Posts
Perfidious Albion
Twilight Club Paper
April 3, 2014
I invite each of you here to notice what I am wearing tonight. My coat was a covert coat supplied by New & Lingwood of 57 Jermyn St., London. Not only is Jermyn St. the location for London's most traditional shirtmakers, but New & Lingwood stands out as traditional supplier for Old Etonians. My jacket was made by J. Barbour & Sons, supplier of British countrywear for more than a century. My shirt is Oxford cloth, named after the university, supplied by Charles Tyrwhitt, also of Jermyn St.
While I may not be the model of a modern major general, there is nothing about my appearance that would cause surprise if worn during an episode of James Herriots' Yorkshire or amongst the figures summoned to the living room during an English country house murder mystery while the Detective Chief Inspector reviews the foibles of each of us revealing that it was, indeed, Colonel Mustard who used the candlestick. Not only have I so dressed for years, but so also have most of my male relatives for generations, as most of you well know. And this makes sense, for, I actually really do happen to be about as close to an English country squire as anybody you are likely to meet on this side of the Atlantic ocean.
In short, gentlemen, I am making a fool of myself. In tonight's paper I shall explain why.
That England today should have come to enjoy a "special relationship" with the United States is not at all obvious, given our history. Quite obviously the United States was born in outright war against England. Hostilities resumed in 1812, and our national anthem celebrates our battle with them. Andrew Jackson, perhaps our greatest and certainly our most flamboyant early president, routed the British at New Orleans. Tensions continued. A dispute over our boundary in the Pacific northwest gave rise to the slogan, Fifty-four forty or fight. The grand strategy of the South during the Civil War was to induce England to intervene on its behalf. Not only did most British sympathize with the South, but England nearly did go to war in response to the 1861 seizure of two Confederate agents who were aboard the British mail packet, Trent.
Indeed, that any country should have a "special relationship" with England is interesting, for the expression, Perfidious Albion, the title to this paper, is hoary. References describing England as "perfidious" date to the 13th century, while the exact phrase "perfidious Albion" was coined by a Frenchman in 1793. Subsequently, the phrase has widely been used not only by French polemicists, but also German, Italian, Portuguese, Israeli, and others. According to Wikipeadia it has been a "pejorative phrase used within the context of international relations and diplomacy to refer to alleged acts of diplomatic sleights, duplicity, treachery and hence infidelity (with respect to perceived promises made to or alliances formed with other nation states) by monarchs or governments of Britain (or England) in their pursuit of self-interest and the requirements of realpolitik, often as not employed by the loser in geopolitical affairs."
Perfidious or not, for England, any sort of special relationship with anybody has generally been unusual. As the fabled Times of London headline, , "Fog in Channel; Continent Cut Off," reminds us, England long has maintained a general policy of Splendid Isolation with other countries. While the actual phrase was most famously used in a speech in 1896 by England's First Lord of the Admiralty, it describes the Tory foreign policy of Disraeli and then Salisbury. Apparently the spirit was expressed in a popular history of the Napoleonic Wars: "In the midst of this terrific commotion, England stood erect: wrapt up in her own impregnability, the storm could not affect her: and therefore, while others trembled in its blast, she smiled at its fury. Never did the 'Empress Island' appear so magnificently grand; – she stood by herself, and there was a peculiar splendour in the loneliness of her glory." And anyone who has gone to England knows that they are a reserved lot; not at all given to mixing freely or admitting strangers into their midst. In short, England and the British are not typically the sort to enter into any sort of special relationship, with anybody, but rather typically deal with others coldly, formally, and at arms length.
So how did America's special relationship with England emerge. One part - a big one, I would submit - was the late 19th and early 20th century marriage mart, whereby Gilded Age American heiresses swarmed to England, trading new wealth for old titles. From the 1870s to the outbreak of World War 1, some 350 US heiresses married into the British aristocracy. At today’s values, it’s estimated that they brought with them the equivalent of £1 billion of new world wealth. In the 1890's there actually was a quarterly publication devoted to this theme, The Titled Americans. In this slim book is a list of all American heiresses who wed titled Europeans, as well as a “stud book” of elgible unmarried peers and aristocrats (with a strong emphasis on the British aristocracy), their professions, their estates, and their incomes. In 1890, it carried this blatant appeal for a wealthy bride: 'The Marquess of Winchester is the fifteenth Marquess and Premier Marquess in the Peerage of Great Britain. 'He is also the Hereditary Bearer of the Cap of Maintenance. The entailed estates amount to 4,700 acres, yielding an income of $22,000. He is 32 years of age, and a captain of the Coldstream Guards. Family seat: Amport House, Hampshire.'
These heiresses actually were not the creme-de-le-creme of American society such as New York Knickerbockers, Virginia Tide Water, or Beacon Hill Boston Rather, they were the daughters of nouveau riche industrial magnates who had risen in the post-Civil war era industrial boom - decidedly not from the ranks that Edith Wharton would write about. As such, they were targets of social snubs from older American families. To marry an English lord would be sweet revenge and social leap-frogging. Europe, of course, had other aristocrats; so some instead married French courts or the stray Prussian Junker. But, let us get real, for that to work you would have to speak the language.
And, we must note, this was also a good deal for the British aristocracy. Money was money, and the British upper classes for centuries had married rich merchant heiresses. And, beginning with the 1880's the same agricultural depression that would give rise to the Populist movement here gutted the rents that had maintained the British upper classes. They not only wanted, they needed the money.
While British stud fees were high, this was not their only means of obtaining nouveau rich American dollars. Not only the heiresses but also their fathers and brothers faced social snubs; and robber barons have feelings too, you know. The solution.: Art. Spearheading this charge was Joseph Duveen, 1st Baron Duveen, one of the great art dealers of history. His success is famously attributed to noticing that "Europe has a great deal of art, and America has a great deal of money." He made his fortune by buying works of art from declining European aristocrats and selling them to the millionaires of the United States. Duveen's clients included Henry Clay Frick, William Randolph Hearst, Henry E. Huntington, J.P. Morgan, Samuel H. Kress, Andrew Mellon, John D. Rockefeller, and a Canadian, Frank Porter Wood. The works that Duveen shipped across the Atlantic remain the core collections of many of the United States' most famous museums. Duveen played an important role in selling to self-made industrialists on the notion that buying art was also buying upper-class status. s. When Duveen was still a young man in his father's employment, a well-to-do couple came into the store to buy tapestries. As the lady was choosing and picking up pieces generously, Duveen's father discreetly asked him to find out who these people were. Duveen went outside to the horseman and was told that the couple were Mr and Mrs. Guinness. Duveen wrote their names and slipped it on a piece of paper to his father, when the lady was almost finished she innocently asked "We are buying so many tapestries, you must be wondering why?" Duveen's father immediately beamed and said "Of course not, Lady Guinness, you have so many beautiful homes, you will need more than one tapestry to decorate them!" The Guinnesses were subsequently ennobled in the 1890s; Duveen had successfully flattered Mrs Guinness by addressing her as "Lady Guinness."
More broadly than art, Gilded Age America aped British culture. Prep schools, modeled on British public schools, such as Eton, Harrow, Rugby, Winchester, and Charterhouse, emerged. Collegiate gothic architecture, reminding one of Oxford and Cambridge, was adopted by Princeton, Yale, and other colleges and universities.
And England's relationship with America certainly paid off. Not only did heiresses' funds help maintain costly country houses, but the deus ex machina America played in World War I saved England from likely defeat.
The British continued to keep American juices flowing later in the century, as - first - American flappers celebrated that they had danced with a man who had danced with a girl who had danced with the Prince of Wales. Germany remained a problem; and one solution was in 1939 to dispatch the British Royal family for a visit.
Hence began America's love affair with "the Royals." Nevermind our republican heritage. Nevermind that Europe has not one but ten royal families; Belgium, Liechtenstein, Monaco, Norway, Sweden, Denmark, Luxembourg, the Netherlands, and Spain - as well as England. And don't even consider Jordan or Japan. When I say the royal family, everyone here knows perfectly well what I mean - and no it ain't Denmark. Are you bored with blanket coverage of missing Malaysian airliners? Rest assured that - should Prince Harry get engaged - you would hear nothing more about it.
Meanwhile, British spy movies fill the airwaves, as dashing British agent James Bond, accompanied by his clumpy CIA sidekick Felix Leitner, dispatch villains with panache. And so the special relationship proceeds and - hey - if there's a little money to be had on the side, what's a nudge and a wink between friends?
At this point, however, it would behoove us to step back a few paces and look at the broader picture. For the world today is not the world of the late 19th century. And today's nouveau rich are not rough hewn MidWestern industrialists but rather Third World crony capitalists. What approach is the British aristocracy taking to these new and frequently - if not typically - non-American billionaires?
As we have previously noted, following the art market can be instructive here. One of the most useful accounts of the current art scene is The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art by Don Thompson. According to Thompson, the contemporary art market is driven by branding. Branded artists use branded galleries to sell to branded collectors. For example, the dealers Larry Gagosian or Jay Joplin, the artists Damien Hirst, Tracey Emin, Jeff Koons or Andy Warhol, the auction houses Sotheby's and Christie's, the collectors Charles Saatchi or Ronald Lauder. Museum exhibitions boost the prestige - hence the value - of certain artists while museums themselves, such as the Guggenheim, franchise their names. All this branding, Thompson states, serves to relieve the social anxiety of purchasers, who can rest assured that if the painting on their wall is a Damien Hirst that had been exhibited at the Met, purchased at Sotheby's from Charles Saatchi, then it must be pretty good. Which in turn explains how a shark cadaver kept in a tank of formaldehyde could wind up commanding a $12 million price tag.
Note that while New York is the foremost center of the art market, London ranks a strong second. And further note that Thompson did much of his research in London.
All of this would have made sense to Duveen. Bigger, broader, more formalized. A target for social satire and moral attack. We could well imagine the Rev. Mark Seikes condemning such conduct from the pulpit at St. Matthews Church, while we sit at our pews, nodding our heads in our Brooks Brothers suits. This looks like more of the same. But - still - there is nevertheless something odd here. The celebrated mythical high bidder at Sotheby's is no longer a MidWestern industrialist. No. He is a Russian oligarch.
And yes, things have changed. Country Life Magazine is essentially the house organ of the British aristocracy. According to it's February 26, 2014, "Fine Art," edition, "Twenty-five years ago those clients would have been Western Europeans and Americans. Today it's the Russians and Chinese who are the major players, many with little idea about collecting." It adds, "Earlier this month, the art market hit a new record, with London auctions of Impressionist, Modern and contemporary works achieving more than 709 million over two weeks......Some of these successes can be explained by the power of brands Both collectors and the visiting public are attracted to works that are instantly identifiable. For some new collectors, displaying a work of art that guests will immediately recognize as a Warhol or a Hirst is gratifying, just as Henry VIII displayed his gold plate on a buffet as a decoration of the size of his bank balance, so most people who see a brand name piece on a wall can guess that it carried a substantial price tag. Perhaps this explains the the taste for Botticellli, Brueghel, and Cranach among Russian billionaires as, whatever else art historians say, they are unlikely to be mistaken for works by other painters."
Headlines from the London-based Art Newspaper's March issue proclaim : "UK-Russia: culture of cooperation? This year's joint cultural programme could help mend political divisions," "More questions than answers after the 'miraculous' Russian avant-guard show." "British Museum coy about its income from the Gulf," and - my personal favorite - "From Russia ( and Britain ) with love, apparently: Despite recent tension between the countries, and concern for Russia's human rights record, a major programme of exhibitions takes place this year." Ping-pong diplomacy at its finest, obviously.
Indeed, assisting these new Russian and other billionaires solve their banding problems seems one the British aristocracy seems eager to provide, for Country Life adds, "It used to be said that connoisseurship was dead; the City people who had time to cultivate an informed enthusiasm for Chelsea porcelain while holding down a highly paid position no longer exist. However, the number of billionaires in the world seem to increase by the day and their children, highly educated at Britain's best public schools, will be able to buy whatever they want." Likewise, a recent issue of The Tatler focused on how Russian, Nigerian, and other foreign billionaires are now prepping their children for admission to England's fabled public schools.
Indeed, wealthy Russians of all stripes have been flocking to "Moscow- on-the-Thames," aka Londongrad, as London is now being called. " This is good news for Londoners because it means that the best-educated, most creative and most active people in Russia will be heading here. London will become what Paris used to be for Russians in 1917-1918" The Guardian stated in a March 2, 2014, article. " By some estimates there are 100,000 Russian-speaking children studying in the UK (from nurseries to universities) and this is really the creme de la creme of the Russian nation. Like the sturgeon hiding its eggs from poachers, Russians are hiding their children not only from the drunk policemen who run them over in the streets, but also from the environment, which has a destructive effect on people," it adds. " Four years ago, after returning from school, the son of one of my friends told his dad that his car was not as good as one owned by a classmate's parents. My friend has a decent car, he is a billionaire. This was the reason why he sent his son to study in England, first to a private school and then to Eton. Russian children will increasingly compete with British kids for spaces at the top schools here as their parents groom them to be leaders," it further states.
But not to worry, for the article adds " The people who will come here will not be the ones who mindlessly, without bargaining, buy houses and artworks, but people whose senses are very well developed, including their intuition, which tells them to leave Russia now. They are not just successful people but perfectionists, who are accustomed to surrounding themselves not with the biggest or the most expensive, but with the best. If in the 90s Russian migrants were associated with mobsters and gangsters, now it will be a wave of so-called creative class emigration."
Hopefully, the article is correct on this point, for London now is being swamped with foreign money. According to the Daily Mail, " Capital is home to 67 billionaires: London now top European destination for super-rich whose average London home will cost more than £10m." It states, " Of these, 60 per cent are self-made billionaires, 20 per cent have inherited wealth with 20 per cent having part-inherited, part-made fortunes." This billionaire influx has been going on for more than a decade. According to a 2004 article in The Guardian, " One in 15 properties sold at the top end of the London property market last year was bought by a Russian, according to estate agents Knight Frank. The company also says that one in 15 properties costing more than £500,000 was bought by Russians in 2003, and they were behind a third of purchases in London by foreign citizens." The 2004 article noted, " "We are getting to the stage that most of the prime streets in London have a Russian living on it now," said Stephen Mallen at Knight Frank. "It has been a gradual trend over the past five years, but has seen an upturn in the last two."
And this has impacted British policy. According to a 2012 article in Foreign Policy, " British elites, elected or otherwise, have grown highly susceptible to the unscrutinized rubles that continue to pour into the boom-or-boom London real estate market and a luxury-service industry catering to wealthy Russians who are as bodyguarded as they are jet-set. This phenomenon has not only imported some of the worst practices of a mafia state across the English Channel, but it has had a deleterious impact on Britain's domestic politics. And some of the most powerful and well-connected figures of British public life, from the Rothschilds to former prime ministers, have been taken in by it. Most surprising, though, is how the heirs to Margaret Thatcher's fierce opposition to the Soviets have often been the ones most easily seduced by the Kremlin's entreaties."
The article goes on to cite the a new lobby group called Conservative Friends of Russia (CFoR), which now apparently has been renamed the Westminster Russia Forum.
Things Russian in London, unfortunately, are not always so friendly. Apparently some Russian oligarchs are bringing their well-known business practices with them. For example, in March, 2012, former Russian banker German Gorbuntsov was shot with a submachine gun in London. There had been speculation in the Russian press that Mr Gorbuntsov was a witness to a murder attempt on another Russian banker, Alexander Antonov, in Moscow in 2009. Gorbuntsov was also on Moldova's wanted list over allegations of an illegal bank takeover and embezzlement. The BBC's security correspondent Gordon Corera then said: "Although at this stage the motive for this attack remains unclear, the concern will be that the type of violence long associated with business and organised crime in Russia might have arrived on the streets of London."
Despite this episode, according to former City of London police fraud investigator, David Clarke, many dubious businessmen from unstable countries prefer London because it is safe. Shootings, kidnappings and physical intimidation of those from unstable countries are rare in the British capital. Better still, the regulatory climate there is so loose that it is lax London, the lovely Moscow on the Thames now is celebrated as the money laundering capital of the world. Clarke cites the following opportunites: the casino/betting shop, the mansion, the travellers cheque, the phony nightclub, the corporate takeover, and collectibles, which includes not only diamonds and Ferraris but - as I'm sure you must have suspected - art.
Furthermore, the City of London, London's financial district, ranks second only to New York in its financial expertise. If anyone knows how to cook the books, it is they. According to fraud and anti-money laundering consultant Rowan Bosworth-Davies:
The architects of these schemes make use of a little-known phenomenon which is that where a UK company is not carrying on any business or if the Registrar of Companies has reason to believe that a company is not carrying on business or is not in operation, its name may be struck off the register and dissolved without going through liquidation or any other kind of investigation.
This is a fantastic facility of which much use is made by professional launderers, and it works like this.
The person creating the laundering chain, does not want to leave behind any unnecessary avenues for further investigation. So, he will create a UK limited company as part of the process, the aim being to obtain a UK bank account.
It is widely recognised and believed among foreign investigatory agencies that the UK has an enviable anti-money laundering investigative process, so it is a widely-held fiction that if there is a UK company involved in a financial transaction, little additional work needs to be done because the very existence of a UK company, gives the whole scheme credibility.
Once the bank account has been acquired, the dubious transaction is carried out, the money paid through the account of the UK company and then moved on again as part of the laundering process. It is highly unlikely that the UK bank will have done anything about the payment, indeed, it is unlikely that they will have picked it up as there is usually only one transaction, and most banks' compliance monitoring software is not calibrated to understand this feature.
Then, all the launderer needs to do is to wait, because if the UK company submits no annual returns to the Registrar of Companies, the Registrar will later assume that the company is not trading or carrying out any business, and conveniently wind it up, and remove its name from the Register of Companies.
Such factors have caused commentators to question how seriously England would pursue sanctions against Russia in the current controversy regarding Crimea and Ukraine.
In a March 7, 2014, op ed in the New York Times, Ben Judah states:
" England’s establishment is not what it was; the old imperial elite has become crude and mercenary. On Monday, a British civil servant was photographed arriving in Downing Street for a national security council meeting with an open document in his hand. We could read for ourselves lines from a confidential report on how Prime Minister David Cameron’s government should respond to the Crimea crisis. It recommended that Britain should “not support, for now, trade sanctions,” nor should it “close London’s financial center to Russians.”
The White House has imposed visa restrictions on some Russian officials, and President Obama has issued an executive order enabling further sanctions. But Britain has already undermined any unified action by putting profit first.
It boils down to this: Britain is ready to betray the United States to protect the City of London’s hold on dirty Russian money. And forget about Ukraine."
He adds:
" The Russians also understand this. They know that London is a center of Russian corruption, that their loot plunges into Britain’s empire of tax havens — from Gibraltar to Jersey, from the Cayman Islands to the British Virgin Islands — on which the sun never sets.
British residency is up for sale. “Investor visas” can be purchased, starting at £1 million ($1.6 million). London lawyers in the Commercial Court now get 60 percent of their work from Russian and Eastern European clients. More than 50 Russia-based companies swell the trade at London’s Stock Exchange. The planning regulations have been scrapped, and along the Thames, up go spires of steel and glass for the hedge-funding class.
Britain’s bright young things now become consultants, art dealers, private banker and hedge funders. Or, to put it another way, the oligarchs’ valets."
However, rebutting this, Forbes Magazine asserts:
However, looking at the data, this theory is clearly wrong....Not only are the links between London and Russia far from substantial but the UK has generally found itself close to those in favour of deeper sanctions in this debate.
All the articles written on this topic provide some anecdotal evidence to support their position, usually related to the number of oligarchs located and doing business in London. While it’s true there are a disproportionate number of them in the City, this is far from sufficient evidence. The vital point is that any discussion must be in the context of London as a global city and in the context of other EU countries having significant trade and energy links to Russia.
Looking deeper at the data, we see that, while Russian business does generate fees for the City, they are not significant as a share of the total
Forbes proceeds to assert that Russian-based fees for financial services and for investments are approximately one percent of England's total. However, Forbes also states: " Some may of course be cycled through offshore centres, but this is impossible to track and there is little evidence to prove it has any impact on London’s role as a financial centre." (Note that the cycling of funds through offshore centers has a well understood meaning in money laundering circles and also that money launders have little, if any, incentive to provide accurate evidence of any sort with respect to any matter.)
Both Judah and Forbes miss the big point, however. England's position right now is indeed both complex and compromised. For Ukraine has oligarchs too. According to a February 23, 2014, article in the Daily Telegraph, " Whereas before the financial crisis Ukrainians favoured Cyprus as a centre for their commercial operations, “today London is the financial centre of Ukrainian businessmen”." Rinat Akhmetov, Ukraine’s richest man, has bought the UK’s most expensive flat at the One Hyde Park residential development in London’s Knightsbridge for $221 million dollars. Apparently the relationship between Kiev's regime and its various oligarchs is complex; so British newspapers are filled with articles trying to sort all this out. Frankly, I will not try to do so tonight. Suffice it to say that sifting between the now conflicting claims of not only Russian but Ukrainian oligarchs now presents British policy makers with quite a sticky wicket. So it can be no surprise that,. so far, England's response to any sanctions regime has been both muted and muddled.
In this paper, I have perhaps focused too much upon Russian oligarchs. We should not forget the many new Nigerian, Chinese, and other billionaires to whom I have alluded; the British certainly have not. So it is entirely premature for us to join Mr. Judah in his conclusion that England is now giving us the old heave ho and sally off with its new found friends. Besides which, anything so blunt would not be perfidious, but rather merely crude. And that's not cricket. Still, as I observe Country Life frontpieces displaying society ladies in the nude and notice Tatler articles celebrating $10,000 a night call girls or the proper care of one's pubic hair, I cannot avoid the suspicion that, indeed, the lady may well be becoming a tramp. Nor need we presently consider the merits of imposing sanctions on Russia. For what it may be worth, I, for one, oppose them. Be sanctions good or sanctions bad, that does not change the point that England today simply is not the place most Americans think it is.
As for me, well, Italian suits actually are easier to obtain online than British; and I have recently become obsessed with the one family that clearly eclipses the British royals, the Julio-Claudians. So I should be able to claw my way out of my sartorial and social predicament. Accordingly, it would be appropriate for me to conclude, not roaring as the British lion, but rather grinning, slowly to fade away, like the Cheshire cat. And finally, my friends, do enjoy your Downton Abbey.
