James Forsyth

A few weeks ago, folks were busy claiming that this financial crisis and the ensuing recession would mark the end of American hegemony. But, as the Washington Post points out in its editorial today, it is America’s enemies who look like they are going to be hardest hit by it. Those petro-states that have been buoyed up by the high-oil price, are in a far weaker position now oil is $65 a barrel. As the Post puts it: “Unless oil prices quickly recover, Venezuela's Hugo Chávez and Iran's Mahmoud Ahmadinejad are likely to face even tougher domestic economic challenges in 2009 than the next U.S. president.

If the Deripaksa affair persuades the Tories that they need to vet everyone from whom a shadow cabinet member accepts hospitality and that the shadow cabinet should be kept as far away as possible from the soliciting of donations then some good will have come of it. The Observer reports today that the vetting process designed to stop David Cameron meeting people who could embarrass the party will now be extended to ‘other senior figures’ and that senior Tories are pressing for all donations to be left to Feldman. But there are still other potential pitfalls the Tories need to deal with. First, and most pressingly, there is the issue of Lord Aschroft’s tax status.

Gordon Brown’s political strategy for the recession involves claiming that it came from America, that Britain is uniquely well placed to deal with it thanks to his policy decisions and that only he has the experience to see the country through this crisis. But as the Observer points out in its editorial today—entitled “It’s your recession, Mr Brown. Deal with it”—these claims are simply not accurate:  “The implication is that recession is a foreign ailment that the UK only contracted through its exposure to global financial markets. But for a decade, the government promoted the City of London as the international centre of financial services.

When you look at these figures from Time magazine you realise how hard hit this country, and London especially, is going to be by this recession: “In 2007 financial services accounted for 10.1% of the U.K.'s gross domestic product, up from 5.5% in 2001. Add in professional services linked to finance, such as accounting, law and management consulting, and the total rises to 14%. And that's for Britain as a whole. For London, finance has been even more important: it accounts for almost one-fifth of the city's total output, perhaps as much as one-third if professional services are included. That's far more than for even New York City, where financial services account for about 15% of its economy.

Ian Jack has a dispatch from Glenrothes in today’s Guardian. Here is his main point: “The conventional wisdom about Glenrothes goes like this. After its victory in Glasgow East, the Scottish National party thought it could wipe out Labour's 10,000-majority. Then the global crisis erupted. Small-country nationalism no longer looked so clever - Salmond will never praise Iceland again. The UK Treasury bailed out Scotland's two greatest banks and Brown emerged as the saviour of the world economy. An SNP victory is no longer secure. There's a new spring in Labour's step. All may be broadly true; people will mention it when asked, though usually only as a kind of hearsay opinion.

There is an argument that British politics since 1994 is a historical freak, a product of a period of ever-increasing prosperity which allowed politicians to avoid the hard choices that typically define politics. As Charles Moore puts it in today’s Telegraph, “our two main parties have both been caught facing the wrong way. Their policy preoccupations, their political positioning, their promises have depended on perpetual prosperity. Now these look as relevant as estate agents' freesheets offering timeshares in Spain. When a really big crisis hits, it takes people a surprisingly long time to understand the basic point, which is that Everything is Different Now. Fear makes people reluctant to admit this, and plays into the hands of those in charge.

One of the oddest aspects of this whole Deripaska affair is why Nate Rothschild went nuclear on George Osborne. It was understandable that Rothschild was irritated about Osborne breaching the privacy of his fellow guests but writing a letter that could have destroyed Osborne’s career seems like a disproportionate response. Especially when you consider that Osborne and Rothschild are old friends. Charles Moore puts it typically well: “But why did Nathaniel Rothschild write to the Times? Yes, he was genuinely annoyed that George Osborne had relayed Peter Mandelson’s disobliging remarks about Gordon Brown to the Sunday Times. The then Mr Mandelson was Mr Rothschild’s guest, as was Mr Osborne. Mr Osborne betrayed hospitality and strained an old friendship.

There will be relief in Tory circles this morning that today’s papers contain no further damaging revelations about George Osborne and Andrew Feldman’s holiday activities. The Tories can begin to hope that this story is on the wane or that the focus of attention will soon shift back to Mandelson; do see Melissa Kite’s revelations about Mandelson and Deripaska. The greatest danger to Osborne now is an accidental recommencement of hostilities. For instance, if a Sunday tabloid designed to try and dig dirt on the Rothschilds, Nate might go nuclear even if the Tories had not played any role in encouraging the paper. He is clearly a man with a trip-wire temperament. Lessons must be learned from this episode.