Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: The drift towards war with Iran
The question of whether a war will break out over Iran’s nuclear programme has been around for so long that it is easy to become almost blasé, writes the FT’s Gideon Rachman. In 2006 Benjamin Netanyahu, the Israeli prime minister, was already asserting dramatically: “It’s 1938 and Iran is Germany.” This year, however, feels different. The threat of war is much more real. A conflict would begin with an Israeli bombing raid on Iran. But it would be likely swiftly to draw in the US – probably the UK and France, as well, and possibly the Gulf states and Saudi Arabia. sraeli fears are driving the process. Ehud Barak, the Israeli defence minister, has talked of Iran entering a “zone of immunity” – in which its nuclear programme becomes unstoppable – in the coming months.
Thomas Wright: Europe’s vote should go to a Republican president
Europe is the punching bag of the Republican primary campaign, notes Wright, a fellow at the Brookings Institution. No one has punched it harder and more frequently than Mitt Romney, the favourite for the party’s presidential nomination, who said in his victory speech after the Florida primary that this White House reflects “the worst of what Europe has become”. For Mr Romney, the presidential election will pit a candidate who fervently agrees with European governments against one who is adamantly opposed to them. Mr Romney was only wrong on one thing – the identity of the party that lines up with Europe. The new transatlantic divide cuts along unfamiliar lines.
Markets insight: Tim Bond – Bull run to be powered by low valuations
Equity investors have had a tough time over the past 12 years, observes Bond, investment strategist at Odey Asset Management. According to the estimable Barclays Equity Gilt Study, the annualised real equity return since the end of the last century is minus 0.9 per cent in the US and minus 1 per cent in the UK. Such returns are pathetic, worse even than cash. Bond returns, meanwhile, have been outstanding. US Treasuries have delivered a real annualised 6.6 per cent gain over the same period. Unsurprisingly, this extended phase of weak equity returns has seen the asset class fall out of favour.
Philip Stephens: The answer to Scottish separatism is a federal union
David Cameron got it about right during his visit to Edinburgh. The surest way to persuade Scotland to leave the Union is to imply it is bound to perpetual dependence on England, writes the FT’s Philip Stephens. Nor will appeals to history do the trick. Emotions count, but, as the prime minister said, the case for the United Kingdom is about mutual interest and shared advantage. So far Alex Salmond’s Scottish National Party has had it all its own way. The SNP leader is the biggest figure in British politics. While others shelter from the storms, Mr Salmond is proof that confident leaders can change the weather. The unionist parties – Labour, Liberal Democrats and Conservatives alike – have done their best to help him.
Joshua Kurlantzick: Beware talk of business-friendly Myanmar
Over the past year as Myanmar has launched a shockingly rapid era of reform, foreign investors have descended on the country, convinced it is the next Asian tiger cub economy and that western democracies soon will lift all sanctions, notes Kurlantzick, fellow for South-east Asia at the Council on Foreign Relations. In recent weeks, some of the largest Japanese businesses visited Myanmar to scout for opportunities, as did George Soros, and several large European companies. Many venture capitalists privately have been assessing ways to invest in Myanmar. Investors are betting on several factors. With a population of over fifty million that has been mostly cut off from western products by sanctions passed in the late 1990s because of the regime’s abuses, Myanmar is one of the biggest untapped consumer markets for western companies. Its location, between China and India, gives companies potential access to underdeveloped regions of the two Asian giants; its land and offshore waters contain significant untapped petroleum, gems, virgin forests, and potential hydropower.
Stephen King: What Ptolemy tells us about Germany and Greece
Ptolemy’s theory of the universe held that the earth was at its centre. All other celestial objects – including the sun – rotated around it, writes King, HSBC Group’s chief economist. It was, of course, nonsense. Aristarchus had more than 300 years earlier come up with a heliocentric model of the solar system. And much later Copernicus came along with his far superior system. Luckily, he died before anyone could be offended by his theory. Galileo, a supporter of Copernicanism, was not so fortunate, ending up under house arrest under suspicion of heresy.
Felix Rohatyn and Rodney Slater: America needs its own infrastructure bank
America needs to invest in infrastructure. Despite signs of improvement, our economy is still in crisis, write Rohatyn and Slater, special adviser to the chairman and CEO of Lazard, and former US transportation secretary, respectively. We could create millions of jobs by rebuilding our transport and water systems – ending the congestion that stifles our ports, airports, railroads and highways; increasing productivity; and empowering the US to compete with countries that are investing in infrastructure on a massive scale. Infrastructure financing tools are available, providing Washington wants to use them. They could bolster investment by leveraging hundreds of billions of dollars in private and international capital.
Editorial comment: Jobs for the young
With youth unemployment standing at a near-record 22 per cent in the UK, talk of a “lost generation” is growing ever louder. Policymakers are right to be concerned. Of course, the fact that the young are struggling to find work is largely a question of demand. The economic environment is making businesses wary of hiring new workers and this disproportionately affects those who are looking for their first job. It has become harder to get a foot on the bottom rung of the work ladder.
Lex on Chinese roulette
This isn’t baccarat. It’s mud-wrestling. Steve Wynn, chairman of Wynn Resorts, and Kazuo Okada, boss of Universal Entertainment, were once friends. They have made piles of money together opening casinos in Las Vegas and Macao. Mr Okada owns (or perhaps owned) a fifth of Wynn Resorts shares. But because of a disagreement over Mr Okada’s plans to build a gambling resort in the Philippines, thereby becoming a regional competitor, accusations of misconduct are flying back and forth. The Wynn Resorts board has voted to redeem Mr Okada’s stake at 30 per cent below the current share price, over a 10-year period.