Wednesday, August 4, 2010

Strategic Defence and Security Review, Part 1

The UK is undergoing a Strategic Defence and Security Review (SDSR) at the moment. What the SDSR should do is provide an analysis of what the UK’s place in the world is, what role the UK aspires to have, and how much the UK is prepared to spend to achieve this. This includes deciding how to spend money between the Ministry of Defence (MoD), the Foreign and Commonwealth Office (FCO), the intelligence agencies and, potentially, the Department for International Development (DfID).

Naturally, how much you want to spend is pretty important. Portugal at the end of the Salazar / Caetano dictatorship spent 40% of the total Portuguese budget on the colonial wars in Africa, whereas Germany (1.3% of GDP) and Japan (0.9% of GDP) demonstrate that the level of defence spending is all about political choices. And of course with the 1974 Portuguese Revolution, the wars abroad ended, and defence spending fell quickly. So, in a spirit of titanic modesty, I want to scribble some thoughts on what I would put into SDSR over the next few days.

First up, the UK’s place in the world.

What are the UK’s long-term interests? Foreign policy has been largely bipartisan, and somewhat timeless. It was Lord Palmerston who opined in 1848 that:

‘We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.’

This is good news if it means that this is an area of public policy that is amenable to long-term planning. It would be much healthier if we were politically able to have a cross-party planning process, but even in this era of coalition building, this appears to be a bridge too far. Nonetheless, what do I think are the UK’s long-term interests?

1. It’s the economy, stupid.

Bill Clinton was spot on in the ’92 Presidential Race – if you can’t get the economy moving and provide a credible plan to eliminate the deficit, then it’s all going to end in tears. (See Portugal, above).

Put crudely, the British military is not self-funding – and therefore it relies on a strong economy to pay for it through taxation. And so for the remainder of the UK’s international position – diplomacy, aid, spooks.

What does this mean in concrete terms? For me, it means that a key role of the Foreign Office is to promote British commercial interests abroad – with a key focus being about strengthening the international legal protections for the UK’s service industries as well as promoting physical UK exports. Given that the current rules of the international trade are a largely Anglo-American production, we need to extend enforcement and to ensure that efforts to roll back liberalisation are tackled and defeated. In this, the appointment of Simon Fraser as the professional head of the FCO is timely and welcome, given his background in trade policy - normally a comparatively less important policy area (

What do the military contribute to the economy? Well, the obvious is some £14bn of public spending on “stuff” with private companies. And though the days of Gun Boat Diplomacy are ostensibly over (much to the disappointment of some Naval Service Officers of my acquaintance), the role of UK forces in increasing international stability and ensuring freedom of navigation worldwide is an indirect economic benefit.

But no-one would claim that the military should be used as an economic stimulus – even the UK defence lobby’s study last summer inadvertently showed that stimulus should be spent on construction or biochemistry. Critically, we should dismiss the argument that placing military equipment orders in the UK is a sensible use for economic stimulus as the things you build cannot realistically support the UK economy after they are completed, unlike a new railway or an upgraded trunk road.

2. We are international traders.

The UK’s wealth has come from trade of things, ideas and services. This means that we must be forward and outward looking – isolationism is simply not an option. This means that we must be fully engaged with the EU as our largest market and that we need to engage with the outside world to ensure that UK firms and UK-based taxpayers have the best possible shot at winning business.

3. We are a Status Quo power.
No, not prog rock. The UK has been a player on the international scene since the before the Norman Conquest. It is also party to the world’s oldest alliance Treaty still in effect – the 1386 Treaty of Windsor, which seals the UK’s alliance with Portugal.

With such a history, today’s UK policy planners build on several hundred years’ diplomatic effort to cement the UK’s international influence in good times and to hold onto these gains in barren periods. After all, it could be argued that the British Isles are a rather wet and gloomy group of islands perched precariously off the north west coast of Europe.

And no generation did better than the WWII generation in bequeathing us Permanent Membership of the Security Council, 4.85% of the votes at the IMF and a Director (currently Alex Gibbs), a slew of politico-military posts in NATO, including the Number 2 (Deputy Supreme Allied Commander Europe, DSACEUR), and a British Judge on the International Court of Justice (currently Christopher Greenwood).

This is tremendously helpful, as it is disproportionate to the UK’s actual level of international economic and military clout. But it is a double-edged sword given that the UK’s optimal position is to keep the institutional structures legitimate whilst retaining as much UK influence as possible. My thinking is that this means that we need to be seen to be a leading proponent of reform to ensure that we can play a leading role in defining the terms of reform.

The cause celebre is UN Security Council reform that will (at some point) increase the number of Permanent Members to include some of Brazil, Germany, India, Japan and maybe Nigeria or South Africa. In order for the Council to operate effectively, it is as inconceivable that the new Permanent Members would gain vetoes as it would be that the existing Permanent Members would give their vetoes up – which they would have to vote for. Therefore, fear not – the UK will never be forced to give up its Security Council veto.

And so with the institutional and legal structure – it’s strongly in our favour, so we need to defend it by ensuring it’s legitimacy by supporting incremental reform on our terms - and the main route to this is to underpin the existing international legal order.

Public spending will be constrained as the UK undertakes a fiscal repair job over the next five years; the international affairs portfolio will bear cuts along with the rest of Government. But the real challenge will be to focus on the long-term national interest, which is to reinforce the UK’s existing systemic advantages by underpinning the legitimacy of the overall system.

In our next instalment, we’ll look at the numbers.

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