Common Cents

Wavering Friendships

Ralph Murphy

(4/2015) The United Kingdom is scheduled to conduct Parliamentary elections 7 May of this year with seemingly intransigent debt and leadership problems that may not be readily resolved. The Conservative governing coalition of Prime Minister David Cameron is teamed with a center-left, Liberal Democratic Party - both of which are opposed to the left of center, Labour Party. They are, however, unable to work together for effective and coherent government.

Cameron took control of the British government in 2010 following the short lived, Labour party rule of Gordon Brown from 2007. The Brown government had been preceded by the lengthy Labour reign of Tony Blair from 1997. That timeframe witnessed a further institutionalization of British participation in the European Union (EU), a trade and political alliance led by Germany and administered through Brussels. It is now mired in debt issues with up to 87.4% of total 2013 earnings valued at $17.37 trillion.

The EU debt is associated with 18 eurozone nations that share a common currency. Britain never joined the currency alliance as then Prime Minister John Major received an "opt out" in the 1993 agreement that came into effect in 2002. The British Sterling is one of the top three reserve currencies in the world following the US dollar and the euro. A 19th century world leader, London remains a strong finance center on a par with Tokyo, but well below New York in terms of assets and trade. The reserve role as well as political factors of domestic comfort with an established trade medium appears to have trumped EU pressure to adopt their currency shared by 18 of the alliance’s 28 members.

That could have changed with a Labour or Liberal Democrat-led government winning in May, but as things stand at present it appears the EU's Frankfurt-based European Central Bank (ECB) cannot withstand its debt issues and the British could be an example of historic continuity in a domestic currency serving a local economy. Major currencies are occasionally used widely for circulation in relatively primitive, dependent and tied economies, but nothing like the euro has ever been historically tried- nor debt so utterly manifest.

Britain has its own debt issues as well. The nation owed 90.6% of $2.678 trillion in 2013. Much of that is held in inter government loans that can be written off as non-asset based, but it will be painful to decide who gets the smaller percentage based on actual production. The ECB that Britain snubbed, issued its debt in euros and can far more easily erase it with a return to host currency. The Bundesbank of Germany issued most of that debt as future and current asset-backed money.

Britain also has concerns for immigration problems tied to the EU's Schengen treaty that allows a free flow of inter-member-nation, nationals for work or passport free travel. Many are unskilled, don't speak English (relevant to UK) and foment unrest. That political agreement also has had to bow to the reality of a region's preference for common religious, race or historic cultural ties. There is usually some need for foreigners, but to the UK it's a political issue of concern as unemployment is at about 8% and the influx even includes terrorist elements.

There is serious infighting between the Conservative (Tory) and coalition partner, Liberal Democrats in Britain. Cameron's party won 306 seats (36.1% of MP's) in the 2010 Parliamentary election but needed 23 more to form a majority in the 650 seat House of Commons. Liberal Democratic Party leader Nick Clegg provided the Tory's 56 additional seats (23% of the MP's), but it came at an enormous political price.

The Liberal Democrats are center left politically. The euro unionists are very closely tied to the Scottish National Party, that is also left of center and pro EU. When the Scottish referendum on independence was held last September, Cameron was opposed, but his government would have fallen without Clegg and his opposition. He noted it would "break his heart" if the northern third of the nation was ripped from the UK.

Westminster as a whole was opposed to the EU-backed Scottish independence issue, but almost all the government was publicly silent during the period leading up to the vote. The Scottish population of 5 million people controls the top third of the island. The land swath of the bottom two thirds would have given the remaining 56 million citizens one of the highest population densities in Europe.

The United Kingdom Independence Party (UKIP) as a "EU skeptic" would be a natural Conservative Party ally, but to date is domestically quite weak having only two seats in the 650 seat Commons and 3 of 754 members in the relatively powerless House of Lords. What's odd is that the UKIP has 23 of Britain's 73 ascribed seats in the 751 seat European Parliament that helps legislate for the EU. They are willing to actively participate despite their policy loathing.

Britain's political uncertainty- and at times even hypocrisy- may be symptomatic of a larger unchecked, cultural phenomena such as an unbridled tabloid press and culture. It is able to freely attack official government institutions as if they were sundry entertainment. It may be humorous to be able to do that, but social degradation has been the result and policy coherence has been moot to the point where that nation very nearly ceased to exist last fall.

The British culture has offered so much to the world in the way of disciplined lifestyle and taste, but its politics of routinely "mud slinging" is at odds with the norm. May 7th may see a return of the Labour government and a center left platform, but they're not a panacea or proven social progression. Policy continuity would be lost amid debt, political, and other EU-focused issues without consistent leadership that is now largely lacking.

Ralph Murphy is a former member of the CIA Headquarters Staff in Langley, VA.