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Karina's Column

An insider’s view on the City of London and beyond

Geopolitics and a Muslim narrative

Why there is nothing inherently wrong in deflation

The mountain guide promised us three things as we faced climbing Wildspitz, at 3,800 metres Austria’s second highest mountain, in glacial winds. That the glacier we were going to traverse on the way there in our skis-on-skins was flat. That there would be a Group A, determined to make it to the top, and Group B, those who couldn’t take it anymore and could quit with honour, to be lead down the mountain by the second ski guide. That it would be easy to climb, roped together with ski boots and crampons.

We were misled.


The West’s visualisation of the world tends to be geopolitical – maintaining access to natural resources and trading markets, impeding the rise of rival systems of governance and, where these emerge, undermining them. Not since the Crusades between 1095 to 1291 has religion been the main reason for a war between states in the Western world.

A Muslim visualisation of the world appears to be primarily about religion, an alternative narrative that is difficult for us to understand in a 21st century where church attendance barely deserves the name. The West does not see war in Iraq, Libya or Syria as being about faith or a conspiracy against Islam, but about oil and/or power.

Western politicians very rarely resign because they disagree with one part of the government’s foreign policy. Yet Baroness Warsi, a British Muslim who was a Foreign Office Minister in the Conservative government, quit in 2014 over its “morally indefensible” inaction over the Gaza crisis.

She said the UK’s support for Israel risked becoming the “basis for radicalisation [that] could have consequences for us for years to come.”

We must never change our foreign policy, be it right or wrong, because a minority of our population – Muslims represent about 3 million or 5% of the UK population – disagrees with it. That would be succumbing to blackmail, which would not, in any case, solve the problem of those already converted to terrorist violence. Nor should we ever stop satirising religious inanity and hypocrisy, as the heroes of Charlie Hebdo were doing, and will courageously continue to do, in Paris.

What we all need to work on, including figures in authority in the Muslim community, is integration. Harun Khan, Deputy Secretary General of the Muslim Council of Britain, admits that “we have failed as a community and as a nation to educate youth as citizens.” Multiculturalism as government policy has been declared a failure, but more must be done on assimilation. That is the mountain we have to climb. There isn’t an easier route.

We can also work harder at distinguishing in the media between extremists and moderates. Let us not forget, in the heat of atrocity, that it is the moderates who are the overwhelming majority of Muslims. Using pseudonyms like “Jihadi John” for an ISIS executioner is an offensive use of the word “jihad” for peaceful Muslims. For many of them it refers to an internal spiritual struggle, not unlike our interpretation of the violent Old Testament – no longer literal, but metaphorical.

Warsi, who co-chaired the Conservative Party, says that for her generation, the nightmare is to have a daughter bring home an Islamic extremist boyfriend. Islamic radicalisation is as much, if not more, an abomination for the decent Muslim community, as it is for everyone else. That should not be forgotten in finding our way through this.


“There is nothing inherently wrong in deflation,” says Geoffrey Wood, Professor Emeritus of Economics at Cass Business School and a former Special Advisor to the Bank of England. Consumer prices in the year to December fell 0.2% in the Eurozone.

The spectre of deflation haunts governments in Western Europe. They have lost sight of the wider picture. Rather than focussing on the growth windfall from a record low in the oil price – the EU is the world’s largest importer of oil and gas and has long complained that this is a major factor in its lack of competitiveness versus the US – all eyes are on the European Central Bank and its possible decision to launch a programme of quantitative easing.

Between 1870 and 1914 in the UK and the US, the general price index ended up at the same level as it began. In the first half of those years it drifted gently downwards, in the second half gently upwards. Consumers did not stop spending in the late 19th and the early 20th century, points out Wood, in reference to the theory that they will put off purchases in the expectation that items will be cheaper in the future and thus send the economy into a spiral of non-consumption. “If it really is deflation, then money wages will be falling as well as prices,” he notes.


We made it to the top of Wildspitz. The glacier was not flat; there was no option B to drop out with dignity intact; the descent was terrifying.

Being roped together with six others for hours on end was awkward and ungainly. Nevertheless, our strength came from our mutual dependence, as experienced mountaineers will attest. That is a lesson for us all, be it in politics as in economics.