The strange non-death of George Osborne

After leaving the political sick ward, the Chancellor is again being spoken of as a possible successor to Cameron.

This is an extended version of a piece in this week's New Statesman.

A year ago, George Osborne stood before his party's conference as a man fighting for his political life. The "“steady and sustained”" economic recovery he promised in 2010 had become a double-dip recession, and the Budget, with its tactless raids on pasties, pensioners, charities and churches, had destroyed his reputation as a strategic grandmaster. Conservative MPs privately joked that Osborne, the Tories’' chief election strategist, was a "“part-time Chancellor"” who “"wasn'’t good at either of his jobs"”. By 2013, they had signalled their intention to oust him if the economy failed to show signs of recovery by the time of the local elections. 
 
But when Osborne addressed Conservative delegates in Manchester on 30 September he did so as a politician reborn. The man who seemed destined to take the blame for Tory failure now seemed poised to take the credit for Tory success. With the possible exception of Nick Clegg, no other figure has enjoyed such a revival of fortunes.
 
Economic recovery was the prerequisite for Osborne’s political recovery. Having once appeared in danger of suffering a triple-dip recession, the economy is now expanding at its fastest rate in three years, while, courtesy of revisions by the Office for National Statistics, the double-dip has been erased from history. The Chancellor’'s Keynesian critics rightly protest that the economy is still 2.9% below its pre-recession peak (the US, by comparison, is 4.5% above) but in politics, trajectory is everything. Osborne began his speech by observing, “"At every party conference since the election, as we have gathered, the question for us. The question for me, the question for our country, has been: ‘is your economic plan working?’ They'’re not asking that question now.”" After three years of stagnation, he has been the beneficiary of low expectations. 
 
But growth alone does not explain his resurrection. Osborne has also fought back by displaying the political cunning that many Tories feared he had lost. His decision to hold an early Spending Review, outlining cuts for 2015-16, proved to be a masterstroke. It forced Labour onto his territory by prompting Ed Balls to concede that he would match Osborne'’s day-to-day spending limits and liberated the Tories to shift their emphasis from austerity to recovery. With more than a year-and-a-half to go until the general election, Osborne is not required to announce any further tax rises or spending cuts.
 
If the Chancellor has secured credit for the recovery, it is also because he has been seen to do so. Once known in Westminster as "“the submarine"” for his habit of surfacing only for set-piece events and retreating under water at the first sign of trouble, he has become one of the government'’s most visible faces. In the last year, he has made a series of high-profile speeches on the economy, taken the fight to Alex Salmond in Scotland, and even braved the world of Twitter. The morning after the government’'s defeat over Syria, it was the Chancellor who led the counter-offensive on the Today programme. 
 
All of this has led some to ask a question that would have seemed unthinkable a year ago: is George Osborne the next leader of the Conservative Party? The speech he delivered to his party’'s conference was the most prime ministerial he has ever given, reminiscent of the state of the nation addresses that Gordon Brown made in his pomp. In his peroration, Osborne declared: “"I don'’t want to see other nations pushing the frontiers of science and invention and commerce and explain to my children: that used to be us; that used to be our country. I don'’t want to look back and say I was part of a generation that gave up and got poorer as a result."” Rather than turning his fire on Ed Balls, he contrasted himself with Ed Miliband: “"I share none of the pessimism I saw from the Leader of the Opposition last week”", declaring: "What I offer is a serious plan for a grown-up country".” As well as referencing his children, he spoke of his pride at his parents who “"planned carefully, took a risk, and set up a small manufacturing company more than forty years ago.”"
 
Should the economic recovery propel the Tories to victory in 2015, Osborne will have a powerful platform from which to launch a future leadership bid. Among his existing assets are a loyal backbench following, a network of influential media supporters and a gifted staff that includes former Policy Exchange director Neil O’'Brien. 
 
The Chancellor’'s ascent is far from inevitable. A renewed economic downturn, or the implosion of the housing market, could wreck his reputation again. Defeat for the Tories at the general would force him, as well as Cameron, to leave the stage. But should the Prime Minister win against the odds in 2015, the sword of succession could yet fall on Osborne'’s shoulder. 
George Osborne delivers his speech at the Conservative conference in Manchester. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why Russia holds the key to resolving the North Korea crisis

China is propping up North Korea’s economy, but it seems to get little influence in return.

For more than half a century, China has seen North Korea as a dangerous irritant as much as an asset. It might be useful for keeping the United States off guard, and regarded as an essential buffer by the military establishment, but China would happily ditch it if there were a better option.

The North Korean regime has tended to be characterised as uniquely irrational and unpredictable. From its perspective, however, its behaviour makes eminent sense: in fact, its argument for developing a nuclear capability closely echoes the rationale of the great powers. It has no declared intent to launch a first strike, but as long as others have nuclear weapons, North Korea reasons they serve a deterrent function. The regime also argues, as others have, that there are associated benefits with civil nuclear power.  

The long history of North Korea’s nuclear programme follows a recognisable path, previously trodden by Israel, India and Pakistan. It goes from the ambition, formed in the mind of North Korea’s founding dictator, Kim Il-sung, through the long years of a clandestine programme, to the gradual revelation of a reasonably mature, if relatively small, nuclear capability. Signalling is also an element in deterrence. The regime is certainly unpleasant and destabilising, but it is a mistake to imagine that there is no clear purpose and no plan.

The dynasty began life as a Soviet puppet, sandwiched between a powerful USSR and a weak China. But from the start, Kim Il-sung’s muscular nationalism and concern for regime survival suggested that he was unlikely to be a docile dependent of either. His attempt to unify the peninsula by force in 1950 led to a bloody war in which Mao Zedong was obliged to come to his rescue. In the course of that war, “fire and fury” did indeed rain down on North Korea: the US dropped as much ordnance on North Korea as it had during the whole of the Second World War Pacific theatre, including the carpet bombing of Japan. To this day, any building site in Pyongyang is likely to turn up some unexploded ordnance. North Korea was born in a rain of fire, which it has incorporated into its national story.

The regime succeeded in maintaining relations with both its patrons through the dramas and tensions of the Sino-Soviet split to the end of the Cold War. But as Kim Il-sung contemplated the future survival of his regime, he concluded that a nuclear programme was essential insurance, both against his major enemies (the US and South Korea) and any territorial ambitions or excessive demands from China or Russia.

China was and remains North Korea’s major ally, but that does not make North Korea obedient. Their bilateral history is a story of growing defiance and increasing alienation: Kim Il-sung ignored Mao Zedong’s attempt to dissuade him from naming his eldest son, Kim Jong-il, as his successor. He had visited Beijing once a year and had promised that his son would follow suit, but Kim Jong-il only visited Deng Xiaoping’s China once, in 1983. His next visit came three years after Deng’s death, a death for which Kim had offered no formal condolences, as even the most minimal protocol required. 

On that visit, Kim heard the unwelcome news that China, already closer to the United States than he would have wished, was to open relations with his bitter rival, South Korea. When the third dynastic leader, the young Kim Jong-un, took power in 2011, relations with China slid further. Tellingly, Kim Jong-un has not visited Beijing at all, nor has China’s leader, President Xi Jinping, visited Pyongyang, although he has held four summit meetings with South Korea.

Kim Jong-un has made his defiance publicly evident. Not only has he chosen to test his missiles and weapons, but he has selected such highly sensitive moments as last year’s G20 summit in Hangzhou to do so.

China is propping up North Korea’s economy, but it seems to get little influence in return, and the value of the relationship has long been openly questioned by China’s foreign policy analysts. China has had little success in encouraging the regime to loosen controls on the economy and make limited market reforms.

 In the current crisis, China has consistently urged restraint, while co-operating with the tightening of UN sanctions. Beijing’s attitude, however, remains ambivalent: it doubts that sanctions will be effective, and is highly sensitive to US suggestions that Chinese companies that breach sanctions would be subject to punitive measures.  For China, the dangers of bringing North Korea to the edge of collapse are greater than the difficulties of seeking another solution.

Today, North Korea’s relations with Russia are warmer than those with Beijing and if President Trump is serious in his search for someone to solve his North Korea problem for him, he could do worse than to call his friend Mr Putin. No doubt there would be a price, but perhaps Trump would have less difficulty in appeasing Russia than in making concessions to Kim Jong-un. 

In July this year, China and Russia put forward a proposal that both sides should make concessions. North Korea would suspend its nuclear and its missile testing in return for a suspension of South Korea’s annual military exercises with the United States. Buried in the joint statement was the assertion that third parties should not negatively affect the interests of other countries.

Both China and Russia aim to reduce US influence in Asia, an ambition greatly aided to date by Trump’s withdrawal from the Trans-Pacific Partnership trade agreement, conceived as a vehicle of US influence; his treatment of long-standing US allies; and his decision to withdraw the US from the Paris agreement on climate change.

Today the US seems poised between demanding that China solve the North Korea problem and beginning a trade war with Beijing. China’s challenge on the Korean peninsula, always difficult, has grown even greater.

Isabel Hilton is the CEO of the China Dialogue Trust

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear