Artificial Intelligence (AI) has emerged as a prominent topic of discussion in various spheres, including board rooms, government departments, and regulatory offices.
Yesterday, Hawthorn organised a private breakfast panel, moderated by Emily Sheffield, that brought together leaders from the media and creative industries, government officials, and regulators. The objective of the event was to explore effective strategies for harnessing the advantages of AI while addressing potential risks.
We’re particularly grateful to our esteemed panellists who contributed their valuable insights: Stephan Pretorius, Global Chief Technology Officer for WPP plc; Sophie Jones, Chief Executive Officer at British Phonographic Industry (BPI); and Baroness Tina Stowell, Chair of the Lords Communications & Digital Committee.
Dollars and sense: internal activism ‘Green’ investment funds and public pressure are forcing big oil firms to change their behaviours, but immediate material change will be limited, while we await and expect further regulatory changes.
This year’s AGM season provide tumultuous for the world’s largest publicly-listed energy firms. Activist ‘green’ hedge funds have used their positions to compel major players to progress on their decarbonisation credentials. Such firms have always been vulnerable to criticisms from climate activists and environmental NGOs.
But the rising salience as climate change as a political issue, coupled with the trend toward a greater focus on companies’ social and environmental credentials, has lent credibility to climate activists operating in the financial world.
Hedge funds such as Engine No. 1 have led the charge by forcing board appointments and environmentally-conscious resolutions at some of the biggest oil firms, including Chevron and Exxon Mobil. These efforts are positioned as moves to maximise shareholder returns and to ensure that energy firms are well-equipped to weather global transitions to renewables. This is a trend we will doubtless see continue as climate change’s impacts are further felt across the world and activists emulate the like of Engine No. 1.
We are also seeing developments of the regulatory environment around listed firms’ environmental reporting requirements in both the UK and the US. For example, the next few years will see the progress along the FCA’s roadmap concerning firms’ obligations around climate and ESG reporting. The roadmap includes reporting requirements for listed entities aimed at preventing greenwashing. From this accounting year, it is already the case that large publicly-listed firms should report their approach to measuring and managing climate-related impacts and risks, and the FCA looks committed to expanding the set of firms affected.
Across the Atlantic, the SEC appears similarly committed to mandating that public companies report climate risks around their behaviours. Although it is already the case the case that oil and gas firms must report on their carbon emissions in the US, this regulatory shift is symptomatic of greater desire by regulators and governments to force companies to disclose the climate impact of their activity. As a sector long negatively associated with carbon emissions, we expect more stringent regulatory mandates to be placed on oil and gas firms in the coming years.
Major economies’ efforts to reach net zero carbon emissions are proving politically contentious across the world. Mandating more open climate reporting will help provide governments with greater political cover to make necessary policy changes. The tightening of ESG reporting requirements, however, can shift the onus for action to a fight between business and government to one within the boardroom.
Though oil majors have been exploring how they can convert their existing facilities to expand their renewable energy production capacity, ‘green’ policies by firms will only go so far. Increased regulation, both in the form of reporting requirements and of minimum climate standards necessary for listing, will likely be a permanent fixture. Governments and activists will both look to listing requirements to bring the battle to the boardroom.
“We welcome the new directors to the board and look forward to working with them—constructively and collectively on behalf of all shareholders.”
Exxon Mobil spokesperson, in response to election of Engine No. 1’s nominees Gregory Goff and Kaisa Hietala.
Power play: Afghanistan’s last bastion The stunning fall of the Afghan government over the last week has sent shockwaves rippling across Western governments, with 20 years of military, human, and financial capital appearing to have been for nought in the fight for control of the country.
US President Joe Biden has made clear that he sees no more direct role for US forces in the country despite acknowledging the surprising speed and scale of the Afghan government’s defeat. And while UK Defence Secretary Ben Wallace too has bemoaned the state of affairs in the country, the reality is that there is no political will in Britain. However, one pocket of resistance to the Taliban remains – Afghanistan’s Panjshir Valley.
Panjshir’s most famous son, Ahmad Massoud, announced on 16 August that he planned to lead a new anti-Taliban movement from the region, the sole territory that has not fallen to Taliban control over the last week. The Panjshir has welcomed fleeing minorities from other parts of the country, special forces units abandoned by their military leaders, and vice president Amrullah Salleh, one of the only senior leaders from the Western-backed government not to flee the country. Protected by significant peaks and a loyal population, it is not the first time that resistance to the Taliban has been left to the Panjshir Valley.
The region famously never fell to the Taliban in the pre-US invasion civil war. It became the core of the ‘Northern Alliance’ against the Taliban that was led by Ahmad Massoud’s father, Ahmad Shah Massoud, better known as ‘the Lion of Panjshir’.
Ahmad Shah Massoud was assassinated two days before the 9/11 attacks, by al-Qaeda operatives posing as Western journalists. The killing was ordered by Osama bin Laden as assistance for his Taliban hosts and to shore up the al-Qaeda-Taliban alliance before the terrorist attacks that did so much to change Afghan and world history. That his son is now left to fight the Taliban without direct Western assistance – effectively the same situation which Ahmad Shah Massoud found himself in, having pleaded for support at the European Parliament just months before his assassination – demonstrates how little impact Western intervention has had on Afghanistan’s underlying divisions.
The younger Massoud notably finds himself without the same broad alliance among Tajiks and Uzbeks that his father was able to rely on. Even before the government’s collapse, the Taliban made inroads in northern Afghanistan far beyond what it ever achieved before the US-led invasion. Meanwhile the Taliban has made clear it seeks international recognition, and even made noise about adjusting its medieval practices ever so slightly to such support. However, it ultimately remains the reprehensible terror group that it has always been.
If there is to be any international support for an anti-Taliban effort now or in the future, Ahmad Massoud and the Panjshir Valley may prove the sole conduit for hope that Afghanistan can avoid another decade of darkness under Taliban rule.
“This situation over the short and long-run, even in case of total control by the Taliban, will not be to anyone’s interest. It will not result in stability, peace and prosperity in the region. The people of Afghanistan will not accept such a repressive regime. Regional countries will never feel secure and safe.”
Ahmad Shah Massoud, ‘Letter to the American People’ (1998)
Policy review: hydrogen hopes The UK government launched its first its plans for a ‘world-leading hydrogen economy’ on 17 August, declaring its intent to secure more than 9,000 jobs in the sector and unlock £4 billion in investment by 2030. Hydrogen has long been linked with the green agenda, as the gas produces no carbon emissions when burned.
However, hydrogen comes in various varieties – and the debate over how to support the sector’s development largely breaks down into two camps over these: advocates of ‘green hydrogen’ derived from electrolysis and ‘blue hydrogen’ derived from natural gas but in which the carbon dioxide in this process is captured and securely stored or disposed.
The government’s hydrogen plan declares its preparation to offer subsidies in support of hydrogen production but crucially demurs on whether it will subsidise green or blue hydrogen, or both, only “committing to providing further detail in 2022 on the government’s production strategy”. A public consultation on “a preferred hydrogen business model” is now underway.
Advocates of both forms of hydrogen production will be lobbying the government in line with their preference, with ‘blue’ advocates keen to demonstrate its lower cost and ‘green’ supporters advocating for its potential as a carbon-free energy source, with no long term storage costs even if presently it is significantly more expensive.
The cost difference to the UK could be significant, as the government’s strategy lays out that it plans to offer effective ‘feed in tariffs’ in which hydrogen producers receive a payment to bridge the difference between the cost of production and the price at which they sell it on the market. It does caveat that this market price cannot be lower than the price of natural gas, but the price differential between gas and ‘green’ hydrogen is significantly wider at present than between gas and ‘blue’ hydrogen.
Blue hydrogen’s advocates, however, have an additional tool at their disposal in addition to the cost basis, which will be subject to advancing economies of scale in electrolysis technology (though some have already voiced concerns about reliance on Chinese technology in this space). Namely that blue hydrogen offers a route to extending the lifeline of the North Sea’s hydrocarbons industry – something already endorsed by the UK’s oil and gas industry.
With the public purse under post-pandemic pressure and the Conservative’s levelling up agenda, subsidies for blue hydrogen may well prove a potential panacea for a number of areas of concern, but selling their potential will require a sustained and joined up effort from both legacy industry and new hydrogen players.
“I believe that water will one day be employed as fuel, that hydrogen and oxygen will constitute, used singly or together, will furnish an inexhaustible source of heat and light” Jules Verne
Policy preview: crypto, leverage and regulation “Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve” Bitcoin founder Satoshi Nakomoto
The age of cryptocurrencies appears to be well and truly upon us: 2021 has seen crypto-exchange Coinbase enter public markets at a market cap of roughly US$85 billion, in line with the market cap of HSBC; the cryptocurrency Ethereum which is positioned as building bloc for a host of digital applications is up some 450% year-to-date as of 12 May, and even the Bank of England Governor, Andrew Bailey, has been forced to discuss their value in a recent press conference. Bailey warned that cryptocurrencies “have no intrinsic value” and said punters should “buy them only if you’re prepared to lose all your money”.
Crypto-evangelists would surely disagree, but Bailey’s comments raise an important consideration for the market that must be considered – who assumes its liquidity risk – as crypto-currencies increasingly enter the main stream. Most crypto-currencies – and certainly the most prominent pair, Ethereum and Bitcoin – are marketed as decentralised and outside of financial regulators’ control . Many supporters argue that central bank officials like Bailey are so critical of cryptocurrencies precisely because of this, and passionately believe that the fact cryptocurrencies exist outside the traditional monetary system is a feature, not a bug.
While it is outside the scope of this column to argue the merits and criticisms of the arguments for cryptocurrencies, their recent stratospheric growth means that it behooves investors, regulators, and market participants to consider the risks of a cryptocurrency collapse. Bitcoin notched a market capitalisation of some US$1.12 trillion this April, up from $160 billion last April, growth of 700% – if it experiences a similar spurt of growth at any stage, it would reach a market cap of nearly US$8 trillion – larger than all of the US stimulus spending since the onset of the COVID-19 pandemic by a considerable margin – and nearly 10 times the US’ 2008 bailout.
Cryptocurrencies’ volatility is well known; and the amount of liquidity available to even the least practiced of traders has received increasing attention in recent months, particularly in light of the market activity around GameStop, which even resulted in a Congressional hearing in mid-February. Whether or not cryptocurrencies are truly independent of other monetary regulation, at their current levels of growth – and given the traditional financial institutions involved in enabling the leverage supporting this – they are becoming systemic.
Regulators may not like crypto-currencies and crypto-enthusiasts may not like regulators, but if they continue to ignore one another, the level of systemic risk will only continue to grow. If it does, and central bankers like Bailey are ultimately proven correct – or even if there is a market crash again as witnessed in 2018 – the pain will be felt far beyond the crypto corner of the financial markets.
Dollars and sense: Paris’ role in China’s lending “Paris isn’t a city, it’s a world” King Francis I
At the end of March, the College of William & Mary’s AidData research lab, the Kiel Institute for World Economy and the Peterson Institute for International Economics published what is arguably the most extensive examination of Chinse loan contracts with foreign governments around the world, simply titled “How China Lends”. Beijing’s use of credit to drive investment into markets ranging from the frontiers of Zambia to central European infrastructure to Chilean mines has garnered significant attention in recent years, particularly after the formal launch of its ‘Belt and Road’ policy in 2017, though Beijing has itself largely ceased to use the phrase. This has increasingly led to accusations of ‘debt trap diplomacy’ in Western coverage, amplified by concerns over Beijing’s own holdings of Western debt.
Yet Beijing is too often described as an emerging player when the reality is that it has now been the key global creditor for over a decade. Already by 2010, China’s official government lending was well in excess of the World Bank’s lending, and Chinese lenders demonstrated a willingness to lend to frontier markets well before Western investors got comfortable with them. While this has led to a number of headaches for Beijing, particularly in Angola and Venezuela, it is only in the aftermath of COVID-19 that China’s lending policies have the potential to upend international capital systems.
Among the most striking revelation in the AidData report is the fact that China’s loans to many emerging markets include clauses requiring them to refuse requests to take the loans to the Paris Club, an informal international institution that includes every major Western government and which aims to facilitate sovereign debt restructurings by working together to agree terms. Its key stipulation is that all government loans be restructured on the same terms.
The clause in Chinese debt contracts therefore runs counter to the Paris Club’s attempt to address the collective action problem of sovereign debt. Beijing has argued that many of these loans are not subject to the same terms because they are commercial, not intergovernmental, in nature – a position opposed both by Western commercial and intergovernmental creditors.
For all the damage wrought by the US-China trade wars in recent years, a major spat between China and the West over how to prioritise emerging markets’ loans in the aftermath of the pandemic would risk even more significant economic and geopolitical disruption.
Power play: a red star rising?
“You don’t have to live the blues to play the blues”
The Labour Party has not been on the receiving end of many uplifting headlines in the aftermath of the UK’s May local elections, a familiar turn of events for a party that has been out of Westminster government since 2010. Silver linings have been found in some local races – for example in the Cambridge and Peterborough mayoralties – which will give some hope to those arguing that Labour must expand into the suburbs and commuter belt if it is to halt the impact of Conservative gains in northern England’s former Labour heartlands.
Labour’s other relative bright spot was the re-election of London mayor Sadiq Khan, though his share of first-preference votes fell slightly from 44.2% to 40.0%, far more votes first-round votes were lost to the left-leaning Greens than the Conservative candidate Shaun Bailey. Khan had a turbulent campaign and a series of senior aides resigned in the aftermath of the vote, with Khan set to bring in a new cadre of advisors that could position him as a future Labour leader, particularly if incumbent Keir Starmer’s authority continues to be questioned.
Khan’s first hire was Richard Watts, who has served as leader of the Islington Council since 2014. The council has been (in)famous in the past for its far-left leanings – famously flying a red flag in the 1980s and even through the mid-1990s – and he appears to have his pulse on the matter of voter-relevant issues: he lead a 2014 paper calling for free school meals for students to be expanded long before famous international footballer Marcus Rashford made the issue a prominent one amid the COVID-19 pandemic last year. Watts’ appointment should be seen as an effort to put a London jobs policy at the forefront of the COVID-19 pandemic recovery.
While hardly a household name, Watts is perhaps best known within political circles for his instrumental role in formulating the “Workforce Focus” paper on upskilling residents published by the Local Government Association. His new appointment, as Khan’s deputy chief of staff, will very much be in this vein, as he will chair the newly-announced ‘London Recovery Task Force’.
Watts’ profile may be unlikely to give him a national profile, but the fate of his policies may well be at the core of Labour’s electoral success in the coming years. If his agenda succeeds in putting London at the fore of the economic recovery – a particularly challenging brief given expectations the ‘work from home’ trend will continue beyond the pandemic – it might just help to convince increasingly socially-liberal voters in the country’s suburbs and commuter belts to put their faith in Labour’s economic policies as well.
Policy preview: Washington’s weapons in tax treaty fight “If the U.S. came down on tax havens in the same way they come down on countries that trade with Iran and Cuba, we’d have no tax havens in the world.” Professor Ha-Joon Chang, University of Cambridge.
US Treasury Secretary Janet Yellen is looking to work with finance ministers from around the world to agree on a global minimum tax rate for multinational corporations. This quiet effort has only just begun, but if successful it could prove among the most significant foreign policy and regulatory moves since the end of the Cold War.
This move is not without its challenges, and comes on the back of a round of recent competition by states to lower their corporate tax rates, which surprisingly saw France cut such levies under President Emmanuel Macron. Yet Britain has announced plans to buck this trend. The European Union has sought to restrict its own internal tax havens, and ensuring that technological multinationals pay their ‘fair share’ is a policy popular with all flavours of government from Canberra to Ottawa.
Perhaps the most underappreciated feature of the discussion thus far, however, is the carrots that the US can offer to other countries for their support for such an effort. The potential sticks – sanctions, tariffs and regulatory restrictions – are far better known, though at least until recently Washington has been hesitant to use these tools to target those it accuses of violating international business norms. It is unlikely that the Biden Administration will use such threats at this stage, though the precedent set by Trump’s actions on China means it cannot be ruled out that Washington will eventually use these tools for such purposes.
The key carrot also results from the US’ central role in international trade and financial markets. More significantly, Washington has already made ample, but quiet, use of the carrot over the last year. Specifically, the US Federal Reserve has offered ‘swap lines’ to key allies since last April, initially an effort to mitigate against the risk that the COVID-19 pandemic would cause a global debt crisis.
Historically, only very few countries – such as the UK – had access to such swap lines and they were only used to respond to the 2008 financial crisis. Today South Korea, Mexico, Singapore, and Brazil are among the biggest beneficiaries. If the US were to withdraw these lines, which would essentially mean that the Fed would treat local currency state debts as fungible with US debts, it would risk prompting a debt crisis. As a former Fed chair herself, Yellen is keenly aware of this.
Expect the US to offer making such swap lines permanent, in exchange for a global tax treaty.
Dollars and sense: Tobin tax’s latest turn “This idea (of a financial transaction tax) has been around for a long time…I think frankly the experiences are mixed”. Former US Treasury Secretary Timothy Geithner, 2009
Discussions of so-called Tobin taxes once dominated considerations of how states should respond to the Global Financial Crisis and Eurozone Crisis. A few years later, they again turned heads in response to the rise of high-frequency traders, which entered the mainstream with Michael Lewis’ 2014 book Flash Boys. The Tobin tax is also known as a financial transactions tax (FTT) and is essentially a levy charged on a securities trade, either a fixed charge or as a percent of the value of the security. The debate appears to be returning again.
Although France did enact such a tax in 2012 – charging 0.3% of the value of certain stock trades, and some high-frequency trades at the lower 0.01% rate – Europe has not followed suit, with only Finland instituting a similar tax. The United States continued to oppose such a policy as well, under both the Obama and Trump Administrations.
However, the Tobin tax has recently received some attention once again, due to the high-profile Game Stop market madness. This saw a small US video games’ retailer’s stock become among the most volatile financial assets in recent months, driven by day-trading users on increasingly popular share trading applications and platforms. These in turn are dependent on selling their order flow to high-frequency traders, who some blamed for causing massive losses for small retail investors when trading in Game Stop shares was first suspended in late January.
In February, the Chair of the Financial Services Committee, Maxine Waters (D-CA), said she was willing to consider such a move. The Congressional Budget Office’s prediction that a 0.1% securities transactions tax could raise as much as $777 billion over 10 years has helped it garner further support. House Democrats are now expected to propose exactly such a tax.
However, such a proposal has little-to-no-chance of advancing in the Senate. The Biden Administration is unlikely to spend political capital on such proposals. Coverage of the tax will only grow through the rest of this year as budget debates and structural economic reforms dominate in Washington. But as with previous proposals, this game too will soon peter out and stop.
Power play: Madrid’s Diaz Ayuso
“It bothers me enormously to lose, I can’t stand it. And I’ve spent many years, with some friends, devoting almost all of our political activity to thinking about how we can win”
Pablo Iglesias, Head of Podemos
Isabel Diaz Ayuso was little heralded when she assumed the presidency of the community of Madrid, the governorship of the greater capital region, in August 2019. She had to hobble together a coalition between her centre-right Popular Party (PP), and the then-rising centrist Ciudadanos faction, as well as the nationalist Vox party. In the election held that May, she led PP to win just 30 of 132 seats in the Chamber, finishing behind the Socialist Party (PSOE), and with Ciudadanos securing 26 seats. The result was the PP’s worst performance in Madrid’s regional elections since the fall of the Franco dictatorship.
A little over 18 months later, Diaz Ayuso has called snap elections that will now be held on 4 May. Nearly 35% of voters plan on backing her PP in the vote, up from 22.23% in 2019. She said she called the vote to prevent Ciudadanos from switching to an alliance with the PSOE. Meanwhile Ciudadanos, which won 19.46% last time around, is polling on the verge of falling below the 5% electoral threshold.
Diaz Ayuso’s likely success tells the story not just of her masterful management of Madrid’s politics, but also of her prominent public opposition to the national minority government of PSOE leader Prime Minister Pedro Sanchez. Sanchez ousted the PP government in 2018 in a series of parliamentary no-confidence votes and won the most votes in the two general elections held in 2019. However, the PP has never been able to form a majority coalition and remains dependent on left-leaning Catalan independence parties for support.
With pro-independence parties winning a majority of votes in Catalonia’s 11 February elections this year, but chafing at the PSOE’s first-place finish, it is more-likely-than-not that that another election will have to be called before December 2023. Pablo Casado, PP’s national leader, has failed to capitalise on Sanchez’s troubles, particularly his regular spats with his leftist coalition ally, Deputy Prime Minister Pablo Iglesias of the Podemos party.
Iglesias announced this week he will step down to lead Podemos in the Madrid elections, vowing to challenge Diaz Ayuso. He may be able to lift Podemos above the 5% threshold it appears at risk of falling below, but it will be Diaz Ayuso who uses the election as a platform to raise her national profile. She may well lead the PP ticket by the time the next general election is called.
Policy preview: net neutrality and the internet regulation fight Perhaps the greatest US regulatory battle of the last decade – even more significant than the political fights around emissions targets or banking regulations – has been the fight over so-called ‘net neutrality.’ The term refers to the principle that internet service providers (ISPs such as AT&T and Comcast) treat all data fairly and do not throttle or accelerate speed for certain upstream or downstream actions. President Joe Biden pledged to restore the policy, but the path will not be as clear as he hopes. Net neutrality falls under the provisions of the Federal Communications Commission (FCC) – which also oversees the implementation of other increasingly controversial regulations such as the Section 230 rules on whether social media companies bear responsibility for the content they share. The fight over the FCC and net neutrality has only begun.
The Obama administration’s FCC put net neutrality at the core of its tech agenda. Proponents have credited it with enabling the growth of the tech giants Facebook, Amazon, Netflix and Google, collectively known, alongside Apple, as FAANG. Republicans opposed the policy as limiting market options and raising costs for consumers, and Trump’s appointee to head the FCC, Ajit Pai, moved to unwind net neutrality from the outset of the Trump administration. Pai surprisingly announced last November that he would resign at the end of Trump’s term. He duly did so and Biden appointed Pai’s fiercest critic, Jessica Rosenworcel, as acting chair.
The FCC is overseen by five commissioners. Following Pai’s resignation, the body is evenly divided, with two Republicans and two Democrats, including Rosenworcel, with a drawn-out appointment fight all-but-certain over the fifth. Biden’s supporters, and allies in the tech sector, have already called for the resumption of net neutrality. ISPs have largely opposed it. But issues around Section 230 and internet regulation more broadly have come to the fore of the political debate in light of ex-president Donald Trump’s criticism of social media companies, the 6 January attempt by to storm Congress, and the role of tech platforms in the election and in spreading misinformation.
The Republican party can use the debate around FCC nominations to wrest control over the narrative of these issues, at least on their side of the aisle, from Trump himself. The narrow Democratic control of the Senate enables them even to hope for political victory on the appointments and to stymie Democratic attempts to shrine net neutrality into law. The battle over internet regulation has only just begun.
Dollars and sense: a tin coup On 1 February, global tin prices surged to a new high, reaching levels not seen since early 2014. Tin has surged on the back of the global commodities boom witnessed over the last half-year, with the COVID-19 pandemic proving little challenge to metals’ best performance in years. Prices in numerous metals have already topped market expectations for the year, though there are concerns that headwinds will emerge if Beijing dials down spending later this year – a rather widely-held assumption.
In particular, there is the potential for major further volatility in tin markets. China is the world’s largest refiner as well as the largest miner of tin ore. If China does rebalance expenditures, the commodity may be particularly affected by declining demand. China’s 2019 shift to emphasize production of higher-value goods and the trade war helped see Indonesia’s PT Timah replace China’s Yunnan Tin as the world’s largest refined tin producer.
But while Beijing is the driving force of global tin production, it is only one of the Asian countries with sizable stores of tin ore, with Indonesia, Malaysia and Myanmar also major mining hubs. Data on tin production in Myanmar is particularly difficult to pin down, given the fact that many of the country’s largest mines are in territory along the Chinese border under the effective control of local militaries who frequently clash with the Myanmar military. Nevertheless, the US Geological Survey estimates it to be the third largest producer of tin ore, responsible for just over 14% of global production.
The 1 February coup in Myanmar threatens to recast the domestic environment in the country. The Western response is likely to include sanctions and a push away from businesses linked to the military, with Myanmar moving closer to China – which holds no qualms over the anti-democratic nature of the coup. Beijing could pressure the forces along its border back into talks with the Burmese military, should it so desire, including by using tin sales as leverage. In the early days it appears as if the Burmese military has already consolidated power but this is by no means guaranteed. Aung Sang Suu Kyi and the country’s democratic forces have already held some degree power for five years, and they will be loathe to give it up entirely – a statement attributed to Suu Kyi leaked in the aftermath of the coup called on the people to defend their nascent democracy.
While 2021 is already being seen by many as a boon year for commodities across the world, events in Myanmar risk superseding global market dynamics when it comes to tin prices.
Power play: ambassadorial ambitions The announcement of Sir George Hollingbery as the incoming ambassador to Cuba has raised eyebrows, least of all because while the move was announced on 22 January, he will only take up the post in 2022. The move is even more of radical departure from standard practice at the Foreign, Commonwealth and Development Office (FCDO) in that Hollingbery is not a career diplomat, but rather a former Conservative MP, having represented the Meon Valley from 2010 until he stood down ahead of the 2019 general election. His appointment has set aflutter rumours about plans to change the nature of the UK’s diplomatic core.
The move was criticised by the civil servants’ union, the FCA, and in response the FCDO pointed out that Hollingbery is my no means the first such appointment. Indeed, many politicians swapped roles as ambassadors in the 19th century, even if such appointments have been relatively uncommon in the United Kingdom over the last seventy years.
While the diplomatic core and civil service are resistant to such moves, there is evidence that political appointments can be effective. This has particularly been the case with Her Majesty’s Ambassador in Washington, D.C., where political appointees have been relatively common, from ex-Labour MP John Freeman, later an editor of the New Statesman before being named ambassador, to Peter Jay, the son-in-law of then-prime minister James Callaghan. Both were perceived to have managed.
Another recent political appointment has been received with aplomb, that of Edward Llewellyn, named as Her Majesty’s Ambassador to France in 2016. He too came from outside the diplomatic core, having held a number of political roles including Chief of Staff to David Cameron. Hollingbery was in government under both Cameron and his successor, Theresa May, for whom he served as Parliamentary Private Secretary. While there has been significant criticism domestically and abroad of the US practice of appointing political (donor) ambassadors, these appointments are very much not in the same light.
It is unlikely that the appointment of political ambassadors will become de rigueur. But there is an argument to be made that delicate relationships can at times best be handled by those who have the ear of decision makers in their own capital, to whom their competence is known. We may just see a handful more appointments that put this thesis to the test.