Scrutinising the Sovereign Wealth Funds

By Dr Chris Armstrong, Politics & International Relations  

Dozens of countries have established Sovereign Wealth Funds (SWFs) in the last decade or so. In most cases those Funds are used to manage the massive revenues gained from selling resources such as oil and gas on a tide of rapidly rising commodity prices – money which is then invested in a wide portfolio of foreign stocks and real estate. From one point of view this makes perfect sense: saving money for the future may be wiser than splurging it today, which would in any case have unwanted macro-economic effects.

But the existence of these Funds has raised a series of ethical questions. How can we make sure SWFs are transparently and accountably governed? Should they avoid investing in ecologically-damaging or otherwise dubious industries overseas? When foreign SWFs invest in countries like the US or the UK, should this raise concerns about national security and political independence? Those questions are, as they should be, attracting more and more attention.

But much more interesting – at least for political theorists – is the question of what the money contained in SWFs should eventually be spent on. What is it for? And more to the point just who is it for? Strikingly, the money contained in most SWFs has been gained through selling valuable stocks of natural resources (or, in some cases, simply selling exploration rights) – but national claims over natural resources are often, from the point of global justice, thought to be very weak. It is a fact of international law, to be sure, that individual states get to exercise considerable control over the natural resources which happen to fall within their borders. But can that principle be morally defended? If it can’t, doesn’t this have the implication that the money contained in SWFs is actually ripe for some old-fashioned redistribution?

In a new paper, I answer in the affirmative. Using the example of Norway’s very large SWF – derived from selling North-Sea petroleum over recent decades, and now the second-largest SWF in the world – I show that national claims over the money in SWFs are often very weak indeed. Saving the massive sums of money involved may be admirable. What is open to question is why it should be saved for Norwegians as opposed to anyone else. I also offer some guidance for how the money contained in such Funds could best be spent if our intention was to uphold not purely national interests but truly global ones.

Human Rights and Irregular Migrants

By Professor David Owen

A few days ago, it was reported that “Toronto has made history by affirming itself as a “sanctuary city,” the first Canadian city with a formal policy allowing undocumented migrants to access services regardless of immigration status. On Thursday, City Council passed the motion by a vote of 37 to 3 that also requires training all city staff and managers to ensure Toronto’s estimated 200,000 non-status residents can access its services without fear of being turned over to border enforcement officers for detention and deportation. The vote puts Toronto in the same league with 36 American cities, including Chicago, New York City and San Francisco that already have such policies.”

It is appropriate that Toronto is the first Canadian city to take this step since it is home to the political theorist Joseph Carens who has led the development of the normative study of migration and led the argument for such measures. But what is the case for such policies?

Well, the starting point is that irregular migrants pose a distinctive normative and practical dilemma for democratic states. On the one hand, irregular migrants are human beings, entitled to human rights. On the other hand, exercising those human rights is liable to expose their migration status to the public authorities. The consequence is twofold. First, the effective possession of human rights by irregular migrant is quashed. Second, public authorities fail to receive salient civic information about labour exploitation, criminal acts, etc., and this supports the production and reproduction of what we may call the “uncivil economy” and “uncivil society” running alongside and intersecting with the “civil economy” and “civil society”.

To address this problem, Carens (and others) have made the case for a “firewall” system whereby knowledge of a person’s migration status acquired through treating them in hospital, through their reporting a crime, etc., cannot be used for migration purposes. (Think of this by analogy with the rule that evidence of criminal wrongdoing uncovered through an illegal search cannot be used in a criminal prosecution.) Such a policy supports the ability of irregular migrants to access their human rights without undue burdens but it also supports the ability of the state to obstruct the opportunities for private and public domination that underpin the ‘uncivil economy’ and support the growth of ‘uncivil society’.

Morality and prudence can sometimes walk hand in hand.

“It might be an Atlantic century after all”

By Dr Kamil Zwolski, Lecturer in Global Politics and Policy

Among all this doom and gloom over the European Union crisis and Western demise, Anna-Marie Slaughter has a reassuring message: “The pervasive narrative of Western decline and Asia’s rise is quickly reversing itself. While the major emerging countries, including those along the Pacific Rim, will continue to grow and prosper, the US will benefit enormously from domestic energy production, and the threat of an EU collapse will be resolved once and for all.”

 

Eastleigh By-election Analysis on BBC Radio Five Live

By Dr Alexandra Kelso, Senior Lecturer in Politics

The imminent Eastleigh by-election has been billed in the media as one of the most significant contests of its kind in recent British political history. I appeared on BBC Radio Five Live’s Drive programme this evening to discuss it, and highlight the high stakes involved for the main parties. This is the first by-election since 2010 in which the two coalition parties are the main challengers, and each would sorely like to win. For the Conservatives, a victory against their LibDem coalition partners would be hugely welcomed by restless Tory backbenchers, while Nick Clegg sorely needs a victory after some rotten by-election performances and rumblings about his leadership. Labour aren’t really contenders, and only a massive electoral upset would see them victorious, but the party would like to improve on their 9.6% performance in the constituency in 2010; they polled around 25% of the vote in the previous two general elections, so any percentage gain will be seized upon as evidence of a Labour revival. And for UKIP, they will similarly want to increase vote share on the back of some impressive recent by-election efforts: they got 22% in Rotherham last November, where they came second (they were also second in Middlesbrough  and will be keen to keep the momentum going. The smart money seems increasingly to be on a LibDem hold for the constituency, and if that happens, it will largely be down to some deeply embedded local organization bolstered by strong LibDem representation on the local council.  And it will prompt a lot of discussion about how coalition government affects voter behavior, and whether votes are willing to punish parties for the shortcomings of their individual MPs.

Democracy: Problems and Prospects Study Day

By Dr Alexandra Kelso, Senior Lecturer in Politics

We are holding a special public event on Saturday 16 February here at the University of Southampton, a study day on the topic of Democracy: Problems and Prospects. PAIR experts will give short talks on why we seem to have so many problems with our democratic systems, and how we might address them. I’m giving a lecture on responses to the 2009 MPs expenses scandals, and will be examining the various suggestions put forward about how to ‘fix’ the Westminster parliament. Other colleagues and PhD students are also participating: Emma Thompson on ‘Anti-politics and public disengagement’, Russell Bentlely on ‘Mistrusting political speech’, Matt Ryan on ‘Democratic innovation’ and David Owen on ‘Democracy and disappointment’. The Study Day is entirely sold out, but podcasts of the talks will be available in due course, and there will, I believe, be some Tweeting throughout the day.

The Conservative problem

By Dr Will Jennings, Politics & International Relations

We are just over a month into 2013 and already two major issues have revealed the fault lines that run through the modern Conservative Party.* First the EU referendum, then the same sex marriage bill. Each reflect the deep conflicts within the Conservative Party, but also on the right of the political spectrum more broadly. Any mainstream political party is a coalition of diverse and sometimes conflicting interests, crafted as a the minimum possible (and sustainable) winning majority — designed for electoral success, but giving away as few concessions as possible. However, for more than thirty years there has been a silent war between what have been characterised as different wings of the Conservative Party. Yet this characterisation misses the distinct polarities of Conservatism as a political philosophy and the spatial (geographical) distribution of politics in modern Britain. Inevitably due to the nature of political debate and the mass media, these debates are personalized in the spectre of Thatcher and in the travails of Cameron (and his predecessors) when far more deep-seated, and irreconcilable, tensions are at work.

Historically, Peter Oborne recently argued in The Daily Telegraph, the Conservative Party “gained its strength and durability from its deep provincial roots rather than its metropolitan centre”. Oborne is arguably wrong, however, that “Mr Cameron and his allies are disdainfully trashing the organisation he leads in order to promote his own popularity.” Rather, there is a much deeper conflict between on the one hand the modernising, metropolitan Conservatives, and their favouring of economic growth through the city (embedded in the context of global capitalism and its modes of political organisation at the transnational level), and on the other the provincial Conservatives out in the shires, just a train ride from London, but also a social and economic time warp away. These provincial forces exhibit an almost Govian nostalgia for 1950s Britain – a world of leafy suburbs, small businesses, country pubs, village greens, strict classrooms, obsequious deference to authority, and the friendly local policeman — the world of Dixon of Dock Green. This is ‘conservatism’ in its truest ideological sense, of conservation of the status quo — treating tradition as sacred and viewing change with a sceptical eye. For the modernisers, the growing interconnectedness of our social and economic lives, and the onward march of cultural liberalism, is something that must be adapted to and embraced. These tensions have been exacerbated under the auspices of austerity, as the Coalition government has introduced swinging cuts to traditional Conservative issues — defence and policing — leaving some Conservatives scratching their heads as to what they stand for any more. In their provincial electoral strongholds, issues such as immigration and same sex marriage are viewed differently than by the metropolitan elite — despite the continued cultural influence of collective memory of old Britain even in metropolitan life.

Neil Brenner has described the ‘rescaling’ of political space — as cities and city regions have become a focus of the transformation of statehood, leaving provincial centres on the periphery, providing country retreats and playgrounds for the metropolitan classes, but condemned to long-term economic decay (as evidenced in the death of the British high street and retailers). Political and economic space is being continuously stretched — with cities now the hub of networks of transnational political organisation. There are parallels here with much older forms of political organisation — the city state — linked through globalised networks and elites that transcend the familiar territorial basis of representation. It is no wonder, then, that there is a disconnect between citizens and a distant political elite — with growing distrust in politicians and other key institutions, and confusion over lines of political accountability. This is manifested in the issues such as immigration and the EU, where the economic imperatives of ‘growth at all costs’ for modern (neo-)conservatives clashes with traditional conservatism and its unease at fundamental change or the giving away of political sovereignty for economic gain. The troubles of the Conservative Party today are, it can be argued, a symptom of much wider challenges, not just a small cadre of modernisers trying to bring the party kicking and screaming into the twenty first century.

*One can observe distinct but equivalent schisms underlying New Labour, though arguably these are less active/profound due to the decline of industry and the working class (and low turnout/participation in those old strongholds), which has been reflected in their reduced influence over the Labour Party – but with nowhere else to go.