Always look on the bright side...

As we enter what promises to be a tough autumn, here are eight reasons to be cheerful -- or at least to consider political and economic outcomes that are less bleak than those you may be fearing

With economic warfare squarely under way between Russia and the West, with energy price-shocks all around us and even shortages looming, with extreme weather in the form of droughts and floods the world over adding to shortfalls of food and energy supply, with the November mid-term congressional elections potentially returning the US legislative system to gridlock, oh, and with Mary Elizabeth Truss about to become Britain’s new prime minister, it is easy to find reasons to be gloomy about what lies ahead. And that is without even mentioning China’s massive military intimidation of Taiwan and the escalating war of words over that island democracy between the United States and China. Yet need things really turn out so badly?

Actually, there are some positives lying behind all of those negatives. We don’t just have to follow Eric Idle’s wonderful song in “Life of Brian” that “when you’re chewing on life’s gristle, don’t grumble, give a whistle”. There are strong causes to be hopeful. Here are my eight big ones:

• In the war, Ukraine looks very much like it is gaining the upper hand. After more than six months, Russia has failed to achieve any of its main objectives — either its initial one of full conquest and control, or its fall-back aim of capturing the south and east of Ukraine, or even its more limited one of controlling the whole of the Donbas region. More important, however, both its will and the resources it has to deploy look to be more frail than at first appeared. As Phillips O’Brien, professor of strategic studies at St Andrews university, said to the FT’s Gideon Rachman in this recent 'Rachman Review' podcast, President Putin’s reluctance to order a full mobilisation along with growing evidence that advanced western weapons have allowed Ukrainian forces to deplete Russian supplies and break its lines of supply and manoeuvre, strongly suggest that the course of the war is turning, albeit slowly and not yet definitively, Ukraine’s way. Russia has made only meagre gains in the east and south after many months of trying. Russia’s extension of its economic warfare by shutting off the Nordstream 1 gas pipeline further indicates that it is getting desperate. This fits also with the always careful but convincing arguments given by Sir Lawrence Freedman in his joint Substack with his son, Sam that this is a war of attrition that Ukraine could go on to win.

• For the West, the energy and resulting economic crisis nevertheless promises to be painful over the coming winter. Plenty have speculated that this might turn western publics, and hence political leaders, back towards the so-called “peace camp” that believes negotiations with Putin might provide a way out. But so far there is no sign that support for Ukraine is fading at all in the countries that are its most important military suppliers and supporters: the United States, the UK, Poland, the Baltic States, Sweden, Finland. Some worry that on September 25th Italy will elect a far-right government which has had a past close relationship with President Putin and which may start to baulk at the economic impact of sanctions and the energy shock. The expected new prime minister, Giorgia Meloni, denies this, fiercely. But no matter: the fact is that Italy’s stance on Russia and the war is not very important for it is a minor supplier of military support to Ukraine. In the next period, it is more likely that public concern and new governments will produce higher pressure for a common EU financial support package, as an accompaniment to or adjustment of, the EU Next Generation fund that emerged, eventually, from the pandemic.

• There will be pain. Nonetheless, Western countries are starting this economic and cost-of-living crisis in a stronger position than is often acknowledged. Unemployment is below 4% of the labour force in the US and UK, is below 3% in Germany, and while it is at 6.6% in the euro area as a whole this is a lower level than for much of the post-2008 period. Certainly, public debt is high as a share of GDP in virtually all western countries, and high inflation makes it likely that the cost of borrowing and so of servicing that debt will rise. But for European countries in particular, including the UK, this is an emergency situation, and all have shown during the coronavirus pandemic that they are strong enough financially to cope with an emergency, especially if they combine forces. The headwinds will be strong, but so are the masts and sails of the Good Ship Europe (and Britain’s too).

• Initial policy responses to the energy shock, and to faster inflation in general, have not been of the emergency sort. Governments have sought to buy time, in the hope that the shock would prove temporary. They have also hoped that higher energy prices would helpfully discourage energy use and encourage private investment in renewables. In this regard, Russia’s switching off of the main gas pipeline could prove helpful. It should empower governments to treat this as an emergency and within the European Union should enable talks to begin on a common financial response as well as the common energy plans they have been discussing all year. For if with western military support Ukraine really can gain the upper hand in the war, then this crisis truly could become temporary, as long as by ‘temporary’ governments mean a planning horizon of another six-nine months. Emergency measures can manage a nine-month problem, as we’ve seen during the pandemic.

• The American picture is brightening, too. There are still two months to go, but opinion polls and recent special election results are now suggesting that President Biden’s Democratic Party could hold on to control of the US Senate and might also fare rather better than expected in the House of Representatives. All the information now emerging from the FBI’s seizure of classified documents from Donald Trump’s Florida country club is looking bad, both for the Republican Party in the mid-terms and for Trump’s re-election prospects in 2024.

• If you are British, the most cheerful news of all is that on Tuesday September 6th Boris Johnson will have gone from Number 10, Downing Street. His three years and six weeks in the prime ministership have been chaotic and ineffective throughout, and his deliberate undermining of the rules and conventions governing the conduct of ministers and prime ministers have done real damage to British political institutions. Henry Mance put it beautifully, if gently, in the FT Weekend:

  Making Johnson prime minister was like serving jelly as the main course at a state banquet. And, after the guests have eaten it, revealing that the kitchen breached E. coli guidance.

  The claim by his Tory loyalists that he “got the big calls right” is ludicrous when placed against the facts: his Brexit deal contained a con-trick-cum-time-bomb over Northern Ireland which will cause continued damage to the UK’s relations with its main allies for years to come, and to the stability of Norther Ireland itself; his covid policy was disastrously slow and riven with corrupt, cronyist practices over procurement of emergency medical supplies; his much-vaunted success with early vaccine approvals and preferential supply contracts gave Britain a lead of a mere six weeks or so over its European neighbours, a lead which was anyway then squandered after several months; and he has failed abjectly to get a grip of the energy crisis that has been staring his government in the face for six months now. The one, albeit important, issue on which he has performed well has been the war in Ukraine. Britain’s support, both military and political, for Ukraine has been steadfast, returning the UK to its traditional position as the strongest follower of the US military lead among the NATO members. That important achievement nevertheless has to be placed in the context of Johnson’s past pursuit of party donations from wealthy Russians and his granting of a peerage to the son of a former KGB officer.

• There are plenty of reasons to be worried about what Liz Truss will do, and who will be in her cabinet. Fussing now about the “plans” she put forward during the excruciatingly long Tory leadership campaign is to overlook the point that those plans were shameless bids to get elected by 160,000 Conservative members, not real plans for government. And whatever we turn out to think of her, she will not be Boris Johnson, thank goodness. Moreover the arrival of a new Tory prime minister very likely brings forward the date of the next UK general election from 2024 into 2023, as Prime Minister Truss is pretty likely to want to try to seek her own mandate, especially as the Conservative party is now so divided up into factions, and she will be tempted to do so once the UK has begun to emerge from the coming emergency, which she will probably be hoping will be at about this time next year. On that argument, this Truss government could therefore be in office only for about 12 months. It would be foolish to predict the outcome of that election at this stage, but we should still be cheered by the thought that voters might soon get the chance to have their say after a long period with one party in power.

• Can we be optimistic also about the prospects for war with China? Well, my next article circulated here in a week’s time, for the Mainichi newspaper in Japan, will indeed raise some worries about that. But the argument I will present cuts both ways. China is currently looking weak, not strong. That could make it desperate, but it could also make it impotent. China’s failed zero covid policy has refuted its claims of systemic superiority compared with the West. Its pharmaceutical manufacturers proved highly effective in producing billions of vaccines during the pandemic, but their technology was shown to be far inferior to that of western firms — and the effects are being seen in the poor levels of acquired immunity being seen all around the country, and the fact interest in Chinese vaccines abroad faded once their efficacy became known.

  Furthermore China, for no fault of its own, has suffered badly this summer from heatwaves and drought. This, along with zero covid, is worsening the economic slowdown that had already been begun by a widespread slump in the property and construction sectors that the economy had come overly dependent on. The professed aim of changing economic course to become a technological leader has stumbled badly, for China’s government has long been doing its best to constrain or even hobble its big tech firms for fear of their political power, not encourage them. Finally, in the medium and long term, China’s demography is now swinging against it, producing an ageing society and shrinking population that by mid-century will be much older than the US and will be comparable to Japan. All this means that China is not the remorseless, powerful juggernaut it is often cracked up to be, and in fact is going through its own period of troubles. Now, this could persuade its leaders that, after all, time is not on China’s side so they had better take their chances over Taiwan sooner rather than later. On the other hand, it could persuade them that their country is, in truth, too vulnerable to take the huge risk of starting a war.

As Eric Idle said, let’s look on the bright side. It might even be the right side.