What will be the impact of Brexit on the wine industry?

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brexit, wine, wine industry

Ever since the middle age when Henry Plantagenet married Eleanor of Aquitaine England has been a dominant wine importer. Although wine market has seen a decrease in general in the last ten years, the UK is still a major centre for the wine market today. In terms of consumption, it is number two, right behind the USA. It is the sixth largest market in the world accounting for 13% of global wine imports and worth around £17.3 billion.

The UK wine consumer is extremely price sensitive and small price rises have substantial adverse effects on purchases, and the outlook for the wine industry in the UK is looking more precarious than ever. Four major factor – a weak pound, inflation, sluggish economic growth and tax – will have an adverse impact on the wine industry even before a Brexit deal is even concluded. The shock result of the Brexit referendum has severely weakened pounds making imports from the EU more expensive. This includes wine, around 42% of the wine is imported in the UK from the EU, and due to this already many French producers have found it harder to sell in the UK. Wine sales could be further affected by inflation that will increase the price of wine. The predicted economic downturns could further negatively impact the wine market. The IMF has lowered growth for the UK from 2.2% to 1.5%, and Standard and Poor has downgraded the UK from AAA to AA. The UK government has already in the past imposed a high tax on alcohol including wine in the aim to lower drinking and as a great revenue generator. Another tax rise seems likely in the near future as the divorce bill from the EU will be large, an estimated €40-60 billion.

The effect of Brexit itself is not encouraging for the wine business. The best possible hope with the least detrimental affect on the wine market would be what is known as a “soft” Brexit. This would be something similar to the “Norwegian model” where the UK would be part of the EFTA (the European Free Trade Association). If the UK joins the EFTA, there would be minimal disruption to wine market as it would be similar to the trade agreement currently in place. This seems unlikely, as it would also require the free movement, which was the primary catalyst for the Brexit referendum in the first place.

A “hard” Brexit, which is much more likely would be a complete break from the current trade agreement. This could range from having a new special deal similar to CETA (Comprehensive Economic and Trade Agreement), which is the EU and Canadian agreement where tariffs were removed quid pro quo. For example, the removal of tariff for wine import from the EU in exchange of another tariff removed for some other UK export to the EU. This would be mutually beneficial as it is both an important market for both the EU and the UK. The UK is an important wine export market for the EU and in particular for countries like Italy, France and increasingly Spain. The UK itself would benefit by having tariff taken, for example, spirits which it exports a substantial amount to the EU. Another advantage for the UK with a weak pound is that it could function

 

as a middle market for global players outside the EU like China and the USA. The possible worst case though would be having no special tariff agreement for wine, and it would fall under WTO favoured nation with a 32%tariff on wine.

Brexit also has further implication for the global wine market as a whole. The UK will have to renegotiate special trade deals with every country possibly at the same time as the EU. The most notable example is Chile which will soon have to renegotiate it’s preferential trade agreement soon and might be forced to choose which wine market place is more important to them. It will also have a general spill over affect where as the UK wine market decrease and will leave a global surplus. Places like the USA, where the wine market is already competitive could become cut-throat.

Although all of these factors will have a negative factor on the overall wine market in the UK, this could be quite positive for the UK wine producing sector. Although at the moment domestic wine counts for only 1% of the market share, it is a growing industry. In 2014 it produced 6.3 million bottles, worth £78 million and has 470 registered vineyards. Already growing quickly, Brexit could further boost UK wine production.

Brexit represents new challenges to the wine industry. But the UK has been a wine-drinking nation since the middle ages, and love affair with wine will continue after Brexit.

Are Syrian Alawites and Turkish Alevis the same?

Obama and the techs

Interesting little snippets of the digital media team for Obama during the elections in 2012 from Jonathan Alter.

Did Hipster Tech Really Save the Obama Campaign?

 

In an age of Big Data everywhere, the 2012 American election both party geared up with the best techies, data analysts and digital marketers. But it was not the tech that made the most difference. Instead of outsourcing or modifying already existing application techs tried to build everything in house. Techs had estimated a workable product by 2016.  There was clear friction between the techs and the rest of the team. The digital analysts and marketers pick it up much of the slack. I certainly remembered the many meme that went viral and the Barack Obama tumblr.

            the president is not impressed

Most important for the Obama geek squad was Facbook and the use to target individuals in swing states.  The highly effective mobilisation of votes through Facebook was also looked in a more academic setting in a paper made that September by James Fowler.

Pakistan elections: Can’t keep a Mr. sharif is down

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2013, elections, pakistan

photo: AP/Emilio Morenatti

Mr. Sharif has been accused of many things in the past such as corruption and was disposed by the army in a coup during his second term but he is back this year for a third term. The news of Sharif’s win in the Pakistan election this week has been more or less hailed with warm congratulation from everybody. His opponent Mr. Khan said he was glade that the election went well, adding that this a great step towards a more democratic and stable Pakistan. The international community also sent their congratulations, most prominent among them was Mr. Obama and Mr. Singh, the Prime Minister for India. They are many reason why Mr. Singh and Mr. Obama would be happy to work with Sharif. Mr. Sharif is a strong proponent of the free market capitalism and he will do his outmost to control the military power that be after their checkered history.

Yet many mutual interests does not automatically translate into great friendship. Mr. Obama is deeply unpopular in Pakistan. Pakistan with Isreal were the only countries where they have voted in the USA election would have voted for Mitt Romney. Mr. Sharif during the election like many of the other candidate have talked against the USA drone war in Pakistan and would like to see an end to them. Mr. Sharif also wants to talk to the pakistan Taliban to find a diplomatic peaceful solution. He also tried during his last term to impose sharia law in Pakistan. Mr. Sharif will find it hard to work with the more robust judiciary system but perhaps he will be more cautious than he was 13 years ago.Mr. Sharif first priority after all is to secure an IMF bailout and continuation of USA aid to try and improve the economy. Mr. Sharif was elected on a mostly economic platform, Pakistan ailing infrastructure means that many industry lack a constant reliable power supply. Pakistan’s economy is also being crippled by spiralling inflation and widespread unemployment.

This focus on the economy, Taliban and corruption was reflected in many other campaigns running in this year election. Many other issues looked at by western media such as the blasphemy laws, minority rights, freedom of press was a non issues for the majority.

The other two major parties in the running were the Pakistan People Party led by Benazir Bhutuo’s widower Asif Ali Zardari and Tehreek-e-Insaf party led by the former cricketer Mr. Khan which both won around 11 percent of the national assembly seats. These results pale in comparison to the 41 percent share secured by the Pakistan Muslim League-Nawaz led by Mr. Sharif. Mr. Khan has been the most vocal about election rigging which many attribute to his high expectation of winning the elections.Mr. Khan has hard last week of companying from his hospital bed after a fall while at a rally where he broke a vertebra. His lack of experience might have hurt him as well as Sharif favourite campaign line was that he played cricket once but he brought nuclear power to Pakistan.

The PPP’s fall can be easily explained.They have won only 31 seat this year a, stark fall from 2008 where they had 78 seats in the national assembly just after Bhutto was assassinated.Asif Ali Zardarias presidents has watched over the economic stagnation of Pakistan, he has been accused of corruption and as head of the party has overseen infighting.Benazir Bhutto’ and Asif Ali Zardari‘s son is the young PPP chairmen Bilawal Bhutto left for Dubai during much of the campaign.No clear explanation was given, rumours spread that it was because of a tiff with his father or that it was Taliban threats. There also has been defection from voters and party members to Mr. Khan.

The election has not been peaceful but has been deemed relatively fair in most part of the country and with a huge win margin of 41 percent for The Pakistan Muslim League-Nawazand high number of turnout of 60 percent it will be hard to transform election irregularities into full fledge election rigging allegation.

The Pakistan Muslim League-Nawaz led by Mr. Shariff has won 125 seats but it will still have to attract independents or create a coalition as it needs137 seat out of the 272 seats reserved for directly elected member which does not include 70 seats reserved for women and non-muslim.

Papal elections

 

Photo: Saint Peter, first Bishop of Rome

 

If there is one institution that knows real politicking it is the Catholic Church and this was certainly seen this week with the election of a new pope. It has been great fun to watch with the media attention from for example the guardian with choose your own pope pontificator and is there white smoke. Twitter and other website like the pope alarm joined the papal election watch as well.

 

The excitement is understandable with the resignation of Benedict XVI, the first pope to do so in over 600 years (maybe this signifies a return to antipopes as well?). The ancient election of the conclave has changed little since its first modern incarnation in 1276; no communication with the outside world, burning of the paper votes and food abates to nothing after 8 days. There is nothing like the imminent prospect of starvation and death to help the indecisive, which was learned after the conclave of 1268-1271.

 

Although very few laws change with the Catholic Church after all the church is about tradition and will always be at odds with change and modernization (The Smithsonian predicted in 1989 that by 2000 there would be women clergy), it surprising that the election rule has changed several time in the last two decades. Pope John Paul II in 1996, when it changed from a two third majority to a majority rule (50%). In 2007 it was reverted back by Pope Benedict to a two third majority so that the elected pop will likely be a compromise candidate.

 

A total of 115 cardinals were eligible this year as cardinals over 80 aren’t allowed to be part of the cardinal-electorate. This rule meant that the dean of the college cardinal, 85 year old Cardinal Angelo Sodano couldn’t participate. Another notable cardinal missing from the conclave this year is Britain’s most senior Catholic cleric, Cardinal Keith O’Brien who had to resign shortly before the cardinal summons due to allegation from fellow priests of inappropriate action. So that the final breakdown of cardinal-elector was 67 were appointed by Benedict XVI, and 49 by his predecessor John Paul II.  In terms of geographical background, 60 were European and more specifically one third of those were Italian. Outside Europe- 19 came Latin Americans, 14 North Americans, 11 Africans, 10 Asians and one cardinal from Oceania.

 

The elections only took two days, which shows that Pope Francis from Argentina was a straightforward choice for most elector-cardinals.  There had been speculation that the Catholic Church would choose a pope that represented the growing percentage of people in the faith (the Catholic Church constituents) outside Europe. This specifically meant looking at either an African pope or Latin American where the Catholic Church is still strong.

 

The conclave is secret and there is no open campaigning on the part of the cardinals. Therefor vetoing of the papal candidate by the public and media only happens after the pope is elected.  Media has been in a flurry about Pope Francis past and what kind of pope he will be. There has been some reports that he might have turned a blind eye to the military Juntas while a priest in Argentina. He also interestingly enough has links to Communion and Liberation(CL) which also has close political relations with Berlusconi: “CL helped put Silvio Berlusconi on Italy’s political map two decades ago by drawing a crucial swath of Catholic supporters to his side, particularly in wealthy northern regions such as Lombardy.”

 

It would seem that secular and catholic politics run deep in Italy and are not so easily divided. For those who want to try their luck in the next papal elections here is a quick guide.

Kenyatta for Kenya!

 

 

photo: SIMON MAINA/AFP/Getty Images

Uhuru Kenyatta, son of the founding president Jomo Kenyatta, was elected by Kenya this week and officially confirmed by the EICB five days later. This year’s election happened peacefully and to an international standard despite glitches with the new electronic vote transmission system which crashed. The Kenyan election this year received a considerable amount of press due to the ethnic violence involved during the last election in 2007, however a major effort by the media and politicians seem to have kept it to a minimum. Although media self-censorship was to some extent positive in minimizing violence, one should question whether it is altogether a positive step forward. To some extent this self-censorship meant that important issues were not discussed in the media or by politicians.

 

This has come as no surprise for Mutahi Ngunyi who has seen the Kikuyu Kenyatta as the clear winner as early as December when voter registration closed, arguing that Kenya would vote along ethnic line. This was for example seen to some extent in the rift valley, a predominately Kikuyu area, where 98% of the Kenyans voted for Kenyatta. This is certainly not the whole picture, as Kenyatta-Ruto’s Jubilee Alliance only made up 39% of the ethnic population. Other factors were also involved, such as the historic and highly emotive issue of land distribution and internally displaced population in Kenya.

 

As one of the largest land owners in the lush rift valley which has a rich soil it is unlikely that Kenyatta with will land reform. The land inherited from his father who came into power when Kenya became independent from the British in 1963. Despite British fear of handing power to Jomo Kenyatta’s Kenya African National Union nothing was done to reform the individual freehold title registration system which was in place during colonial times. The Kenyattas and the Kikuyu tribe settled in the rift valley and acquired a vast amount of land legally through the World Bank-supported settlement transfer funds scheme in 60’s and 70’s. Although in no way illegal, many feel this essentially amounted to simple land grab. This was reflected in the agriculturally land poor coastal region of Kenya where Uhuru Kenyatta gained less than 10% of the votes.

 

There is greater controversy regarding the dubious origins of William Ruto’s wealth. Kenyatta and Ruo were heavily promoted by the Moi presidency; Ruto was in charge of financing the youth kanu club support for Moi in 1997 elections. It has been alleged that Ruto sudden wealth came from the money skimmed of the youth group. This close association is reflected in the nickname of the Moi youth club that Kenyatta and Ruto have acquired in the press.

 

Another factor which may have contributed to Kenyatta’s lead over his competitor is ironically his impending International Criminal Court (ICC) trial. Kenyatta is alleged to have fomented violence in the 2007 election. Many Kenyans lost their lives in the post election ethnic conflict, and the scars were still felt today by many more in this past week’s election. The ICC and the international community (primarily United State Ambassador Johnnie Carson and the former UN secretary-general Kofi Annan) repeated warnings about electing Kenyatta, spurred many Kenyans to equate that a vote for Kenyatta was a vote for nationalism. In the words of Edward Kirathe, a real estate developer and a passionate Kenyatta supporter “Kenyans may be tribalists but we are also nationalists”. Kenyatta is hopeful that the charges will be dropped like Muthaura but if not he has offered to rule Kenya via Skype during his trial in July.

 

Kenya is an important logistic hub in Africa for journalists, humanitarians and businesses as well as being an important ally for western countries. Kenya has been significant in fighting the Al-Shabba terrorist group in Somalia. Alongside his ICC trial and the fact that Kenyatta campaigned on an anti-west platform, it is still unlikely that trading, donor or diplomatic relations with the west will end anytime soon.

 

The troubling issue that will almost certainly arise is the ethnic conflict that seemed to be dormant during the election.  Voting strongly along ethnic lines and for political dynasties reflects upon a weak institutional government. The ICC trial will be more damaging during the summer when a Kalenjin Ruto and Kikuyu Kenyatta go on trial bringing ethnic tension to the coalition.

 

Moreover another source of ethnic tension within the coalition is the issue of devolution, Ruto being strong supporter of devolution and Kenyatta staunch supporter for strengthening central government.  This will be exacerbated by the development of mining, gas and oil, which strongly encourages inequalities between class, ethnicity and regions.

 

The Italian election!

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2013, elections, Italy

photo: Reuters Yara Nardi

Italy went to the poles on Sunday the 24^th of February to vote and like many other European countries rejected the harsh austerity measure. This has been seen in recent election all across Europe such as France, Netherlands and Greece. Although there seem to be no clear winner, the clear loser was Mario Monti.  Monti’s party won only about 10% of the votes. Mr. Monti terrible downfall is not surprising not only because of the harsh anti-austerity sentiment but as well as his choice to run in the election in the first place. He was after all a technocrat interim prime minister who was supposed to step down for the election.

Italy’s will have to try to cobble some sort of working coalition from the three biggest winner from the election which were Bersani centre left, Berlusconi centre right with both about 30% of the votes and Grillo five star party with 25%. The most likely coalition will between Bersani and Berlusconi. There has been some doubt of how easy it will for a coalition to be built.

One of the reason building a strong coalition will be necessary is in 2005 when Berloscuni was still in power, among the many laws passed, such as the law against persecuting the president for fraud, was a change in the way elections were determined. This changed from first past the post (majority vote) to proportional representation. This has significant repercussion as in Italian democracy where both houses are equal (perfect bicameralism) and therefor a majority party has to win both houses. This was introduced before the last election so that Berlusconi could keep himself in power. Its is also interesting to note that the election was called two months early when Berlusconi’s party pulled its support from Monti’s government.

It is a surprised that Berlusconi managed to do as well as he did to many outside of Italy. Where he has been found guilty and sentenced to four year in prison last year (reduced to one year) and most recently to a further year for breach of confidentiality when he released a wiretapped conversation.

Another reason is even though Berlusconi campaign on an anti austerity platform, he was one of many candidates to do so and Bersani seemed like a valid alternative. Although Berlusconi did go further and pledge to not only reduce taxes but reimburse taxes already paid. Perhaps another reason is the fall in voter turn out by 7% to 55%. Many Italian feel delusioned by Italian politics. A clear sign that Italian want to see change in their politics is the rapid rise of the comedienne Beppe Grillo and his Five Star Party. Whether this young, anarchic and inexperienced party will be able to bring any solid and productive fiscal political policy that has positive change in another matter.

Netanyahu is dead! Long live Netanyahu!

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2013, elections, isreal

Image from BAZ RATNER / REUTERS

Netanhayu has won the Israeli election this year however not many of his party or his voters will see it as a victory. Netanhayu’s party, Likud Beitenu lost 11 of their 42 seats, some of which were gained by the ultraorthodox and moderate centrists. This means Netanyahu will have to scramble to form a coalition for a parliamentary majority, flirting with both the more moderate centrist party Yesh Atid and the ultra orthodox Jewish Home party. In many ways the Israeli elections this year have been devoid of content leading it to be referred to as a “Seinfeld election”; although this has not dampened voters, which rose to around 66%.

Israel has major issues such as government corruption and the ever-present question of Palestine. However like many OECD countries it also has a looming 10 billion deficits and eroding middle class. Israel has a Gini coefficient of 0.37 which is slightly less than the USA at 0.38. In the words of the great James Carville “it’s the economy, stupid.” One of the reasons that may have led to Netanhayu meager victory could be that his election campaign was based on the vague term of “Strength”. This was evident in late 2012 in the hawkish and warmongering stance Netanyahu had towards Palestine which resulted in skirmishes and bombing of Gaza city. Only through some diplomacy with Egypt taking its traditional role did the violence quiet down. Iran is Netanyahu other bugbear, the strained relationship between Iran and the rest of the world has certainly not been helped by threats from Israel about the possibility of air strikes nor by Israel’s murky relationship with Azerbaijan. Although during the USA presidential campaign nothing but full support from President Obama for Israel attacks on Gaza City was shown, yet as soon as the USA elections were won Obama was quick to distance himself from Netanyahu and was reported have said “Israel doesn’t know what its own best interests are”. These issues are deepening Israel’s isolation from the rest OECD community.

If the centrists do join Netanyahu, how much of a difference they will make remains to be seen. The Yesh Atid very much veers to the right when compared to Western countries. Their view about Palestine is more in agreement with Netanyahu, than for example the Labour Party. Major contentious domestic issues between the moderate Yesh Atid and ultra-orthodox Jewish Home, such as, the special treatment of the growing number of ultra-orthodox receive is resented by many Israelis. If the Yesh Atid does have any visible affect it will be on the domestic issues not Israel’s foreign policy. Major foreign policy changes in regard to Palestine will probably not change especially when considering that Arab Israelis party has been reduced to two seats in Knesset even though arabs make up 20 percent of the population.

Netanyahu has won another term in office but he will be playing much more the role of a power broker between the orthodox extremist and centrist party than as a head of state.

Silvio, Italy will always have a place for you.

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Berlusconi, elections, Italy

 Honk honk Italy, Silvio is back. European Pressphoto agency.

Never count Mr. Berlusconi when it comes to politics in Italy is what we have learned this week.  Although not a glorious return to his immunity prime ministerial days, and poling at only 19%, his newly formed allies at the Northern League party has made it clear, Mr Berlusconi will be the lowly minister of finance.  I wonder what it says about Mr. Farrage UKIP leader here in the UK who according to the latest polls at 16%.

Not surprisingly enough Der Spiegel wrote a scathing indictment of Berlusconi past and his future chances in Italian politics. Der Spiegel is one of many voices in the media not enthusiastic about Berlusconi return. Grilfriend in a coma, an Italian film ,which is the named after The Smith song is one many films that were brutal invective against Berlusconi. It is propitiously is showing at The Frontline Club this Friday. The most noted one in recent years is Vidoecracy lambasting Berlusconi and the tight hold on he has on the Italian media. Unsurprisingly enough was not allowed to be shown by the Italian network that Berlusconi controls.

Although Italians corruption is commonplace and permeates many institutions such as politics and football, pain of austerity has changed the public. Polling in extremely low figures Berlusconi hasn’t given up his chances, although most opinions do not believe he will be elected. It is not Berlusconi improbable victory that is important but the effect he will have if his party picks up senate places as well as the infighting between him and Monti. The daily attacks between Monti and Berlusconi has left the center left coalition with what seems to be an easy victory. A win for the center left coalition will mean another EU country going against austerity measures. The real joke in this election is not if the five-star movement lead by the comedian Beppe Grillo wins but Berlusconi.

The Electorate College and democracy.

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2012, democracy, elections

 

2012 has been a very busy years in terms of the number of election in all their splendiferous variety. Across the world we have seen the people going to vote from Mexico, France, Netherlands, Greece, Russia, South Korea, India as well as new fledgling democracy in some Arabs countries such as Egypt and Tunisia.  It would seem we are just a hope scotch away from mundialization, which I vote for Sting to represent the UK.

What a year for the democratic elections to shine in all its variety.

The French election is a basic run-off competition, which the second round between Holland and Sarkozy led to some strange anti-Semitic/immigration comment by the latter as he tried to gather Marine Le Pen votes. The Egyptian election was uncomfortable for the western world, as the mix between proportional representation and winner takes all electoral system put in power the Muslim brotherhood in power. Whilst although under not as much criticism western world, but certainly to much consternation of the other EU nations, the Greek people electorate gave a large portion of their votes to the Neo Nazis and Communist parties (An extreme version of the UK coalition?).

Yet none of them have garnered as much attention as the USA presidential elections.

The great United States presidential elections between Mittt Romney and the incumbent current president Barack Obama will be a close. The current polls show only a few points lead to Obama. Although since the charismatic Bill Clinton gave his speech at the democratic convention Obama has seem to picked up enough of lead that will certainly help him sleep a bit more comfortably at night.  Not too comfortably as a couple of days later Clinton introduced Romney at the Clinton Global initiative conference, to which Romney quipped that he hoped that Clinton introduction would have the same bump in polls for him that it did for Obama.

The USA has a very interesting and unique voting system compared to a lot of countries due to its history. Although Electorate College have been used by different countries at some point only the United states has continued this tradition. Arrow’s impossibility theory shows that there is no perfect voting system yet the electorate system has produced strange results in the past such as the 1886, 1888 and most recently the 2000 elections. The Electoral College was chosen specifically for the USA federalist system so that sparsely populated state would not lose out to more populous states. This means that the USA president in not directly elected by the people but by the state and electors cast votes for a specific candidate so that instead of having one vote per person it is a state win all votes. This has led to specific way of campaigning and strategic voting in the States. In terms of party politics it has meant overwhelmingly strong two system party which concentrate on nine swing state and are safe to ignore the rest of the USA. It also means that a candidate only needs 22 per cent of the popular vote to win the election. Should the United States change its system to a more vox populi and change to a presidential direct election?

The UK in 2011 tried to change from winner takes all (simple plurality) to instant run off (alternative vote) method. It was felt its voting system of direct election to an alternative would be more representational. The Electoral Reform Society looked at winner takes all (first past the post), the alternative vote and single transferable vote. Its finding with all the caveats seem to find only slight change between winner takes all and alternative voting for the conservative, labour and liberal democrats. The real difference was the single transfer votes, which was never proposed as an alternative. There was many reason why the Yes to AV campaign did not work, in suffered a massive loss by more than 64 per cent.

Political system once entrenched are hard to change and reform happen through turbulent chaotic times such as revolution in the middle east. Lord reforms in the UK have found not so much opposition as intractable inertia. Americans will find it even harder to change their traditional voting system especially when it has been passed down from the hollowed founding fathers. Yet the voting laws have been changed before to give women and minorities the right to vote.

The results should be interesting in November when the popular votes are counted and the electors officially cast their state votes on 6^th of January. I do wonder who would be the winner if alternative more representational voting such as instant run off or single transferable votes replaced the Electoral College.