Why Mehdi Hasan is half right and half wrong on foreign policy as a cause of terrorism

Uncomfortable though it might be, it is entirely conceivable the Woolwich attack was motivated by both an unwise, unsustainable and unjust foreign policy, and the beliefs predominant within minority elements of British Sunni Islam, namely Salafi-Jihadis.

 

Mehdi Hasan’s article “Extremists point to Western foreign policy  to explain their acts. Why do we ignore them?” contains both an appealing, and an uncomfortable message. Firstly for those wedded to interventionist positions, be it in Iraq and Afghanistan, or several of the foreign policy choices that have faced the coalition, the argument is discomfiting. A traditional principle of government is to provide for the security of its citizens. If intervening in Muslim majority countries, or reflexively supporting the United States or Israel undermines this, surely the Prime Minister has a duty to reconsider such policies?

There is little evidence such an approach is likely. David Cameron’s response to the In Amenas siege in Algeria was to talk of an existential struggle against terrorism that may last a generation, to pledge some supporting elements to France’s intervention in Mali, but to deny a parliamentary debate on the subject as British boots were not on the ground in the country. Such actions made a mockery of the democratic beliefs he claims to be upholding.

Mehdi Hasan’s arguments are also, in some quarters, very appealing. Britain’s many Muslim representative organisations have long complained of a political discourse that equates Islam per se with terrorism. Academic research of our print media in particular demonstrates the volume of negative media stories about Muslims. Both the British National Party and English Defence League sought to arrest declining influence post-Woolwich with rallies, whilst in several towns arrests were made after attacks on mosques.  The response of many on the left – from the Morning Star, Stop the War Coalition to Unite Against Fascism, has been to describe Woolwich as ‘the inevitable price of the war on terror’, and, after briefly condemning the murder, to quickly move on to concentrating solely on their original campaigns.

In such an atmosphere, many will miss the nuanced nature of Mehdi Hasan’s argument, which does not seek to blame all of our terrorist trends on our foreign policy, but does locate much of the blame there. This needs to not only be debated, but placed in significantly more context.

Woolwich in Context

We are now in the third decade of what may be referred to as British Jihadism – the involvement of a small, but not insignificant number of British Sunni Muslims (perhaps best described as Salafi-Jihadists) in armed struggle and/or bombings. These actors have appeared in areas as diverse as Bosnia, Kashmir, Afghanistan, Yemen, Pakistan, Israel, Iraq, Somalia, Sweden, Kenya, Libya and Syria, not forgetting attempts to blow up airliners flying to north America. At some stage, probably beginning with the jihadist plot uncovered in Birmingham in 2000, but occurring increasing significantly after 2003, the UK was added to this list of combat zones.

The Iraq invasion, as former head of MI5 Eliza Manningham-Buller states, sent domestic terrorist plots off the Richter scale. But is worth stressing how distinct these plots were. Iraq is a mostly Shia country, Shia are estimated to comprise anything from 10-15% of the UK Muslim population, yet they do not tend to appear in our terrorism arrests. Nor do other Muslim minorities – the Ismali section of Shi’ism or the Ahmadiyya’s seem immune to such trends. The hurt of our foreign policy was felt most onerously by certain, but by no means all, Salafis.

These plots tended to focus on the mass killing of civilians – something delivered on 7/7, but something that failed with, for example, the botched bombing of the Tiger Tiger bar in 2007. If Woolwich was different it is that rather than targeting a transport interchange or large venue selling alcohol, an off duty soldier was chosen, and civilians left to go about their business. Whether this reflects debates within Jihadist circles, and the wider estrangement killing civilians brought Al Qaeda from its base, remains to be seen.

Home and Away With Al-Muhajiroun

Following Woolwich, significant attention has again been focused on individuals around the over-interviewed Anjem Choudary. At least one of the alleged attackers, Michael Adebolajo, had publicly moved in these circles. Often referred to as al-Muhajiroun (even though this group was disbanded in 2004 and subsequently banned under the Terrorism Act) these activists have long provided a heady mixture of vigorous condemnation of British foreign policy with a politico-religious platform that centres around Islam having the answer to all the United Kingdom’s problems be they spiritual, legal, political, economic or ethical.
This duality is also displayed In terms of nomenclature. After al-Muhajiroun (the exiles, a reference to the Prophet and his companions being exiled to Medina from Mecca) – replacement names have included Muslims Against Crusades, Islam4UK, not to mention front groups such as the London School of Sharia. This translates into group activity combining these two poles – provocative anti-war stunts such as poppy burning and booing returning soldiers, or dawah stalls to convert non-believers to Islam, usually but not always in inner London.

Somewhat curiously a visit to the Home Office’s list of proscribed terrorist organisations finds al-Muhajiroun listed, not as a domestic terrorist group, but an international one. Its supporters have allegedly been responsible for something like a fifth of Islamist terrorist plots in the UK, and many of its members were born within sound of Bow Bells. One of its best known, Anthony Small, is a former British Light Middleweight boxing champion. What is so international about it?
When I challenged the Home Office about categorisation, via the Freedom of Information Act, I received a very woolly response that its focus was international because it campaigns for a caliphate. In this area at least, the government seems determined to have an international, rather than domestic focus.

There is much more to come out about Woolwich, but the snippets we have of the attackers invocations to Allah, followed by a desire to be filmed denouncing British policies in Muslim lands, are entirely consistent with al-Muhajiroun’s trajectory over many years.

The closing of debate

For some on the left, making reference to problematic trends within domestic Islam remains a no-no. Some anti-fascist organisations have grasped this nettle – the anarchists of Antifa were probably first, whilst the anti-fascist organisation Hope Not Hate, under the leadership of Nick Lowles, has returned to this subject repeatedly.
This remains a step too far for some on the revolutionary left, and broader organisations such as Unite against Fascism or the Stop the War Coalition. Here a condemnation of an attack such as Woolwich (or Toulouse, or 7/7) is quickly followed by a pivot into either opposition to the EDL/BNP or broader critiques of Western foreign policy. The Jihadists are then forgotten about, until the formula is repeated the next time. And the next.

The Broader Problems

It is entirely possible to imagine a Britain with a non-interventionist, quietist foreign policy, and yet still wrestling with some of the difficult minority strands in British Islam. Is it because of foreign policy that earnest young men in Tower Hamlets proclaimed gay free zones earlier this year to try to enforce, even for a few hours, their version of sharia? How do we explain the practice of segregated meetings being held by some Muslims at universities, often in defiance of clear guidance to the contrary by the host institutions? 
In some neighbouring countries it is not foreign policy but perceived or actual insults to Islam that have provoked the jihadists – to attempted murder in the case of Danish cartoonist Kurt Westergaard, murder in the Holland of Theo van Gogh. But we do not have to look abroad for politico-religious violence – in 2008 the publishers Gibson Square was firebombed for planning to publish a novel about the Prophet’s child bride. In 2010 RE teacher Gary Smith was battered for the ‘crime’ of teaching about Islam when he was not a Muslim. These actions, which combine a hyper-sensitivity to the practices of democratic society with a desire for sharia, right here, right now, are unlikely to dissipate quickly. If fighting for the Jihadist cause abroad is still going strong after three decades, why should fighting for these ideals at home end any quicker?

It is entirely conceivable the Woolwich attack was motivated by both an unwise, unsustainable and unjust foreign policy, and the beliefs predominant within minority elements of British Sunni  Islam, namely Salafi-Jihadis. That is an uncomfortable message – to those in government, those who oppose its foreign policy, and to Muslim representative organisations. But unless we open up debate on these issues, this society is guaranteed to experience groundhog day, not just in further terrorist attacks, but in the debates that follow them.

Paul Stott is an academic based at the University of East Anglia. He submits his PhD “British Jihadism: The Detail and the Denial” later this summer and tweets @MrPaulStott  

Michael Adebolajo, who is charged with the murder of Lee Rigby in Woolwich, arrives at court. Photograph: Getty Images
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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?