The MT Diary

Politeness Swiss-style; truth about Gordon's 10p punt; Jordan hedges on its sharia rules.

by Howard Davies
Last Updated: 31 Aug 2010

Basel has its charms, especially in early summer. The rolling Rhine, two terrific art galleries, a tram system to rival the Manchester Metrolink, and banking regulators on every street corner. Who could wish for more?

There is, though, just a hint of the less freewheeling side of Swiss society. A friend of mine at the Bank of England who was seconded to work at the Bank for International Settlements (the central banks' central bank) for a while was standing alone by his tram stop early one morning, and yawned extravagantly. (The prospect of another day working on capital ratios can take you that way). A passing cyclist stopped and told him that in Basel it is polite to put your hand in front of your mouth when you yawn.

It occurs to me that banning naked yawns could be another useful wheeze for Boris, once his Tube drinking ban has bedded down.

One good thing about Switzerland, though, is that no-one can recall the name of a single Swiss politician. The president, the finance minister, even the first lord of the Swiss admiralty, are anonymous figures. The average clockmaker or money-launderer wouldn't know them if he bumped into them in his bank vault.

Gordon Brown must by now be wishing the same were true here - though it is his attempt to create a Helvetic-style federation that threatens to derail him more than the 10p debacle. If Alex Salmond does 'bring it on', in Wendy Alexander's ladylike phrase, he might just win a carefully worded referendum on Scottish independence. And, whatever constitutional consequences there may be, one outcome would be the demise of our Scottish PM.

A modest punt on shares in Charles Clarke, a heavyweight but underinvested stock, could pay off nicely in the next 12 months.

Talking of the 10p band, quite a high rate in Switzerland, it's interesting that Gordon's apology has made no impact. Often, a heavy dose of sorry takes the wind out of the Opposition's sails, especially if the outcome of the policy was not the one intended. Blair apologised prettily for targets, once it was clear that they were distorting behaviour, and for the Iraq war, once it was clear that it was a trillion-pound disaster. (I made that last bit up, but you catch my drift).

The problem is that the effect of the abolition of the 10p tax band was exactly as intended. It was not that the Treasury didn't understand the consequences for some low-earners: they said there would be losers at the time. It was that Gordon wanted to shoot the Tory tax fox before the election, which he then forgot to hold, and the poor could wait their turn. Since they don't vote as much as the middle classes, and in the wrong places, election years are not for them.

The backbenchers, now on their high horses, were prepared to sit quiet while they thought the strategy would deliver an historic third and a half term. Now it doesn't look so clever.

What will Gordon do when he leaves office, whenever that is? An elevated international post? Possible; there is a fan club in Washington, if not in Brussels. Moderator of the Church of Scotland? Chairman of Celtic (now an outplacement post for retired Labour Scots)? He may not find commercial positions as easily as his predecessor has done. Whatever it is, I'm sure he'll follow the purdah rules. No-one has ever accused him of being out for personal gain.

The rules are pretty clear for politicians. What are they for lord chief justices? An ex-lord chancellor like Charlie Falconer is not allowed to return to the law, which seems a bit rough. Yet Lord Woolf was able to take £6,000 a day from British Aerospace to whitewash ... sorry, to conduct a rigorous investigation into all aspects of its procedures, except the ones everyone is interested in, relating to the Al-Yamamah contracts. Asked how objective he could be in these circumstances, his lordship came over all bewigged and infallible, and asked the questioner to wash his mouth out. Seemed a fair point to me.

Jordan doesn't have many billions to throw around on Eurofighters. And it has accepted a million Iraqi refugees without fuss. There are only five million of them, so this is the equivalent of our receiving 12 million French, fleeing the Bruni-Sarkozy dream regime. Boris would have to ban garlic on the Tube, which used to be quite a hazard on the Paris metro in my youth. The Jordanians live in a dangerous neighbourhood, yet seem remarkably cheerful about it.

I was there to talk about Islamic finance. I know a little bit about it, honest. And I didn't visit a single castle. Islamic finance, which bans charging or paying interest, is on the rise. Since the transactions have to be related to the real economy, the Jordanians have avoided the kind of securitisation debacles that have hit conventional banks. They are a tiny bit smug about it, though they acknowledge problems of their own. One imam says a new product is Koran-friendly, another issues a fatwa. The rules keep changing.

So the main beneficiaries are the lawyers, who can pontificate for hours on sharia compliance. Maybe this is what the Archbish of Canterbury was getting at in his Delphic speech on parallel legal systems. When at the Treasury, Gordon said he was going to issue a sukuk - an Islamic bond. But no news recently. Maybe he's consulting his own imam, Frank Field.

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