In other news

In other news


There’s been a lot going on recently, what with the resurgence of Covid-19, the new lockdown, the US elections and French terror attacks.  What else has been going on that might be important but which might have escaped your attention?  Lots, obviously.  Here are three things that deserve more attention than they’re getting.

1 – Armenia has lost control of parts of Nagorno-Karabakh

Armenia and Azerbaijan have vied for control of Nagorno-Karabakh (an enclave within Azerbaijan that is ethnically majority Armenian) ever since the end of the USSR.  It, along with a chunk of territory that forms a bridge between Armenia and Nagorno-Karabakh, has in practice been under Armenian control since 1994.  It is, however, generally recognised at international law to remain part of Azerbaijan and it is presently governed separately from Armenia proper (under the name “Republic of Artsakh”).

After escalating tensions all summer, the Azeris, backed by the Turks, launched a ground offensive.  This has apparently met with some success despite Russian support for the Armenians, which the Armenians are now looking to call on further.  Right now, the Azeris are approaching Stepanakert, the regional capital.

This is a far-away conflict of which we know little.  Both the Armenian government and the Azeri government look unworthy of sympathy.  But it is yet another front on which Turkey and Russia find themselves on opposite sides by proxy, and since Turkey is part of NATO, Britain could be drawn in.  Unlikely?  150 years ago, Britain was drawn into the Crimean War, which was also caused by conflict between Turkey and Russia over spheres of influence in a region just as remote and of just as indirect interest to Britain then.  Keep an eye on this.

2 – The government is consulting on changing how insurance companies must secure their business

Following Britain leaving the EU, it can consider how insurance companies reserve for their liabilities, and it is. This sounds extremely techy.  So it is.  But put very crudely, the less insurance companies need to reserve, the more free capital they have, the more aggressively they can look for business and, in theory, the cheaper the policies.  Sounds great.  

Of course, the downside is that there’s an increased risk that they run out of funds to pay out when they need to.  Insurance companies do go bust from time to time.  Equitable Life is the obvious example.  So this isn’t a theoretical problem, and with the economy going through an especially volatile period, the dangers are particularly obvious.  (On a practical level, it might also put up barriers for British insurance companies doing business in the EU.)

There’s a big philosophical question here. How much counterparty risk should consumers face when dealing with insurers? And how much should they be required to pay for that risk being compulsorily reduced?

Huge sums are at stake on this very technical consultation (insurance companies in the UK hold in aggregate more than £1.5 trillion of reserves).  It may be deathly dull.  It’s also deathly important.

3 – The government has u-turned and is going to retain a ban on chlorinated chicken

The government took a lot of flak for trying to soften up the public to the idea of a trade deal with the US that allowed for the importation of chlorinated chicken and hormone-injected beef.  Last weekend, it u-turned.  This will place a substantial obstacle in the way of a trade deal with the USA, which will be negotiating hard to be allowed to export such foods to the UK.

Has the government concluded that it simply couldn’t sell a trade deal with the USA that let chlorinated chicken in to the British public?  Has it concluded that a trade deal with the USA is in practice unlikely to happen and so it may as well assuage public concern on the matter (and with Joe Biden winning in the presidential election, the chances of a trade deal seem to have dimmed further)?  Either way, it hardly bodes well for the free traders’ vision of Brexit.  

Either way, there will be quite a few Conservative MPs who will be wondering why they dutifully went through the voting lobby at the government’s behest, annoying a substantial part of their electorate, for no reason at all.   With each u-turn, fewer and fewer of them will put their heads above the parapet when controversial stories break.  Why should they bother?

Alastair Meeks

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