Why Assange lost

Explaining the extradition decision.

On 24 February 2011, the City of Westminster Magistrates' Court ordered the extradition of Julian Assange to Sweden under a European Arrest Warrant.

This extradition order does not necessarily mean, of course, that he will be extradited, still less that he will be charged, tried, or convicted. Assange may win an appeal of the extradition order, or Sweden may decide either not to continue or to interview him while he remains in England. However, unless some such external event intervenes, Assange will be shortly extradited to Sweden to be questioned about an allegation of rape, two allegations of sexual molestation, and an allegation of unlawful coercion.

There can be no doubt that these allegations are serious: far more serious than they have been represented by many internet commentators. The EAW for the arrest of Assange sets out the allegations:

Unlawful coercion

On 13-14 August 2010, in home of the injured party [A] in Stockholm, Assange, by using violence, forced the injured party to endure his restricting her freedom of movement. The violence consisted in a firm hold of the injured party's arms and a forceful spreading of her legs while lying on top of her and with his body weight preventing her from moving or shifting.

Sexual molestation (1)

On 13-14 August 2010, in home of the injured party [A] in Stockholm, Assange deliberately molested the injured party by acting in a manner designed to violate her sexual integrity. Assange, who was aware that it was the expressed wish of the injured party and a prerequisite of sexual intercourse that a condom be used, consummated sexual intercourse with her without her knowledge.

Sexual molestation (2)

On 18 August 2010 or on any of the days before or after that date, in the home of the injured party [A] in Stockholm, Assange deliberately molested the injured party by acting in a manner designed to violate her sexual integrity; that is, lying next to her and pressing his naked, erect penis to her body.

Rape

On 17 August 2010, in the home of the injured party [B], Assange deliberately consummated sexual intercourse with her by improperly exploiting that she, due to sleep, was in a helpless state. It is an aggravating circumstance that Assange, who was aware that it was the expressed wish of the injured party and a prerequisite of sexual intercourse that a condom be used, still consummated unprotected sexual intercourse with her. The sexual act was designed to violate the injured party's integrity.

It is crucial to note that these are allegations. There have been no charges. There certainly has been no documentary or oral evidence published to support these allegations, and nor have these allegations been tested by cross-examination. Assange must be presumed innocent until proven guilty. However, the presumption of innocence does not mean such serious allegations should never be answered.

The main reason for the court ordering extradition was simply that a valid European Arrest Warrant (EAW) had been issued. If a valid EAW is correctly served on the correct person then, unless it can be shown that it is disproportionate, an abuse of process, or otherwise a violation of the defendant's human rights, a United Kingdom court is bound to order extradition, just as a Swedish court would be bound to order the extradition of a person requested by the UK government under an EAW.

It was contended by Assange's UK lawyers that it was not a valid EAW, for it had not been issued by a competent authority. This was always going to be a difficult submission, as the EAW had already been certified by the United Kingdom's Serious Organised Crime Agency (SOCA). But even if there was still doubt on this, Assange's own expert witnesses from Sweden confirmed that it had been validly issued. Once this fundamental question had been decided then it would have been exceptional had the EAW been refused on any other grounds.

It was submitted that the EAW had been issued too early in the criminal process: that it should not be used to aid an investigation but rather it should only be in respect of a formal charge. This was a stronger point for the Assange team to raise, and offers perhaps his best hope of a successful appeal. However, the court had the evidence of the Swedish prosecutor that Assange was not being sought to assist with inquiries but for the purpose of conducting criminal proceedings. The EAW was issued because "there was substantial and probable cause to accuse Julian Assange of the offences". In response to this, Assange relied on the evidence of two Swedish legal experts. However, their evidence on this and other key points was to be fatally undermined by Assange's own Swedish lawyer, Bjorn Hurtig.

In Hurtig's "proof" (or prepared) witness statement, he had said "astonishingly [the prosecutor] made no effort to interview [Assange] on the rape charge to get his side of the story" whilst Assange was still in Sweden. This was a highly important statement, but it was completely untrue. Indeed, in the sort of criticism rarely made by an English judge, it was held that Hurtig had deliberately sought to mislead the court on this point. The effect of this was catastrophic for the Assange case: not only did it discredit Hurtig, but the two key legal experts relied upon by Assange had wrongly based their expert evidence that the EAW should not have been issued on Hurtig's false claim.

By seeking to attack the credibility of the Swedish prosecutor, it appeared that Hurtig had provided evidence which, if retracted or disproved, had the effect of undermining any serious submission that the prosecutor had acted disproportionately in seeking Assange's extradition under an EAW. As District Judge Riddle concluded, it would have been a reasonable assumption for the prosecutor to make that Assange was deliberately avoiding interrogation.

Once the EAW was held to be valid, and any evidence as to disproportionality undermined by Assange's own Swedish witness, then the court had no difficulty in dealing with the many other points raised. Sweden is a signatory of the European Convention on Human Rights and so Assange can rely on any engaged Convention rights once extradited; the Swedish court is better placed than the London court to deal with any alleged abuses of process; the legal arguments before the Swedish court will be in public, even if the Swedish courts take witness evidence regarding sexual offences and rape in private; and the offences alleged were also offences in UK law (which, of course, no serious person could doubt).

The judgment ordering extradition is careful to emphasise that the defence case had been thorough and meticulous. The skeleton argument of Assange's UK lawyers alone is some 74 pages, consisting of 181 paragraphs. Two senior Swedish legal experts were even brought over to provide evidence in support of the defence. It is difficult to see what further submissions could have been made on behalf of Assange.

However, the defence did not succeed. And, unless the defence prevails at appeal, or some extraneous event occurs, Assange will be extradited to face questioning by the Swedish prosecutor over these undeniably serious allegations. He may then be charged and tried. That should not be prejudged. Assange is entitled to the benefit of due process.

But the simple fact is that Assange is being extradited because a valid EAW was issued and served for serious alleged offences, and that there was nothing in the particular circumstances of this case to prevent the EAW being implemented.

 

David Allen Green is legal correspondent of the New Statesman

David Allen Green is legal correspondent of the New Statesman and author of the Jack of Kent blog.

His legal journalism has included popularising the Simon Singh libel case and discrediting the Julian Assange myths about his extradition case.  His uncovering of the Nightjack email hack by the Times was described as "masterly analysis" by Lord Justice Leveson.

David is also a solicitor and was successful in the "Twitterjoketrial" appeal at the High Court.

(Nothing on this blog constitutes legal advice.)

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?