A Syrian greengrocer next to a bombed out building in the Shaar district of Aleppo, February 2014. Photo: Mohammed al-Khatieb/AFP/Getty Images
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Jeremy Bowen: I know there’s trouble in the Middle East when I need my flak jacket, gas mask and Kevlar pants

The BBC’s Middle East editor on John Kerry striking the wrong tone over Ukraine, and remembering the Aleppo souks.

I saw someone looking on sympathetically as my attempt at running for the train turned into a hop and then a hobble. It was the kind of sympathy no middle-aged person needs or wants and I didn’t turn around to look for any more when the doors of the carriage came together with a smug hiss, leaving me on the platform. At the moment my left knee, calf and Achilles tendon have various injuries, all caused by sport. Some go back to the late 1970s. The most recent was self-inflicted during a rash attempt to ski off-piste a month or so ago.

Journalists in the Middle East need to be mobile. Visits to presidential palaces, foreign ministries and embassies all matter but being on the streets is the best way to get to the heart of the matter. My physio tells me I will stop limping fairly soon. Then I’ll be able to cycle and, after that, run.

Perhaps getting my left leg to work properly will be a mixed blessing. In the past year or so, two good legs have taken me to any number of Egyptian riots and have stumbled, nervously, as I tried to wade through streets full of rubble in the rebel-held suburbs of Damascus. And they have trudged through the snow in miserable informal  refugee settlements for Syrians in the Beqaa Valley in Lebanon. “Informal” means their inhabitants are barely supplied, burning pieces of plastic to keep warm and melting snow to get water.

 

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Sometimes the challenge of covering the misery and complexity of the modern Middle East is almost overwhelming. Since the Arab uprisings started at the end of 2010 the region has been in a profound process of change, which looks likely to go on for at least a generation.

Its consequences have turned millions of lives upside down and in Syria alone ended more than 100,000. Journalists have been extremely busy.

I always have a big flight case packed in my garage. It contains a flak jacket, a ballistic hel­met, vivid yellow and black Kevlar-woven “blast boxers”, assorted dressings and first-aid kits, along with a riot helmet, a gas mask and shatter-proof protective glasses. The case is my personal index of Middle Eastern trouble. I needed it all only rarely before 2011, usually because of a flare-up between Israel and the Palestinians or Lebanese. Now I take the case to most places.

 

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The international news reporting machine has turned its attention to Ukraine. I would never wish the attentions of a pack of journalists on anyone. Yet the world is in a time of trouble and bad news is going to happen somewhere. The Middle East is still pumping out stories, but for now Ukraine, Russia and Vladimir Putin are getting top billing.

It is a relief, in a strange way. I have been travelling for more than half of the time since the uprising against Hosni Mubarak in Egypt began in January 2011. It’s refreshing to be able to hobble for the train in London.

 

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I watched a live broadcast of the American secretary of state, John Kerry, in Ukraine. The way he mocked the Russians at his news conference sounded as if he was trying to win a debate, not help settle a crisis. I think that Russia should not send its troops on to the territory of its neighbours. However, it is hard to listen to an American official talking about sovereign territory, international law and invasions without thinking about what happened in Iraq in 2003.

I am not proposing a reprise of the row over UN Security Council resolutions or whether or not the United States, the UK and their allies were acting legally or illegally but it is important to remember that many countries did not buy the west’s version, so it has to expect a sceptical response when it scolds others.

 

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If Middle East politics was a lake, it would always be turbulent. The US and UK threw in a big rock in 2003 and the waves it made are still washing up, from the Gulf to the shores of the Mediterranean. Apart from the obscene amount of death in Iraq since 2003, the worst consequence of the invasion was the way it heated up sectarian tensions.

The differences between Shia and Sunni Muslims make up one of the world’s oldest religious and political quarrels. Yet the invasion’s reordering of the regional balance of power brought the conflict stretching and snarling into the new century. Events since then have made it much worse.

 

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In early March, I will be in Dubai for the Emirates Airline Festival of Literature. The organisers have invited authors to bring a guest. Mine is my 13-year-old daughter, Mattie. It’s not her first time in the Middle East. In 2010, with my mother, we travelled through Lebanon and Syria.

We couldn’t do that now. Mattie loved the Old City in Damascus. She would still be able to recognise it. Physically it has barely been touched by the war, though foreigners are rare and foreign tourists extinct. Most of all she loved the old heart of Aleppo, its alleys, khans and mosques and the great citadel. Friendly traders sold us dried fruit, freshly roasted nuts, soap made from olives, embroidered cotton and a slimy nylon football shirt in Syrian colours.

Every time I see pictures of the devastation, the deserted, burnt-out souks, the toppled minarets and punctured domes, I think of the people who used to buy and sell in Aleppo’s narrow streets, of the way they smiled at my mother and daughter, and wonder what happened to them. l

Jeremy Bowen is the BBC’s Middle East editor and the Royal Television Society TV Journalist of the Year

This article first appeared in the 05 March 2014 issue of the New Statesman, Putin's power game

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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