Stop digging it deeper!

2nd Edition
My business involves assisting foreign companies with trade and investment in Russia. So I have a more than passing interest in Russia’s international relations. At times, because my office is in the provincial city of Saratov rather than in Moscow, I have perspectives on Russia that do not seem available to journalists and embassy staff based in the major cities.

I’m writing about the attempted assassination of Sergei Skripal and his daughter Julia because the British media seems to have closed far too quickly on a single line of enquiry that is very convenient for the government. In particular, there has been no discussion of Brexit despite important initiatives from the European Union. I’m also surprised that two potential connections to Saratov that have arisen.

Those who have not tracked the recent rise of anti-Putinism in the British media might want to read my Blog on this before reading about the Skripal case. The recent media storm against Putin seems to have bli…

Anti Putinism in the UK media
Russia, and in particular its president does not enjoy good press in the UK. The price is almost universally Anti-Putin. Some of this is simply a hangover relating to the confrontation with the USSR. It should also be noted that London has been a refuge for a number of Russian oligarchs who have reasons to be negative about Putin. At least two of them, Berezovsky and Khordokovsky aspired to be president of Russia. In addition, there are Ukrainian oligarchs who suffered substantial losses because of Russian customs blockades against Ukraine who keep homes in London. This huge concentration of money has been used to pay for journalists, special editions of newspapers giving negative views about Putin, setting up think tanks to provide a steady stream of negative opinion about Putin, giving platforms to academics from the UK and abroad who are critical of Putin and perhaps more direct intrigue, certainly on the part of Berezovsky. Every year, a new hardback…

This analysis is aimed at businesses considering what opportunities are available beyond the EU following Brexit. It uses the gravity model of trade to show that the potential of Russia as a trade partner beyond the EU is second only to the US. It shows that the UK already tends to trade above potential with English speaking countries. It trades well below potential with Russia, Indonesia and Argentina. The shortfall with Russia is such that meeting average performance is worth more than any deal in Asia.
The Gravity Model of Trade (http://www.nber.org/papers/w19285) is one of the more robust models in economics. It is based on the observation that levels of trade between countries depend on the size of the economies and the inverse square of the distance between them. Double the distance between a pair of countries and the potential for trade falls to a quarter. The gravity model is persistent over time as it is includes geography which does not change. Growth rates in GDP and exchang…

The EU is a huge success. It was founded generate peace and it has done so far beyond its original remit. It has also generated increased prosperity.

The EU like Japan is a large net consumer of oil. China's growth sucked oil from the rest of the world. So, during the peak of the customary raw materials cycle from 2007 to 2014 the price more than tripled. Japan and the EU economies staggered to a halt. Advanced states with raw materials (UK, US, Canada, Australia) muddled through or prospered. Real costs rose across the world. Debt, sometimes euphemistically  called a liquidity problem, was exposed. It was mostly private debt in the US. In the EU, it was mostly government debt to private banks. Portugal, Ireland, Italy, Greece and Spain had the largest problems.
In 2011, the Chinese workforce peaked. Most raw materials began to decline immediately. In the oil market, OPEC had some control of prices so it was not until 2014 that the price of oil plummeted.
Unprepared producer states…

There are only two "benefits" from Brexit that might be concrete rather than flag waving vapourware about "sovereignty" without power. One is changing the source of unskilled immigrants from Eastern Europe back to the Commonwealth which will be addressed in another blog. The other benefit might be cheap food.

After two major wars where political survival depended on convoys of food crossing the ocean, British farmers have been heavily subsidised. The Common Agricultural Policy of the EU replaced earlier forms of subsidy and now the average UK subsidy is about the same as the average UK farm's net income (link at bottom). Senior Leavers from the Tories and UKIP have promised to maintain these subsidies (so much for £350m to the NHS anyway).

However, there two other forms of protection for farmers. Tariffs and regulations. Tariffs are far more significant. There are tariffs against imported food to protect EU farmers from low cost foreign products. Although the …

Surely the obvious choice for the UK's international partnerships should be countries of the British Commonwealth. Some are settled by British people with as near identical ties of culture and law as can be imagined. Many others have inherited legal and business practices and the English language from the days of Empire. Commonwealth countries more or less by definition, have more positive than negative attitudes to the UK. Only the French have something similar. The Spanish, Portugese and Dutch have no such thing. The Russian experience to try to create something similar through various measures has had very partial success. The British Empire was largely about trade, not conquest and tribute. Most conflict took place as a struggle for power by local elites when the British were withdrawing. We have fought and died together in the same causes. Until 1968, we had total freedom of movement for Commonwealth citizens. There are ties of shared blood sacrifice between Britain and all …