A memorable conversation

What really* happened when Crosby and Cameron talked.

The scene: 10 Downing Street. The Prime Minister is seated at a desk. Enter a stout Australian man.

David Cameron: Ah, Lynton, come in.

Lynton Crosby: G’day Dave.

DC: I’d prefer ‘Prime Minister’.

LC: But this is the Aussie straight-talking that you pay me for Davey-boy.

DC: That’s when I’m wearing my Conservative leader’s hat. For the purposes of this conversation I’m wearing my Prime Minister’s hat.

LC: But you’re not wearing a hat, David. Jeez, it’s lucky you hired a top dog like me to tell you what's what.

DC: It’s an expression. Look, I need to talk to you about something.

LC: What is it?

DC: I can’t say.

LC: Why not?

DC: Because then we’d definitely have had a conversation about it.

LC: Is this the plain cig…

DC: (Tersely) I said I don’t want to have a conversation about it.

LC: So what’s this conversation we’re having now?

DC: That’s the problem. That’s what I want to have a conversation about.

LC: You want to have a conversation about having had a conversation about something without having the conversation or ever having had it.

DC: Yes.

LC: Have you tried forgetting the conversation?

DC: What do you mean?

LC: Well, if you need to have a conversation about something but you don’t want to have had that conversation the usual thing is to forget that you ever had the conversation. That way, when someone asks you if you had the conversation, you can say: “I don’t recall any conversation.”

DC: Of course! How could I have forgotten to say I don’t remember.

LC: That’s why you pay me the big bucks. Is that all? It’s just that I’ve got a meeting with another client …

DC: Well, there is one thing. About these clients of yours ...

LC: Is this another conversation we won’t remember.

DC: No, this is about a conversation you have to remember. It’s from back when I first hired you. You agreed to abide by certain principles of engagement  to avoid conflicts of interest.

LC: I don’t remember that conversation.

DC: We’re having it now.

LC: Right now?

DC: Yes, this is it. Read this memo that Jeremy from the civil service put together about how being a corporate lobbyist four days a week won’t be a problem when you’re advising me one day a week. I think you'll find it captures the essence of the conversation, so now we can all remember having had it.

LC: (Skims memo) Right, of course. It’s all coming back to me now, Prime Minister.

DC: That’s why I pay you the big bucks.

Curtain.

 

 

 

 

*not really.

 

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump