The Cypriots are the authors of their own misfortune, having turned their banking system into a rackety offshore haven for Russian loot and lent most of the proceeds to Greece. But it was madness on the part of bailout negotiators to shake confidence in banks across the eurozone by trying to impose a levy on deposits held by even the smallest Cypriot savers, in what was presumably an attempt to cream off a layer of ill-gotten foreign cash. And even if the proposal has been radically watered down by the end of the week, we now know the European powers-that-be are prepared to pull this device out of their toolbox if the subject government is too weak to resist. That threatens to undo much of the good work of European Central Bank president Mario Draghi, whose declaration last July that he would do ‘whatever it takes to preserve the euro’ and maintain confidence in its banks seemed to mark a turning point in the eurozone crisis.
The irony is that arguably many of us have already suffered just such a levy on our savings, having endured four years of below-inflation official interest rates underpinned by quantitative easing. That is the price the prudent have paid, here and elsewhere, for the follies of borrowers, traders, real estate developers and profligate governments — and one way or another, we have certainly surrendered more that the 9.9 per cent top-rate levy proposed in Cyprus. But to impose such a haircut upfront on every citizen looks disastrously ill-considered.
Surely better to let the island’s banks go bust while protecting small depositors, then embark on an Icelandic-style reconstruction — which as Michael Lewis recorded so entertainingly in Boomerang, included putting sensible women into many senior positions to repair damage wrought by their risk-happy fishermen-turned-financier menfolk. I suspect the psychology of the Cypriot male has been much the same — and hope a trawler-load of stern Icelandic ladies is even now being recruited to sail from Reykjavik to Limassol.
Budgets come and Chancellors go, but if we run out of energy in the next decade we’ll all be in that involuntary post-coital position so pithily phrased by Whitehall chief Sir Richard Mottram in the midst of a transport department crisis long ago. Electrified trains won’t be working either, so perhaps he’ll come back and say it again.
Only one thing can save us from shivering in the dark — the fate to which we’re condemned by ministerial eagerness to obey Brussels by closing carbon power plants. That one thing is not wind power, which is almost as discredited as its leading advocate, Prisoner Huhne. Nor is it shale gas, which no one expects to be the game-changer here that it is in the US. Nor is it our friendship with Vladimir Putin, who holds imperial sway over the price of imported gas. No, the one thing that will avert a return to reading by candlelight is nuclear power. In that sense, the most important announcement this week was the granting of planning permission for a new nuclear station at Hinkley Point in Somerset. That doesn’t clinch the deal, however: the French operator EDF is still haggling over a guaranteed ‘strike price’ for power output to make the sums add up.
Besides its future energy contribution, Hinkley’s construction will be a £14 billion growth-booster. It would be hugely irresponsible of Huhne’s ministerial successor, Ed Davey, not to agree terms with EDF for fear that the strike price looks embarrassing and the green lobby throws tantrums. Meanwhile, remind yourself of the case for nuclear versus ‘renewables’ by searching online for the writings of Andrew Kenny, a South African engineer and occasional Spectator contributor. ‘Do you want to work with nature or against it?’ Andrew asks. ‘The immense advantages of nuclear power come from nature, not from man. The nuclear force is by far the strongest force in nature, so that a very small amount of material can provide a very large amount of energy.’ That’s what we’ll need to keep the lights on.
The curse of Qatar?
A Qatari takeover bid for Marks & Spencer, talk of which sent the retailer’s shares soaring on Monday, would demonstrate an enlightened pragmatism on the part of the gentlemen from the Gulf — who would be buying a business built by ardent Zionists of the Sieff and Marks dynasty. In these difficult times we draw reassurance from the continuing willingness of foreign wealth, sovereign and private, to invest broadly in British companies and real estate — but we might prefer the world’s super-rich to ease our fiscal pressures in a simpler way by amassing holdings of gilt-edged stocks. And we might also observe that in the Qataris’ case, investments rarely seem to flourish under their desert sunshade.
Picture Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, prime minister of Qatar and controller of its sovereign wealth fund, sitting lonesome in his penthouse at One Hyde Park and balefully surveying his assets across the London skyline. There’s Harrods just down the road, for which he probably feels he overpaid when he gave Mohamed al Fayed £1.5 billion in 2010. To the east is the Shard, the pointy skyscraper at London Bridge of which he owns 80 per cent; still ‘in talks’ to secure its first office tenants. Further east is the Barclays tower at Canary Wharf, where investigators are crawling over the terms of the controversial Qatari capital injection in 2008. Due south is the desolate Chelsea Barracks site, bought for almost £1 billion in 2007 but with its ‘Gucci ghetto’ development scheme of super-
luxury homes still ‘under review’.
It would be overegging this story to talk of a curse of Qatar, but that’s not an encouraging record. M&S is a potential takeover target — there will surely be rival bidders from the private-equity world — because its performance has been poor and investors are losing faith: London’s leading retail analyst, Nick Bubb, calls it a ‘declining brand’. It’s hard to see the Sheikh’s fat chequebook as a harbinger of revival.