Heisnotaloneinthisview。

ApowerfulnewbookbyEconomistEastEuropeancorrespondentEdwardLucas,TheNewColdWar:HowtheKremlinMenacesbothRussiaandtheWest,makesexactlythesamepointonageopoliticalscale。

Lucas’sbook–whichIrecommend–tellsthestoryofhowVladimirPutinandhisformerKGBcroniesbroughtstabilityandprosperitytoRussia,butintheprocessstampedoutpoliticalfreedomsandturnedRussiabackintoanauthoritarianstateinwhichcorruptionisendemic,propertyrightsareroutinelyabusedandopponentsaremurderedorthrownintopsychiatrichospitals。

Lucasbelieves–liketheUKregulator–thatwearenottakingthethreatposedbylawless,resurgentRussiannationalismanythinglikeseriouslyenough。

Russia’skeychallengetotheWestconcernsenergysecurity(Russiawillsoonberesponsibleformorethan50%ofEuropeangassupplies)。

WehavealreadyseeninRussia’streatmentofUkraine,EstoniaandGeorgiathatitispreparedtoholdcountriestoransomtosecureitspoliticalobjectives。

YetEuropeisdoinglittletotrytoreduceitsrelianceonRussiangas。

SoRussiaispickingoffEuropeancountriessuchasGermanyandItalyonebyonewithsweetheartdealsandjobofferstoformerpoliticalleaders,whileplansforthemuch-neededNabuccopipelinethatcouldbringgastoEuropefromIranandAzerbaijanaresoboggeddowninpoliticalin-fightingthatoddsareitwillneverbebuilt。

OneofthereasonsRussiaisabletogetawaywiththispolicyofdivideandruleisthatthereisnowapowerfulEuropeanbusinesslobbythathasavestedinterestinnotprovokingtheRussianbear。

ThisbusinesslobbyissobusymakinghugeamountsofmoneyfromRussiathatitispreparedtooverlookthemostegregioustreatmentofitsownmembers。

Onlythisweek,RussiapubliclysteppedupthepressureonBP-TNK,theoilgiant’sRussianjointventure。

Thatfollowslastyear’sexpropriationofShell’soiloperationsinSakhalin。

Yetthebusinesscommunityturnsablindeye。

Europe–indeedtheWest–urgentlyneedstostanduptoRussiabeforeitistoolate。

AlreadyRussiaisthreateningformerSovietsatellitessuchastheBalticrepublicsandGeorgia。

Thistimethethreatisnotsocialismbutlawlessnessandauthoritarianism。

FewcountrieshaveasmuchatstakeinthisstruggleastheUK。

NotonlyareweoneofthemostreliantcountriesinEuropeongasforourenergyneeds,butwealsohavetheintegrityofourfinancialservicesindustrytoprotect。

Intime,theCitycanrecoverfromthecreditcruncheasilyenough。

Butitcan’tsurviveLondonbecomingahavenforgangsters。

Iftakingatoughlinemeansforegoingsomeoftheeasymoneythatthegangstersbringwiththem,sobeit。

Theonlywayfortaxesisup

Anotherweek,anotherloomingtaxU-turnbythegovernment。

AlistairDarlinghasbeendroppinghintsthatheispreparingaclimbdownontheincreasesinvehicleexcisedutyannouncedinthebudgetinMarch。

Thatfollowspreviousbackpedallingovercapitalgainstax,non-domtax,the10ptaxbandandcorporationtax。

ItistemptingtosaythatanotherU-turnwoulddestroyLabour’seconomiccredibility–butithasnocredibility。

Thatmuchisclearfrominflation-linkedbonds,whicharecurrentlyindicatingthatthemarketbelievestheUKauthoritiescannotkeepinflationundercontrol。

Thatlooksareasonableassumption。

Lastweek,itemergedthatUKgovernmentborrowingisalreadyat43%ofGDP–wellabovetheceilingof40%setbyGordonBrownunderhisGoldenRule。

WhenBrown’sgovernmentisfinallygonesomeoneisgoingtohavetoclearupthismess。

Therehasbeenmuchexcitedtalkrecentlyofanewpoliticalconsensusinfavouroftaxcuts。

Butwiththepublicfinancesindisarray,theonlywayfortaxesisup。

SimonNixonisexecutiveeditorofBreakingviews。

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