The MT diary: Howard Davies

A Parisian dinner with Jane Birkin and dash of intellectual diplomacy in Buenos Aires

Last Updated: 31 Aug 2010

Centenary celebrations of the Entente Cordiale have come at a difficult moment in Anglo-French relations. That is appropriate in a way, as 1904 was also a difficult year, though mainly in connection with rumbling colonial disputes, rather than a disagreement over the future political shape of Europe.

As it happens, I can bore for Britain on the original Entente: it was my special subject in History at Oxford 35 years ago, when it all seemed quite contemporary. Maybe that is part of the reason I was included in a group of Francophiles who were shipped over to Paris as 'attendant lords' for the Queen's State Visit.

We were all a little nervous. Being listed as a Francophile is a bit like appearing on a register of child molesters. You expect exposure by the News of the World at any moment. So I should be careful who else I expose.

Martin Johnson, who has not always shown brotherly love for his French counterparts in the past, can look after himself. John Browne of BP is also a substantial figure, though in rather a different way. At the dinner he was in pole position, sitting next to Jane Birkin, who seemed at one point to be making a strong bid for the vacant position of Lady Browne of Madingley.

They would be the only couple I can think of who might depose Posh and Becks.

The French expressed considerable concern about what was happening at Shell. Indeed, if you travel the world these days, people talk of little else. The UK has so far been spared the worst of the impact of corporate scandals. Enron, Tyco, Vivendi, Worldcom and Ahold all have one thing in common: they are not British companies. The Shell problems are not, of course, in the same category, but at a few thousand miles distance they are hard to distinguish. I hope Shell gets its act together before London suffers more collateral damage.

Even in South America the Shell story is on page one. I was in Buenos Aires to advise on post-crisis financial regulation, as part of a programme of what is now called 'intellectual diplomacy'. That may be an oxymoron, like legal certainty, but at least it's more fun.

Argentina is in a bizarre position. The economy is growing at 10% a year, and the government has a large fiscal surplus. But they are in default with private creditors to the tune of $125 billion and have offered, in effect, about 10 cents in the dollar to make them go away.

Fortunately, this problem has little impact in the UK. The much-maligned regulations that require advisers to propose 'suitable' investments to their retail customers are the reason. It is a different matter in Italy, where hundreds of thousands of Italian small investors have Argentine bonds, which, like the 19th-century railway version, are now best framed for the downstairs cabinetti.

Aside from the financial crisis, Buenos Aires is a great place to be. A collapsing currency is good for tourism. You can attend a concert in the best hall in town for 60p and after a steak and half a bottle of red wine still have change from a fiver.

Maybe Italian bondholders should make a consolatory trip.

But one odd consequence of rapid growth is that Argentinians are running into energy shortages. So they have reneged on a contract to supply gas to Chile. As a result, in Santiago it is not a good idea to talk about your Argentinian friends.

Santiago is enjoying an amazing upturn. Part of the city now looks like the 16th arrondissement in Paris, without the litter. There are problems elsewhere, of course, but the city has a lively feel. Assisted by an exhibition promoted by the British Council of photographs by i-D Magazine, Kate Moss gazed from every lamppost.

At the exhibition itself, the Chileans could clearly see the point of her. But some looked a little puzzled at a more than life-size photograph of a naked Damien Hirst, with a dotted line painted vertically from forehead to bell-end. I could see at once that it was another example of intellectual diplomacy at work, but the Chileans seemed less sure.

I returned to the UK to find that we were going to have a referendum. In effect, this is a consequence of the Government's failure to sort out House of Lords reform. The Lords would add a referendum clause to the Constitution Bill, and would not back down even if it were reversed in the Commons, on the grounds that they are now 'reformed'. It is odd that the peculiar deal on the 92 hereditaries reached with Lord Strathclyde four years ago, which allowed reform to go ahead, may lead to our withdrawal from the European Union.

It makes the choice of Commission president more crucial than usual.

The Government won't want a figure who will frighten the horses in a referendum campaign. The current position is ideal, with practically no Commission left - and no real sign that we miss it. So a permanent vacancy might be one option. But, if not, the prime minister will certainly favour a non-threatening, smaller-country candidate. Maybe a suitable Maltese could be found, or a Latvian with an unpronounceable name. We will not, you can be sure, be seeking to celebrate the Entente centenary by supporting a candidate from Outre-Manche - unless Jane Birkin is available.

Howard Davies is the director of the London School of Economics.


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