The clash of civilisations will not be with Islam

“Don’t panic!” says distinguished Cambridge academic.

Amid the news that France's lower house of parliament voted yesterday to ban women from wearing face-covering veils, a pathetic piece of populism aimed at exploiting fears about Islam which has already been condemned by Amnesty, it is something of a relief to come across a more pragmatic, no-nonsense assessment of where the real sources of global tension will be in the future.

Professor Nicholas Boyle, president of Magdalene College, Cambridge, and a scholar of German and European history, has just published a book titled 2014: How to Survive the Next World Crisis. Many might expect such an imminent doomsday to involve terrorism of some sort (probably Islamist, as that's the kind of terrorism most people seem to fear), or militant jihadism spilling out of Afghanistan, through Pakistan and into central Asia and the Middle East, destabilising all those pro-western autocracies we've propped up for so long.

Four years is too soon for the "couple of generations" that one Mail columnist has warned is all there is left before "Islam will be in control in Europe", but something on those lines, some tipping point in birth rates, perhaps, could soon be upon us. Or so many seem to think.

Not at all, says Boyle. "It would," he writes, "be a mistake to include [among the worst-case scenarios] a supposed clash of 'western' and 'Islamic' civilisations." How so? I'm going to quote the swift paragraph with which he dismisses such fears in full, as it's such a surprisingly different perspective:

It is not a profound source of tension in the world, of the kind that moves economies and armies. The apparent significance of the western-Islamic divide is a consequence of the dependence (in the drug-addicted sense) of the USA on Middle Eastern oil and of the disproportionate leverage on American foreign policy exercised by states in that region, from Saudi Arabia to Israel. If in the course of the 21st century that oil runs out, or alternative sources of either oil or energy in general become available, the late-20th-century concern with the culture and politics of these small and otherwise unproductive countries will seem as obsolete as 16th- or 17th-century concerns for the control of the Spice Islands.

Boyle clearly makes several assumptions here, not least that the spread of violent radicalism to what are certainly not small countries -- Pakistan, for instance -- is contingent on backing by oil money. And his rather rude description of the Gulf states makes it unlikely that his book will fly off the shelves in Doha or Bahrain, let alone Tehran or Riyadh.

But he is not a great Islamophile or "apologist". His assessment, which has no cause to be partial with regard to religion, is simply that those who constantly warn of cataclysms and "Eurabia" are wasting their time. You're worrying about nothing, he says. And with that one paragraph, he is done with the likes of Daniel Pipes, Mark Steyn, Melanie Phillips et al. As I say, a bracingly refreshing view indeed!

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Sholto Byrnes is a Contributing Editor to the New Statesman
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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation