10 ★ FINANCIAL TIMES Thursday 30 January 2020
Letters
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to the FT Editorial Complaints Commissioner: [email protected]Donald Trump touted the proposals he
unveiled alongside Israeli premier Ben-
jamin Netanyahu this week as a Middle
East “peace plan”. In reality, they are an
attempt to force Palestinians to accept
the status quo — one in which Israel has
steadily strengthened its position in
occupied territory. The US president
claimed his plan would lay the founda-
tions for a “realistic two-state solu-
tion”; in fact, it is closer to a one-state
solution. It tilts heavily in favour of
Israel on issues central to peace talks
since the 1993 Oslo Accord: on the sta-
tus of Jerusalem, the right of return for
Palestinian refugees, and the principle
of “land for peace”. Far from ending
conflict, this plan risks renewing it.
Mr Trump says his deal offers a win-
win solution to both sides through his
own vision of two states. He argues it
would allocate more territory to Pales-
tinians than they currently hold. It
would impose a moratorium on Israeli
settlement-building during four years
of negotiation. It holds out the prospect
of $50bn investment in sorely-needed
infrastructure — which Mr Trump
claimed would create 1m Palestinian
jobs and halve poverty.
The reality is different. The Palestin-
ians’ capital would not be occupied
East Jerusalem, as they have long
sought, but probably in a suburb sepa-
rated from the city by an Israeli secu-
rity barrier. More importantly, the plan
would create nothing resembling a via-
ble state. Instead, it offers Palestinians
disjointed enclaves in the West Bank,
over which, for an extended period,
they would have only partial sover-
eignty. Palestinians would have to give
up any claim to territory where the
Israelis have established settlements.
In effect, the proposals legitimise the
Israeli land grab in the West Bank that
has been under way for years. Mr
Netanyahu signalled Israel would now
formally annex the Jordan Valley and
all West Bank settlements as early as
Sunday.
That will fuel suspicions that the real
motive for releasing the plan now is to
bolster the political fortunes of the men
who presented it. For Mr Trump, it pro-
vides a distraction from his Senate
trial, and a chance to portray himself as
a peacemaker and claim that — merely
by presenting the scheme — he has ful-
filled another election pledge.
For Mr Netanyahu, indicted on cor-
ruption charges on the day the propos-
als were unveiled, it could improve his
chances of breaking the political dead-
lock in Israel’s third election in less
than a year.
The Palestinian leadership is not
without blame. It has failed to tackle
corruption and refused to hold elec-
tions for over 10 years, leaving it dis-
credited at home and isolated interna-
tionally. Yet it could not possibly accept
the “deal” as presented.
It will hope for support from Arab
allies. But leaders in the Arab world,
more anxious about Iran than Israel,
will weigh carefully whether they can
afford to antagonise Mr Trump.
Deprived of any chance of a real state of
their own, moderate Palestinians will
be radicalised. Israel, long proud of
being the Middle East’s most vibrant
democracy, may expand its territory at
the expense of its legitimacy.
After the repeated failures of the
Middle East peace process, the search
for a fresh approach had merits. Mr
Trump’s supporters will argue the plan
recognises “facts on the ground” and
makes Palestinians an offer they would
be wise to accept before their negotiat-
ing hand weakens further. But this plan
looks too much like rewarding the
occupiers while forcing the occupied to
surrender.
It stands to benefit its authors more
than the people, and region, it is osten-
sibly designed to help.Proposals aim to force Palestinians to accept the existing status quo
Trump plan is not a path
to Middle East peace
The chances of a rate cut at the Bank of
England’s meeting today are balanced
on a knife edge, at least according to the
markets. Implied probabilities in
option prices forecast a 45 per cent
chance of a 25 basis-point rate cut by
the central bank’s nine-strong rate set-
ting committee and a 55 per cent likeli-
hood that rates will remain at 0.75 per
cent. The most sensible course for the
BoE is to wait and see whether the post-
election bounce in sentiment and busi-
ness confidence feeds through into the
economy.
Sterling was dealt a blow this month
when policymakers raised the possibil-
ity of cutting rates. Three external
members of the Monetary Policy Com-
mittee who are widely seen as doves —
Gertjan Vlieghe, a former hedge fund
economist, Silvana Tenreyro, an aca-
demic, and former Citigroup econo-
mist Michael Saunders — all indicated
they were prepared to vote for a cut.
The most influential remarks came
from Mark Carney. In a speech about
the central bank’s lack of tools to fight
any future recession, the outgoing gov-
ernor said there was a case for cutting
rates soon, “if evidence builds that the
weakness in activity could persist”.
Doves looking for a reason to cut
rates can point to weakness last year.
The available evidence suggests that
the UK economy ended 2019 in either
stagnation or contraction. National
income grew just 0.1 per cent in the
three months to November and con-
tracted within the month itself. Overall
data has not yet been published for
December but retail sales fell com-
pared with the previous month.
The most convincing argument for a
rate cut is the low level of inflation. Last
year the consumer price index rose by
1.3 per cent, far below the Bank of Eng-
land’s 2 per cent inflation target and the
lowest pace of price growth for three
years. Hawks on the committee who
predicted rising wages would inevita-
bly lead to higher inflation appear to
have been mistaken.
However, the role of the central bank
is not to target the current rate of infla-
tion but the pace of price growth over
the next two years, and the labour mar-
ket is still healthy despite weak growth
in output. While the economy may
have stagnated in the final quarter of
2019, the UK added 208,000 jobs in the
three months to November — roughly
double the pace of employment growth
forecast by City economists.
Meanwhile, average weekly earnings
grew at an annual pace of 3.2 per cent,
slower than July but still above the rate
of inflation. With labour productivity
growth showing no signs of returning,
companies may, finally, have to pass
higher wage costs on to consumers.
Doves may still point out that labour
market data is “backward looking”. It is
a guide to how the economy used to be
rather than how it will look over the
next few years. Mr Saunders, in his
remarks, pointed out that the slow-
down in business investment since the
Brexit vote is likely to lead eventually
to job cuts.
Since the convincing victory for the
Conservatives in the general election
business and consumer confidence has
rebounded. The flash purchasing man-
ufacturers index, published last week,
pointed to a sudden improvement in
private sector sentiment. Data from
the lobby group UK Finance pointed to
a sharp rise in mortgage approvals,
while the Nationwide Building Society
found an increase in house prices.
With evidence on both sides the most
sensible course is to hold fire and see if
this confidence persists. The sense of
relief may evaporate if EU trade negoti-
ations become mired in disagreement.
Traders are right that the arguments
are finely balanced. The Bank of
England should not rush to judgment.Data point to weakness last year but also a bounce back in confidence
The Bank of England
should hold fire on rates
It is not the boarded-up branches of
HSBC and Bank of China or the
smashed traffic lights. It’s not even the
graffiti or the riot police lurking
outside public buildings. The most
telling thing about Hong Kong in early
2020 is something you cannot see.
The tax authorities — until recently
the most feared and efficient part of
the government — are struggling to
issue 2018-19 tax bills to hundreds of
thousands of people in the Asian
financial hub.
“Have you received your tax return
yet?” has become one of the most
frequently asked questions in Hong
Kong, only beaten by, “How will this
end?” — a reference to the nine
months of protest that have pitted
pro-democracy campaigners against
the government that takes its
direction from Beijing. This week, the
threat posed by the coronavirus
outbreak has further alienated the
territory from the mainland, as high-
speed rail links closed and permits for
Chinese tourists were suspended.
Hong Kong’s tax system normally
works like clockwork. Bills are
delivered by October, people pay a
first instalment by January 31 and the
remainder by the end of March. But as
of the end of last year, only one-third
of people had received their demands.
The official reason for the delay is
related to the protests — the
Legislative Council that was due to
debate tax laws couldn’t because it
was suspended after being attacked by
activists. But, for a government that is
already under intense scrutiny for itshandling of the unrest as well as
financial pressure (the city slipped
into recession last year), not being
able to collect its own taxes would be a
huge embarrassment. And a gift to the
critics who question its competence.
Tourist numbers almost halved at
the end of 2019, so tax receipts are
likely to be lower next year. Delays in
receiving tax payments for 2018-
could exacerbate an economic crisis
which has only been made more acute
by the decision to limit visitors from
the mainland as part of measures to
prevent the spread of the coronavirus.
The delays sparked speculation that
the authorities were deliberately
withholding bills because they feared
a widespread tax boycott — a classic
“no taxation without representation”
campaign. But the protesters, it
seems, have already discussed the
merits of a tax strike — via Telegram
messaging groups — and decided
against the move because it might hit
the wages of public sector workers
who largely back the protests.
Instead, some are calling on
taxpayers to pay more. The aim of the
so-called “$1 more” campaign is to
cripple the tax authorities’ operations
by forcing them to handle possibly
millions of rebate payments, tying
them up in bureaucracy and bringing
the system to a grinding halt.
It forms part of a new phase of the
anti-government campaign designed
to weave protests into every corner of
the Hong Kong economy. Mass rallies
and marches have drawn global
attention but, with more than 7,protesters arrested and as many as
2,000 facing charges, they risk
running out of steam. So, in parallel,
the protesters are creating new trade
unions for everyone from train drivers
to teachers to accountants, and
organising online campaigns to
boycott businesses sympathetic to the
government, while supporting those
backing the protesters’ five demands
— the so-called “yellow economy”.
This has extended to boycotts of
some global brands. At the last big
rally, on January 1, HSBC which in
December froze a HK$70m ($9m)
account controlled by one of the
protest groups, was targeted. The
following day I saw three separate
work teams boarding up banks on the
edge of the business district — just
400m from a station housing scores of
riot police. They drew barely any
attention but, in a city built on
financial security, barricading your
windows during opening hours does
nothing to instil confidence.
Many argue that the protests can
only end badly; that there is no room
for compromise in Beijing. Some,
optimistically, hope a new generation
of politicians in the city can harness
the power of the mass rallies to carve
out some kind of deal.
Yet almost all agree the protest is
unlikely to end anytime soon. “This is
only the beginning,” said one
protester, a professional in his thirties.
“We have lots of options for how to
move this on.”[email protected]The new year
marks a new
phase of protests
Hong Kong
Notebook
by Tom O’Sullivan
We have collectively failed
Bauer’s third challenge
The 75th anniversary of the liberation
of Auschwitz is indeed a salutary
reminder of the dogged persistence of
an ugly anti-Semitism (“The rising
scourge of modern anti-Semitism”,
editorial, January 28). This hatred
resides not only in the far left, but also
in the far right as well as radical parts
of the Muslim communities. It has
infected university campuses, political
parties and social media.
The historian Yehuda Bauer
famously summarised the lesson of the
Holocaust as follows: “Thou shalt not
be a victim, thou shalt not be a
perpetrator, but, above all, thou shalt
not be a bystander.” Sadly, as a
collective, we have failed to live up to
the third challenge. There have been
other genocides carried out since the
world promised “Never Again” in 1945.
Systematic murder of particular social
groups have taken place in Cambodia,
Bosnia, Rwanda and Darfur.
One of the positive responses to
these tragedies has seen the sharing
and support offered across the
boundaries of different genocides. As
an example, survivors’ groups have
come together, united over their
experience of pain and by their dream
of a better future. The Holocaust is a
reminder of how much the world has
failed but also of eternal vigilance
against scapegoating, marginalising
and ostracising specific groups.
Zaki Cooper
Trustee,
Council of Christians and Jews,
London SW1, UKDon’t let Putin claim all the
glory for the Soviet Union
Neither Boris Johnson nor any of the
western allies who contributed so
massively to the defeat of Hitler’s
Germany should endorse the false and
self-serving version of the Soviet
Union’s role in that conflict to be
celebrated by President Vladimir Putin
on May 9 (“Putin’s invite is an early
test for post-Brexit UK”, editorial,
January 27).
It is right to commemorate the
immense sacrifices made by the Soviet
peoples and their great contribution to
the allied victory. But waving from the
top of Lenin’s tomb, next to a Russian
leader who violated Georgia, Crimea
and Ukraine and sends OGPU-style
death squads to peaceful provincial
cities, would bestow unwarranted
legitimacy on an unsavoury and hostile
regime as well as its false vision of its
glorious past.
Instead, the leaders of western
democracies should demonstrate
solidarity with Poland and the Balticstates who have declined Mr Putin’s
invitation to celebrate his crypto-
Stalinist view that the second world
war was essentially a Soviet triumph
accompanied by the liberation of
central Europe.
In 1945 Stalin’s pithy verdict was
that “the British gave time, the
Americans money, the Russians gave
blood”. The war in the east was
particularly savage because it was
directed by two equally coldblooded
and cynical tyrants. No one in the west
would dream of denying the terrible
sacrifices demanded of the Soviet
armies and peoples. But without
massive deliveries of war materiel of all
kinds, initially from UK factories and
then from the US, Soviet forces would
almost certainly have been
overwhelmed in the winter of 1941 and
unable to rebuild Soviet strength, hold
the line at Stalingrad and move on to
the attack.
At the very least, western leaders
should demand generous recognition
by Russia of the democracies’ vital
contribution and help. Democratic
governments owe this to the allied
soldiers, airmen and sailors who risked
or lost their lives on the Arctic convoys,
or delivering arms, fuel and food
through Iran.
Instead of acquiescing in Mr Putin’s
vainglorious version of the Soviet
Union’s role, western leaders should
call on Moscow to be honest, for a
change, about Russia’s tragic
totalitarian past, as Germany has.
Zbigniew Brzezinski, President Jimmy
Carter’s adviser, wrote: “Russia can be
either a democracy or an Empire. It
can’t be both.” Exactly. The main
beneficiary of more truth about
Russia’s Stalinist past would be Russia
itself. Without it, Russia will remain
trapped by its illusions of imperial
grandeur.
Anthony Robinson
London N10, UKFocus on the haystack
— not on the needles
Jonathan Guthrie contends that it is
impossible for asset managers that
engage in passive index-fund investing
to “immunise their clients against
human error”, because “someone has
to build the haystack” rather than “just
buy the haystack” (“The fallacy of
passive fund management”,
January 16).
Under this premise, he argues that
because active managers are the ones
“who select securities they believe will
outperform”, then it is the passive
index-fund industry that will freeride
off the active manager’s success.
The logic underlying his argument is
flawed. It is not necessarily the active
managers who create the underlying
assets (“build the haystack”)
occupying any given index. They
merely search — sometimes blindly —
for the needles they deem to be
shiniest and sharpest within the
haystack, perhaps thinking they create
value in the process. Buying the
haystack, however, does not focus on
the ability either to stock-pick or to
create a swath of successful underlying
assets in an index.
Rather, passive indexing aims to
refocus the investor’s attention away
from the needle and towards the
haystack because the strategy
recognises that a haystack is not built
by identifying all the needles within it.
Instead, the aggregation of the
haystack is built on something more
fundamental and perhaps elusive.
Passive investing merely seeks to
mitigate the negative consequences of
attempting to divine the fundamentals
and animal spirits hidden in the
haystack.
Brendan P Geary
Washington, DC, USShow the super-rich how
to change their lifestyles
Michael Williams (Letters, January 28)
is entirely right about how the super-
rich should lead the way in giving up
their luxuries to reduce damage to the
environment. Yet last week, on January
23, the Financial Times carried a front-
page ad showing a dog in a seat on an
executive jet and proclaiming the
unlimited virtues of such a mode of
travel. Perhaps the FT might engage in
some showing of the way rather than in
some lining of its own pockets.
The fact that, for the week in
question, we had also been showered
with “moral money” messages from
Davos by FT reporters makes Mr
Williams’ call all the more apposite.
Bernard H Casey
Social Economic Research,
London, UK and Frankfurt, GermanyYour paean toElon Musk (“Tesla’s rise
has sparked an electric revolution”,
editorial January 25) rightly praises the
Tesla founder for turning the world on
to electric cars. But you failed to note
that, along the way, Mr Musk is also
guilty of dangerously overhyping the
capabilities of his company’s driver
assistance features.
A recent investigation by the Dutch
Safety Board has noted a number of
issues with Tesla’s so-called autopilot
including concerns over driver
overestimation, misunderstanding andmisuse of the system as well as driver
disengagement from the driving task.
The report also found that the system
can be and is activated in situations
that it cannot cope with — such as
unseparated highways with
roundabouts.
These failures have led to deaths and
serious injuries that otherwise might
not have occurred.
Last year, a crash investigation by
the US National Transport Safety
Board found that the “autopilot”
system’s design, which enabled thedriver to disengage from the driving
task, contributed to a serious crash.
Our fear is that the “ruthlessness”
and “chutzpah” the FT attributes to Mr
Musk could lead to more unnecessary
deaths and injuries unless regulators
on both sides of the Atlantic step up
and demand changes both to the way
these systems operate, and to the way
they are marketed to customers.
Antonio Avenoso
Executive Director,
European Transport Safety Council,
Brussels, BelgiumMusk has overhyped Tesla’s autopilot feature
Turkish court cannot
justify Kavala’s detention
In a letter to the Financial Times
published on November 7 2017, we
strongly criticised the wholly
unjustified imprisonment of the
leading Turkish philanthropist Osman
Kavala. He has been incarcerated ever
since. Now the European Court of
Human Rights has authoritatively
confirmed our assessment.
Mr Kavala, along with 15 others, is
charged under Article 312 of the
Turkish Criminal Code, and faces a life
sentence. That article concerns the
overthrow of the government through
violence. The Strasbourg court
observes with amazement that the
indictment makes no such allegation
regarding the use of force, and that
even the police questioning included
no questions regarding violence. The
court concludes that all of Mr Kavala’s
activities constitute actions guaranteed
under the European Convention on
Human Rights, and demands his
immediate release.
Mr Kavala has already spent 800
unnecessary days behind bars, yet
Turkish courts — and above all, we
must conclude, their political masters
— have refused to release him.
Last week, 12 bar associations which
represent two-thirds of all lawyers in
Turkey, issued a joint statement
condemning 30th Felony Court of
Istanbul for its unprecedented
arbitrariness and gross due process
violations. This week, the Court took
no notice and condemned Mr Kavala to
continued detention.
In its treatment of Mr Kavala,
Turkey is in clear breach of its
commitments under the European
Convention on Human Rights and has
along the way alienated almost every
friend it once had in Europe.
Carl Bildt
Timothy Garton Ash
Ivan Krastev
Kalypso Nicolaidis
Claus Offe
Chris Patten
Javier Solana
Nathalie TocciLet’s raise a glass to
the European project
Undoubtedly, there will be some who
will be disappointed that the bell at Big
Ben will not be ringing on January 31 to
mark the UK’s new direction. My wife
and I have long planned to mark the
occasion in a different way.
With a bottle of good champagne and
suitable food, we will toast how we feel
that our membership of the EU over
the past 47 years has enriched our lives
in so many ways, and how, in turn, our
country has contributed to the
European Community. We will then
drink to the health of the European
project, wishing that it will continue to
act as a force for good in the world and
one to be reckoned with.
Perhaps other FT readers will join us
in doing likewise?
David Rex
East Didsbury, Manchester, UKThere’s a place for us...
I am fascinated with John Thornhill’s
idea of interactive models as developed
by Nick Towers in his letter (January
2 8). Please could we have a model of a
UK that voted to Remain in 2016. I
might want to live there.
Steve Harrison
London SE15, UKJANUARY 30 2020 Section:Features Time: 29/1/2020 - 18: 50 User: alistair.hayes Page Name: LEADER, Part,Page,Edition: LON, 10, 1