” says Tony Saggers, the former head of drugs threat and intelligence at the NCA. “It is important not to stereotype, but the Kosovan war led to Albanians pretending to be Kosovan in order to get asylum in the UK. Many of the people who came just wanted a better life, but there were criminals among them who were able to set up illicit networks … The UK criminal has a get-rich-quick mentality while the Albanians’ strategy was get-rich-slow, so they have driven down the price of cocaine in the UK. They knew that if they expanded, they could undercut the market.” It helped that their reputation preceded them. “The Albanian criminals may be ruthless and potentially murderous when controlling their organised crime,” said Saggers, “but when they come to the UK they try to be more charismatic and they use fear – ‘We’re here, we need to get on,’ that sort of approach. So there is little violence from the older Albanian criminals in the UK, because they know that violence attracts more attention.”

The Albanians had already established themselves in a darker fashion when 26-year-old Luan Plackici was jailed in 2003 and said to have made more than £1m from trafficking “poor, naive and gullible” young women who thought they were on their way to jobs as waitresses or barmaids. Some had to service up to 20 men a day to pay for the £8,000 “travel bill” from Romania and Moldova.

The international nature of people-trafficking was exposed fully in 2014 by a trial of a gang that imported more than 100 women into Britain. The trial ended with the gang leader, Vishal Chaudhary, being jailed for 12 years. Chaudhary, who lived the high life in Canary Wharf in London, contacted young women through social networks in Hungary, the Czech Republic and Poland, offering work as receptionists, nannies or cleaners in England. But when they got to the UK, the women were forced to work in brothels. Chaudhary’s team, all of whom were jailed, consisted of his brother, Kunal, who worked for Deloitte in Manchester, a Hungarian heavy called Krisztian Abel and the latter’s sister, Szilvia, who helped recruit the women.

 
A cannabis farm discovered in a house in Oldham in 2013. Photograph: Christopher Thomond/The Guardian

There are numbers of young people involved in what the legal system terms “forced criminality”. The lawyer Philippa Southwell has specialised in such cases, which apply in particular to young Vietnamese people brought illegally into the UK by traffickers and forced to work in cannabis farms to pay back debts of up to £30,000 that their parents have undertaken in order for them to have a new life in Europe.

“The modus operandi of criminal organisations is to target children or young adults, trafficking them across the world in a journey that can take months,” Southwell says. “Those being trafficked from Vietnam, often transit via Russia, Germany and France, by boat, lorry and even by foot. Once at their destination, they will be locked in a premises and made to tend the cannabis plants, by watering them and ensuring the lighting is on. These cannabis grows are sophisticated multi-million-pound drug operations, with the electricity often being extracted illegally and high-value equipment used. The windows of the buildings may be nailed shut. The farms normally operate in rural areas where the chance of detection is reduced.”

The boys and young men were in a form of debt bondage, but no matter how hard they worked, their debt never seemed to be paid off. “There is a misconception within the criminal justice system that they are free to leave because the doors may not always be locked,” says Southwell, “but the reality is that they have nowhere to go – they are controlled through threats of violence, debt bondage, isolation, fear and other complex control methods that are regularly used by traffickers.”

From the Chinese opium dealers in the 1920s, the Italian gangsters in the 30s, the Maltese pimps in the 50s, the West Indian Yardies in the 60s, the Turkish heroin dealers in the 70s to the east Europeans gangsters and Nigerian fraudsters today, there has long been an unfair tendency to blame foreigners as dominant figures in the underworld. While they may have all had their parts to play, the homegrown British villain – whether artful dodger or ruthless kingpin – has always been the bedrock of the underworld.

“Everyone wants to be a gangster,” says BX, a young former gang member from north-west London. “Everyone’s seen it on TV and that’s what they want to be. They look at music videos and it looks like the people in them are making hundreds of thousands of pounds, although the reality is that they are still living at their mum’s house. Most of them come from estates and they see their parents going to work, struggling to pay the bills. They come home, their mum’s not there, and all the places where kids could play are closing down. Nine times out of 10, they leave school without qualifications. So if you’re broke, if you can’t get a job, you’re going to take the opportunity. My parents had no clue what I was up to – I didn’t come back with any marks on my face.”

The recent upsurge in knife attacks has focused attention on gangs. At one stage last year, there were six separate knife murder trials underway at the Old Bailey, all gang-related, all involving more than one defendant, none older than 22. “It’s not a black thing, it’s not a white thing, everyone’s doing it,” says BX. “There’s no: ‘I’m black, he’s white, we can’t get along’ any more.” There were still ample opportunities for smaller-time dealers: “You can make a grand a week.”


An organised gang carrying out robberies on scooters in London in 2018. Photograph: MET Police

The hierarchy of gangs remained a key factor. “If you’re a drug dealer, you have to find people who will do your dirty work for you. The way it works is the elders, who are, say, 24 or 25, they see you doing well, so they might take you under their wing. The young kids acting as look-outs, they’re thinking: ‘I’m part of that guy’s enterprise. That could be me in however many years, I could get promotion.’ As they say, loyalty brings forth royalty.”

Territory is important commercially. “If you’re doing five keys (kilos) a week and then suddenly you’re only doing three a week, it doesn’t take long to realise that someone’s out there taking your customers. So you have to eliminate the opposition. How do you do that? By either taking them out, or tipping off the police. You are never supposed to snitch, but I know one guy, from Southall, who’s a millionaire now; he was in competition with a guy from the same area so he informed the police.” There’s a not-unfounded suspicion that some informers have continued to commit crimes while under police protection. “All the old-school rules – they’re gone. I know people who work with the police to get immunity for themselves. I know one who everyone knows works with the police, he’s even been shooting people, but you type his name into Google you won’t find anything about him and, believe me, his record is way longer than my arm.”

The risks are high. “Of the people I grew up with, only three of us haven’t been to jail, although I’ve been arrested many times. My older brother has been in and out of jail – nine months here, six weeks there. But there are less police than ever, so that gives you the incentive, and even if you get arrested, you’re not going to do that long.”

While the young gangs have largely replaced the old family-based crews, so have young, helmeted, scooter-riding robbers smashing their ways into jewellers and mobile phone shops taken on the role of the old sawn-off shotgun-wielding bank robbers.

While those smalltime home-grown villains may still thrive, an increasing number of members of the British underworld have followed old imperial traditions and headed abroad to cut out the middle-man, establishing themselves not only in the traditional bolt-hole of Spain, but in the Netherlands, Thailand and South Africa. The person who was to rewrite the rulebook on drug dealing is the street-smart Liverpudlian Curtis Warren, better known by his nicknames Cocky or the Cocky Watchman. Born in 1963, his criminal career started at the age of 12 with a conviction for car theft. By 16, he was on his way to borstal for assaulting the police. Other offences followed, but it was only when he moved into the drugs business, working out of Amsterdam, that he established his reputation as one of the most prolific traffickers of modern times – Interpol’s “Target One” and the subject of a joint British–Dutch investigation codenamed Operation Crayfish.

While Warren’s move to Amsterdam, where fellow British dealers also established themselves, seemed like a smart idea in that he was less exposed to the British police, it was also a weakness, because the Dutch authorities were able to tap his phone without restriction and secure the evidence they needed. (Although they also required English help in translating Liverpudlian for them.) In October 1996, police in the Netherlands seized 400kg of cocaine, 60kg of heroin, 1,500kg of cannabis, handguns and false passports. Nine Britons and a Colombian were arrested, and Warren was soon portrayed as the biggest fish in the net. He was jailed for 12 years for a conspiracy to import what was claimed to be £125m of drugs into Britain. The Observer suggested he was “the richest and most successful British criminal who has ever been caught”, and he was the only drug dealer to make it on to the Sunday Times rich list. T-shirts with an old mugshot of Warren on them were still for sale in Liverpool 20 years after Operation Crayfish.

After his release from jail in the Netherlands in June 2007, Warren was only a free man for five weeks. He headed to Jersey, but was under constant surveillance and soon arrested. In 2009, he was convicted of conspiring to import £1m of cannabis into Jersey and jailed for 13 years. Warren was alleged to have invested his wealth in everything from petrol stations to vineyards, football clubs to hotels. A Jersey court ordered him to pay £198m after he failed to prove his business empire was not built on the proceeds of cocaine trafficking. Detectives had secretly recorded him boasting during a 2004 prison visit of funnelling huge amounts of cash via a money launderer. “Fuckin’ ’ell, mate, sometimes we’d do about £10m or £15m in a week,” he told some of his visitors. “I was bragging like an idiot and just big-talking in front of them,” was Warren’s explanation later. The Jersey attorney general, Timothy Le Cocq QC, described him as “one of Europe’s most notorious organised criminals”. His failure to pay the money resulted in a further 10 years’ jail time.

He told Guardian journalist Helen Pidd, when she interviewed him in jail in Jersey, that he disapproved of drugs: “I’ve never had a cigarette in my life or a drink. I’ve never tasted alcohol or anything. No interest.” His ambition after he was freed was to leave England – “and never come back”. He added: “I just wish I’d not been such a worry to me mum.”

Few people were better qualified to comment on Warren than former NCA man Tony Saggers, who was an expert witness in Warren’s trial and proceeds hearing. “Curtis Warren was a forerunner,” he said. “You get people like him who come from a tough background, a council-house environment, and he had a sort of bare-faced courage in some respects, to put himself in places like Venezuela and Colombia, which were probably even more dangerous then than they are now. He put himself at the other end of the supply chain, and in a way established that pattern for the elite drug trafficker. But nowadays, high-level, high-profile criminals play less and less of a role, and make use of others below them in a detached way.”

Other British criminals have also cast their nets wide during the past two decades. One of the best-known was Brian Wright, once one of Britain’s most active cocaine smugglers, who was nicknamed The Milkman – because he always delivered. He operated from both Turkish-controlled Northern Cyprus and Spain. In 1998, he was alleged to have imported almost two tonnes of the drug, with the result, according to one customs investigator, that “the cocaine was coming in faster than people could snort it”. The Dublin-born Wright owned a villa near Cadiz, which he named El Lechero – the Spanish for milkman – and had a box at Ascot, a flat in Chelsea’s King’s Quay and used some of his proceeds to fix races on which he then bet, thus laundering his drug profits. Finally arrested in Spain, he was brought back to England and, in 2007, at the age of 60, found guilty at Woolwich crown court of conspiracy to supply drugs and jailed for 30 years.

Some very successful scams have been perpetrated on elderly Britons. John Palmer, who had been involved in the Brink’s-Mat bullion robbery (from whence he got his nickname “Goldfinger”) made his fortune in a crooked timeshare business in Tenerife. A ruthless operator, he took advantage of thousands of gullible souls, many of them elderly holidaymakers, who believed his spiel about the fortunes they could make by investing in timeshare apartments that were never built. Outwardly, he appeared to have it all: the yacht, the cars with the personalised number plates, dozens of properties. He even made it to No 105 in the Sunday Times rich list. “Remember the golden rule,” was the motto he loved to quote, “he who has the gold makes the rules.” But in 2001, he was convicted of a timeshare fraud in which 16,000 victims lost an estimated £33m and served eight years in prison.

Then, in 2015, Palmer was shot dead by a hitman in his garden in Essex. There were rumours that he was killed because he might have been cooperating with the Spanish police over another fraud case. His co-accused were convicted in Spain in May this year and the police in Britain have duly issued a fresh appeal for help to find his killer – with a reminder that there is a £100,000 reward on offer in case that tempts an elderly underworld grass.

Any notion that Spain might still be a safe haven for expat criminals was dispelled in 2018 when Brian Charrington – a close associate of Curtis Warren and regarded as one of the major international drug dealers of his generation – was jailed for 15 years for trafficking and money-laundering in Alicante in 2018. Described in the Spanish press as “el narco que escribia en Wikipedia”, because of his reputation for updating and correcting his Wikipedia entry, the former car-dealer from Middlesbrough had been arrested in 2013 at his villa in Calpe, on the Costa Blanca, an area where some estate agents offer bulletproof glass as a special feature along with the spa bath and barbecue area. There had been wild rumours of crocodiles in his swimming pool, but disappointingly, the police found none.

Charrington was alleged to have brought vast quantities of drugs into Spain via a yacht docking in Altea, north of Benidorm. He claimed his money came legitimately. “I buy and sell villas and I pay my taxes,” he told the court, but was still fined nearly £30m. Following a lengthy investigation involving Spanish, British, Venezuelan, Colombian and French police, his assets, including a dozen houses and his cars and boats, were impounded. After his sentence, his Wikipedia entry was speedily updated.

The titles of true crime memoirs published in the past decade or so tell their own tale. The Last Real Gangster by Freddie Foreman came out in 2015; The Last Gangster: My Final Confession by Charlie Richardson arrived just after his death in 2012; The Last Godfather, the Life and Crimes of Arthur Thompson, was published in Glasgow in 2007. A requiem for the old British underworld.

In many ways, it was already slipping into a haze of nostalgia. The television series Peaky Blinders has spawned its own fashion accessory industry. You can now buy Peaky Blinders cufflinks shaped like razor-blades, or wear a Peaky Blinders cap and waistcoat from the new David Beckham clothing line, something that might have prompted a dark smile from the ruthless and acquisitive 1920s Birmingham gang on whom the series was based. The website henorstag.com even recommends “the Peaky Blinders look” as perfect for a stag night: “For a theme the ladies will love, you will need to capture the stylish world of the early 20th century with black peak caps, stylish grey or black suits with waistcoat, as well as a dusty black coat and shoes in order to complete the look.” (Add a cosh and a cut-throat razor and you’ll really slay ’em.)

While the Kray twins brand continues as the underworld’s equivalent of Marks & Spencer – a framed letter from Ronnie Kray in Broadmoor is currently on offer on eBay for £650 – changes in the law have made criminals less prepared to boast about past crimes. In the old days, under the “double jeopardy” rule, once you were acquitted of a murder, you could never be tried for it again. That rule was overturned with the 2003 Criminal Justice Act, so the days when a villain could explain in their memoirs how they got away with a crime have gone. The 2009 Coroners and Justice Act made it an offence for criminals to profit from accounts of their crimes, so they could no longer sell their stories, or at least officially. The 2002 Proceeds of Crime Act and its increasing use against career criminals has meant that illicit incomes can be seized.

No wonder the Hatton Garden burglary of 2015 – that “one last job” carried out by the elderly “diamond wheezers” – received such attention. Even one of the “last of the last”, Fred Foreman, was hoping he was going to be offered a role in it. “I heard that Terry (Perkins, one of the ringleaders) was looking for me, not long before the burglary took place, so I presume that would have been what it was about,” he says.

Perkins died in his cell in Belmarsh prison last year. Foreman, who made his name with the Krays in the 1960s, now lives in sheltered accomodation in west London. He doubts that the current generation of gangsters will ever write their memoirs: “I don’t think that anyone who has turned to crime these days is going to live long enough to build up a reputation, are they?”

But the recruiting sergeants of the underworld – poverty, greed, boredom, envy, peer pressure, glamour – will never be short of volunteers, whether they live long enough to make a name for themselves or not.

Wednesday 3 July 2019

After urging land reform I now know the brute power of our billionaire press

A report I helped publish has led to attacks and flat-out falsehoods in the rightwing media. It’s clear whose interests they serve writes George Monbiot in The Guardian


  
‘As their crucial role in promoting Nigel Farage, Brexit and Boris Johnson suggests, the newspapers are as powerful as ever.’ Photograph: Christopher Pledger


All billionaires want the same thing – a world that works for them. For many, this means a world in which they are scarcely taxed and scarcely regulated; where labour is cheap and the planet can be used as a dustbin; where they can flit between tax havens and secrecy regimes, using the Earth’s surface as a speculative gaming board, extracting profits and dumping costs. The world that works for them works against us.

So how, in nominal democracies, do they get what they want? They fund political parties and lobby groups, set up fake grassroots (Astroturf) campaigns and finance social media ads. But above all, they buy newspapers and television stations. The widespread hope and expectation a few years ago was that, in the internet age, news controlled by billionaires would be replaced by news controlled by the people: social media would break their grip. But social media is instead dominated by stories the billionaire press generates. As their crucial role in promoting Nigel Farage, Brexit and Boris Johnson suggests, the newspapers are as powerful as ever.

They use this power not only to promote the billionaires’ favoured people and ideas, but also to shut down change before it happens. They deploy their attack dogs to take down anyone who challenges the programme. It is one thing to know this. It is another to experience it. A month ago I and six others published a report commissioned by the Labour party called Land for the Many. It proposed a set of policies that would be of immense benefit to the great majority of Britain’s people: ensuring that everyone has a good, affordable home; improving public amenities; shifting tax from ordinary people towards the immensely rich; protecting the living world; and enhancing public control over the decisions that affect our lives. We showed how the billionaires and other oligarchs could be put back in their boxes.

The result has been four extraordinary weeks of attacks in the Mail, Express, Sun, Times and Telegraph. Our contention that oligarchic power is rooted in the ownership and control of land has been amply vindicated by the response of oligarchic power.

Some of these reports peddle flat-out falsehoods. A week ago the Mail on Sunday claimed that our report recommends a capital gains tax on people’s main homes. This “spiteful raid that will horrify millions” ensures “we will soon be joining the likes of China, Cuba, Laos and Vietnam in becoming one of the world’s few Marxist-Leninist states”. This claim was picked up, and often embellished, by all the other rightwing papers. The policy proved, the Telegraph said, that “keeping a hard-left Labour party out of office is not an academic ideological ambition but a deadly serious matter for millions of voters”. Boris Johnson, Philip Hammond and several other senior Tories weighed in, attacking our “mad” proposal.

But we made no such recommendation. We considered the idea, listed its possible advantages and drawbacks, then specifically rejected it. As they say in these papers, you couldn’t make it up. But they have.

There were dozens of other falsehoods: apparently we have proposed a “garden tax”; we intend to add “an extra £374 a year on top of what the typical household pays in council tax” (no such figure is mentioned in our report); and inspectors will be sent to people’s homes to investigate their bedrooms.

Dozens of reports claim that our proposals are “plans” hatched by Jeremy Corbyn: “Jeremy Corbyn’s garden tax bombshell”; “Jeremy Corbyn is planning a huge tax raid”; “Corbyn’s war on homeowners”. Though Corbyn is aware of our report, he has played no role in it. What it contains are not his plans but our independent policy suggestions, none of which has yet been adopted by Labour. The press response gives me an inkling of what it must be like to walk in his shoes, as I see my name (and his) attached to lurid schemes I’ve never heard of, and associated with Robert Mugabe, Nicolás Maduro and the Soviet Union. Not one of the many journalists who wrote these articles has contacted any of the authors of the report. Yet they harvested lengthy quotes denouncing us from senior Conservatives.

The common factor in all these articles is their conflation of the interests of the ultra-rich with the interests of the middle classes. While our proposals take aim at the oligarchs, and would improve the prospects of the great majority, they are presented as an attack on ordinary people. Progressive taxation, the protection of public space and good homes for all should strike terror into your heart.

We’ve lodged a complaint to the press regulator, Ipso, about one of the worst examples, and we might make others. But to pursue them all would be a full-time job (we wrote the report unpaid, in our own time). The simple truth is that we are being outgunned by the brute power of billionaires. And the same can be said for democracy.

It is easy to see why political parties have become so cautious and why, as a result, the UK is stuck with outmoded institutions and policies, and succumbs to ever more extreme and regressive forms of taxation and control. Labour has so far held its nerve – and this makes its current leadership remarkable. It has not allowed itself to be bullied by the billionaire press.

The old threat has not abated – it has intensified. If a newspaper is owned by a billionaire, be suspicious of every word you read in it. Check its sources, question its claims. And withhold your support from any party that allows itself to be bullied or – worse – guided by their agenda. Stand in solidarity with those who resist it. 

The magical science of storytelling


Jasprit Bumrah on Practice


Mullah v Allah. Do India's Mullahs hold Muslim Women in Captivity?


Tuesday 2 July 2019

Putin’s wrong on liberalism, but so are liberals themselves

The two liberalisms - one offering genuine human freedom, the other entrapping humans in ruthless market mechanisms - are fundamentally in conflict writes Pankaj Misra in The Print


Russian President Vladimir Putin’s assertion last week that Western liberalism was obsolete provoked some strident rebuttals. A contemptuous silence might have been preferable, saving us the embarrassment of Boris Johnson invoking “our values,” or European Council President Donald Tusk claiming, against overwhelming evidence, that it was authoritarianism that was obsolete.

Even the Financial Times, to which Putin confided his views, was reduced to childishly asserting that “while America is no longer the shining city on the hill it once seemed, the world’s poor and oppressed still head overwhelmingly for the U.S. and western Europe” rather than Russia.

Such rhetoric from both sides felt like a rehash of the cold war, and with the same purpose: to conceal the failures and weaknesses of both systems.

One function of Russia’s communist tyranny in the past was to make its capitalist opponents look vastly better. Centrally planned command economies failed spectacularly, revealing that communists had no economic solution to the modern riddles of injustice and inequality, and were, furthermore, devastatingly blind to their own environmental depredations.

Wealth-creating capitalist economies, on the other hand, can hardly be said to have resolved those problems or made the world more inhabitable for future generations. Their advocates made extravagant promises of freedom, justice and prosperity after the collapse of communism, claiming that capitalism was the only viable model left standing at the End of History. Then their feckless experiments in free markets set the stage for the authoritarian movements and personalities that now dominate the news.

It should not be forgotten that the shock therapy of free markets administered to Russia during the 1990s caused widespread venality, chaos and mass suffering there, eventually boosting Putin to power. That’s why it won’t be enough to invoke, against Putin’s demagoguery, the most flattering definition of liberalism: as a guarantee of individual rights and civil liberties.

To be sure, the liberal tradition that affirms human freedom and dignity against the forces of autocracy, reactionary conservatism and social conformism is profoundly honorable, and ought to be always defended. But there is another liberalism that has been bound up since the 19th century with the fate of capitalist expansion, concerned with advancing the individual interests of the propertied and the shareholder. This is the liberalism, unconcerned with the common good, popularly denounced today as “neo-liberalism.”

In fact, the two liberalisms — one offering genuine human freedom, the other entrapping humans in impersonal and often ruthless market mechanisms — were always fundamentally in conflict. Still, they managed for a long time to coexist uneasily because the West’s expanding capitalist societies seemed capable of gradually extending social rights and economic benefits to all their citizens.

That unique capacity is today endangered by grotesque levels of oligarchic power and domestic inequality, as well as formidable challenges from economic powers such as China that the capitalist West had once dominated and exploited. In other words, modern history is no longer on the side of Western liberalism.

The devastating loss of its special status has exposed this central Western ideology to mockery from demagogues such as Putin and the Hungarian leader Viktor Orban. They’re joined by men of the hard right in the West who also zero in on liberals’ always vulnerable faith in cultural pluralism, denouncing immigrants and multiculturalism as well as sexual minorities.

In a much-circulated recent article, Sohrab Ahmari, the op-ed editor of the New York Post, complimented Donald Trump for shifting the national conversation from liberal notions of individual freedom to “order, continuity, and social cohesion.” But, as the intellectual historian Samuel Moyn put it last week, “the political system based on individual liberty and representative government doesn’t need to be celebrated or repudiated. It needs to be saved from itself” — from an obsession with “economic freedom that has undercut its own promise.”

Certainly, it won’t do to double down on shattered verities: to claim superior values, or to insist, as the Financial Times did, that “the superiority of private enterprise and free markets — at least within individual nations — in creating wealth is no longer seriously challenged.”

That seemingly last-minute qualifier, “at least within individual nations,” tries to conjure away the buffeting of national economies by opaque global forces. And it betrays the uncomfortable truth that, these days, even liberalism’s self-appointed defenders are not wholly convinced of their cause.

Perhaps, instead of mechanically asserting their superior status, they should examine their reflexively fanatical faith in market mechanisms. They should trace how the once-expansive liberal notion of individual freedom narrowed into a rigid principle of individual entrepreneurship and private wealth-creation. Indeed, such self-criticism has always defined the finest kind of liberalism. It is the best way today to renew an important tradition and convincingly defend it from its critics.

Monday 1 July 2019

Currency warrior: why Trump is weaponising the dollar

Businesses in countries such as Russia are testing the power of the reserve currency but it could benefit from any global instability writes Sam Fleming in The FT


In an industry long dominated by the dollar, it was a move that carried obvious symbolic weight. 

Last summer Russian diamond miner Alrosa tested a new system for selling its rocks in roubles to clients in countries such as China and India, as an alternative to the US currency. 

Since then the company has conducted about 50 transactions under the mechanism, using a range of currencies, says Evgeny Agureev, Alrosa’s director of sales, who says avoiding dollar conversion allows transactions to be conducted more speedily. 

“The number and volume of these transactions is relatively small . . . but we think it is valuable for our clients to have a variety of options for settlement to choose from,” he says in an email, adding that the “world changes and we need to respond”. 

Though under consideration for several years, the initiative by the partly state-owned miner is a sign of a growing appetite to find ways of shaking off the stranglehold the US dollar has long held on global commerce and finance. Those efforts have taken on high urgency given Donald Trump’s increasingly aggressive use of US economic and financial weaponry to get his way in foreign affairs. 

The president has thus far engaged in minimal military conflict, but he has proved an unusually pugnacious currency warrior, as he pairs a tendency to talk down the dollar’s value in his quest for a smaller trade deficit with an unusual willingness to use the currency’s global heft as a tool of foreign policy. 

Critically, sanctions, which can block foreign officials or corporations from accessing vast swaths of dollar-dominated commerce and finance, are being deployed against Russia, Iran, North Korea, Venezuela and a host of other countries, alongside tariffs and other restrictions on key companies such as telecoms manufacturer Huawei. As a result, economies including China and Russia are examining mechanisms to curtail their reliance on the dollar, while European capitals are seeking ways of circumventing America’s new barriers on dealings with Iran. 

To date the initiatives amount to less than a pinprick in the US currency’s hegemonic status, as underscored by the modest scale of Alrosa’s foreign exchange innovation. But Mr Trump’s unilateralist approach has unquestionably unleashed a phase of experimentation elsewhere, prompting some analysts to ask whether, in the longer term, the US dollar’s supreme position in the global financial system could be shaken as other nations revolt against what they see as Mr Trump’s arbitrary use of American power. 

Adam M Smith, a former Treasury and White House official who is now a partner at law firm Gibson, Dunn & Crutcher, says the manner in which Mr Trump is wielding America’s economic power is unprecedented, as he uses sanctions, tariffs, trade negotiations and export controls interchangeably. 

“He is using the importance and attractiveness of the US market to the rest of the world as a coercive tool to get others to bend to his will,” says Mr Smith. “Does the very aggressive use of these economic tools make it more urgent for countries to find ways to avoid the US market? Probably. However, the urgency may not mean that most countries will be successful in finding effective workarounds.” 

America has long enjoyed a singular economic arsenal thanks to the ubiquity of the dollar and the centrality of its economy and financial system to global commerce. Although America’s share of global gross domestic product may have declined, its currency still accounts for over 60 per cent of international debt, according to a speech by European Central Bank official Benoît Cœuré in February, and leads the euro both as a global payment currency and in foreign exchange turnover. It dominates pricing of commodities such as oil and metals and accounts for about 40 per cent of cross-border financial transactions. 

The dollar’s share of global foreign exchange reserves has slipped in the 10 years since the financial crisis, but at 62 per cent of the total it still dwarfs all rivals. The euro has lost greater ground over the same time, now standing at just over 20 per cent. The Chinese renminbi is just a few per cent of global reserves, and a mere 2 per cent of international payments, according to the global transfer network, Swift. 

This unique place at the heart of the global economic system gives the US government enormous power. Using the dollar almost invariably means touching a US financial institution, says Eswar Prasad, a professor of economics at Cornell University. This immediately puts you within the reach of US government and regulators. 

The US toolkit is particularly potent thanks to the use of “secondary” sanctions. Normal US sanctions aim to prevent American citizens from dealing with a given country or party, but secondary measures allow the government to penalise third parties that do business with a sanctioned country. 

The consequences for non-US institutions of failing to comply with US rules can be severe. In 2014, for example, BNP Paribas was hit by a penalty of nearly $9bn by the US authorities in connection with sanctions violations, as well as being forced to temporarily suspend part of its US dollar clearing work. 

While Washington’s use of sanctions has been on the rise for decades, Mr Trump has emerged as a particular enthusiast. Data compiled by Gibson Dunn show 1,474 entities were subject to sanctions designations in 2018 — 50 per cent higher than in any previous year for which it has kept records. 

The power of these tools has been felt across markets. The Treasury’s decision to sanction metal groups Rusal and parent company En+ led to a surge in aluminium prices, before it agreed to ease its stance if its major shareholder, Oleg Deripaska, gave up control. Sanctions were lifted in January. 

Last August Turkey was plunged into a currency crisis as the US imposed swingeing tariffs on its steel and aluminium exports, on top of sanctions on senior ministers. 

The US Congress has equally been aggressive in pushing sanctions. In April a cross-party group of senators led by Republican Marco Rubio and Democrat Bob Menendez demanded sanctions against senior Chinese Communist party officials in response to alleged human rights abuses against Uighurs and other Muslim minorities in the northwestern province of Xinjiang. 

This month senators demanded the more rigorous enforcement of US regulations against Chinese companies that seek access to US markets. Hawks such as Mr Rubio want to take matters further and more closely examine China’s ready access to US finance. 

“China poses the greatest long-term threat to US national and economic security. At a minimum, American investors should be aware of where their money is going when it comes to Chinese investments,” said Mr Rubio. 

The Trump administration’s aggressive use of sanctions carries multiple risks. It is not only rivals who are upset: the US has at times also incensed close allies, which for decades have viewed Washington as a reliable steward of orderly global markets. 

In the longer term it could accelerate a trend in which other countries wish to reduce their reliance on the dollar for its main three purposes — as a store of value, a unit of account and a medium of global exchange. In the very long run, some specialists fear the US dollar’s totemic status at the centre of the global economy could be eroded, or even supplanted, just as the British pound was by the dollar during the interwar period. 

Richard Nephew, a former US government sanctions specialist who is now programme director at Columbia University’s Center on Global Energy Policy, says that for at least the next five to 10 years the world is locked into the dollar as the default currency. 

But he argues there will be an evolution towards a system where the US is not the sole significant trading currency. US policy today “will increase the speed with which that transition takes place”. 

A recent report from the Center for a New American Security think-tank argues that a host of factors could conspire to weaken the impact of America’s economic policy arsenal over the longer term. Critically, it says that if the US attempts to reduce its economic, financial and trading connections with key overseas economies, “over time US coercive economic leverage over those economies will diminish”. 

Russia has been at the forefront of attempts to de-dollarise, spurred on by the punishing impact of US sanctions on its economy. “We are not ditching the dollar, the dollar is ditching us,” Russia’s president Vladimir Putin said late last year. “The instability of dollar payments is creating a desire for many global economies to find alternative reserve currencies and create settlement systems independent of the dollar.” 

Russia’s central bank last spring sold $101bn worth of dollars from its reserves, shifting the holdings into renminbi, euros and yen, according to official data published in January with a six-month delay. Fifteen per cent of Russia’s reserves were in the Chinese currency last summer, the data showed, three times the proportion at the end of the first quarter of 2018. 

For its part, China has experimented with denominating oil futures in its currency as well as working on its own international payments system. 

In June Russia agreed with China at a summit between Xi Jinping and Mr Putin to do more trade in their respective currencies. The rouble and renminbi’s share of Chinese imports into Russia edged up from 17 per cent in 2017 to 24 per cent in 2018, according to economist Dmitry Dolgin of ING. 

Yet for all the political attention, the two countries’ attempts to reduce the dollar’s role remain in their infancy. For example, China and Russia set up a non-dollar direct settlement plan to help with their gas pipeline deals around 2015. However, in practice, the Chinese side uses it as little as possible, in part because of the risk of rouble volatility. 

China has also harboured aspirations to turn its Belt and Road Initiative into a platform for boosting the international use of the renminbi. But it would in practice have to dramatically liberalise its capital controls to gain widespread acceptance as a reserve currency. 

In Europe, frustrations have been growing at the continent’s faltering attempts to boost the euro’s global role alongside the dollar. Top French officials including François Villeroy de Galhau, governor of the Banque de France, have called for greater use of the euro in international transactions in a bid to challenge the dollar’s dominance. European Commission president Jean-Claude Juncker last year said it was an “aberration” that the EU paid for more than 80 per cent of its energy imports in dollars despite only 2 per cent of imports coming from the US. 

Yet the pattern since the financial crisis has if anything been a decline in the euro’s international role. Gita Gopinath, the IMF’s chief economist, points to a reduction in euro invoicing and international financial transactions. “The dollar on the other hand has gained relative to the euro in the last 10 years,” she says. 

Meanwhile progress on a high-profile mechanism backed by major European countries that aims to sustain trade with Iran despite newly imposed US sanctions has been painfully slow.   

Sigal Mandelker, the Treasury official in charge of enforcing sanctions, points out that despite European efforts to keep their businesses invested in Iran following Mr Trump’s withdrawal from the nuclear deal, the companies “got out in droves”. 

“There are people out there who argue we have overused the tool,” says Ms Mandelker, “[but] if you look at our objectives and how we are using the tool, you will see that what we have been doing systemically is to change behaviour, to disrupt the flow of bad money, and to go after entities and individuals who pose national security and illicit finance risk.” 

For all the warnings that the US will undermine its own currency by being so aggressive, there is little sign of any diminished appetite for using the greenback. Kevin Hassett, the outgoing chairman of Mr Trump’s Council of Economic Advisers, says: “If you thought that the Trump policies were imperilling the status of the dollar, then your case would be stronger if you showed that the dollar had collapsed a lot under Trump policies . . . But the move in the dollar has been kind of the opposite of that.” 

Ms Gopinath is sceptical about the chances of near-term change. “You are hearing more noise right now for other currencies to become truly global currencies. But the data do not show a more forceful dynamic in this direction and it would take a lot more than what we’re seeing now for there to be a switch.” 

Indeed, the irony is that if the president ends up triggering global instability via his policies, investors may end up flocking all the more enthusiastically towards dollar assets. That was after all the phenomenon during the financial crisis, when a mortgage meltdown that was made in the US prompted global investors to scamper for the safety of government bonds, and it has been the same story more recently as Mr Trump’s trade wars drove down US bond yields. 

“Anything Trump creates to foment uncertainty and instability will only end up strengthening the dollar,” says Mr Prasad. Over time, other countries will indeed get tired of this and shift away from the dollar as a unit of account and a medium of exchange, he adds, but “in the foreseeable and longer future the dollar’s role as the dominant store of value is unlikely to be challenged.”