Those words, said by the late merchant banker Siegmund Warburg over fifty years ago, have been ringing in my ears this past weekend and probably both relevant and appropriate to what we are observing unfolding in British and European politics today. Another particularly favourite quote to remind here is “intelligence is no barrier to stupidity” a situation that I observe that our political masters would do well to remember.
Unusually for a paper under the UK Defence category heading I have chosen to split this particular commentary providing views on both political and defence.
First then let me touch on political events that have opened up over the weekend:
These are momentous days and I was reassured by the wise and sensible words from Chancellor of the Exchequer George Osborne this morning and so should all of you be. It is not as bad as it may easily look and be in no doubt that the Treasury and Bank of England have got the awkward situation that we have found ourselves in hand. My words, not his but what Osborne said this morning should be enough to reassure global markets. Yes, the political upheaval of deciding to leave the EU has cast a shadow on global markets but when all is said and done it has just added another small chapter to an extremely large number of other deeper concerns. Yes, it is also true that we are all forced to move forward from here in what will undoubtedly be a period of uncertainty and gradual change but at least we do so from a position of reasonable financial strength compared to others. Remember the words above from Warburg and translate that to meaning we need ‘them’ just as much as ‘they’ need us. Tolerance, patience, hard work and effort will ensure that both they (the EU) and we can and will achieve all of what we want and that we continue to move forward as allies and friends.
With no precedent for the levels of fall-out that we have witnessed from the EU referendum/plebiscite decision from a political situation we are to an extent left wallowing in the dark. The next five or six weeks up to the summer recess will be particularly tough and on top of all this there was supposed to be a decision announced by the Government on Heathrow Airport, the possibility that the House of Commons would debate Trident replacement and then, to cap it all, Chilcot and which may well be only one of the three important events mentioned that will still occur.
The Prime Minister, David Cameron has announced that he will go before the Conservative Party conference in Birmingham and we can be sure that the internal fight to succeed him will create more uncertainty. I doubt that whoever emerges will call a General Election so, just as Gordon Brown had been, we will have an unelected prime minister until he or she eventually does. Let us at least hope that whoever does emerge is a real leader, one that can bring to the fore tolerance that underlies British society.
Meanwhile we find that the Labour Party is once again in turmoil with no fewer than twelve (at the last count) members of the Shadow cabinet resigning following the sacking of one of the most universally respected Labour front bench team, Mr. Hillary Benn. What happens next here is anyone’s guess but until this unhappy situation is sorted out Labour will in my view remain unelectable.
Back in the real world and having fought a battle and then lost Mr. Cameron is right to go. His ultimate departure will mark the third and I hope, last time that a Conservative Prime Minister has fallen due to a long standing split the party has on the EU. But there are three months to go before Mr. Cameron departs and these are months that will be crucial in laying the foundations for not only how we negotiate with our European friends but in recreating the framework of stability required. I thus live in hope that we will not be left with either a lame-duck Prime Minister or Government in the months that follow and whilst I accept that it cannot all be business as usual most of it will. The Chancellor’s words earlier this morning are reassuring on that score.
At the other end of the spectrum we find the Scottish Nationalists calling for another independence referendum not to mention ridiculous petitions calling for a second EU referendum on the issue. What will be will be but this is far from being our finest hour. Only Westminster has the powers to allow another referendum to take place in Scotland and it was certainly not helpful to hear the German Chancellor suggesting that Scotland, presumably as along as it adopted the Euro currency, would be welcome to join the EU.
It is no use me harping on about the real dangers that this referendum/plebiscite vote has left in its wake such as the potential breaking up of the United Kingdom. I will regret that if it occurs as much as anyone else but what will be will be. For now like everyone else I crave stability, harmony and common sense judgement rather than the uncertainty and political instability that is currently staring us in the face. Mr. Cameron still has a big job to do over the next three months.
Markets dislike uncertainty and while there is neither precedent nor rules that govern how a country departs the EU, other than to confirm who presses the starting gun, if we are to leave the EU it is surely in the interests of the UK and each and every member of the EU that we attempt to do this as friends in an orderly and proper fashion. If we are still strong at anything it is diplomacy and I am sure that carefully constructed and agreed over time we and ‘they’ can achieve all the objectives that are required to ensure we move forward with mutual respect and consent on matters to do with trade and borders.
In moving from macro political to defence let me express some of my concerns as to what are the likely impacts from the decision taken by the electorate last Thursday to leave the EU. While the Secretary of State for Defence has already confirmed that as far as he is concerned it is business as usual in defence the first of my concerns all but stares one in the face. It is that if there is to be a new Prime Minister by October we are bound to question whether this will be used as an excuse by the Treasury not to sign anything off. The Farnborough International Air Show two weeks’ from now will be interesting in this regard. Confirmation announcements, most likely from the Prime Minister himself, continue to be anticipated in respect of P-8 Maritime Patrol Aircraft capability and on Apache Helicopters.
The second impact also stares one in the face and it is simply recognising that if we are to have a new Prime Minister then it must surely go without saying that most probably there will also be a new Secretary of State for Defence appointed. If so and if there was to be a change this would come at a crucial time for UK defence. The prospect of having a new Secretary of State for Defence at a time when the department continues to be under great pressure to further reduce defence cost, albeit that as a result of SDSR 2015 it is both expectant and readying itself for the promise of greater investment on the part of Government, makes me somewhat uneasy. Experience and stability in defence really matters.
On a similar theme the potential of change means that those of us engaged in advocating strong defence and of championing the defence industrial base and in particular, the need to retain and grow sovereign based skills, to invest in research and development and innovation and that put much effort into persuading government to better recognise the importance of defence, industry and defence exports within the prosperity agenda may, with genuine regret, also need to anticipate that the present Minister of Defence Procurement, the MP for Ludlow Mr. Philip Dunne who has worked so tirelessly in support of the procurement and through real engagement, has pushed UK defence exports up the agenda will likely be moved on.
Next in terms of issues is one of equal significance. It is that political and military interactions throughout Europe will undoubtedly be impacted by the “out” vote. Yes, the special relationship with the US will of course be unchanged and as the US Secretary of State, John Kerry will no doubt confirm when he arrives in London shortly, the US will in the future continue to interact with the UK just as it does now. But the perception of change and how this plays out on defence is not just about questioning how we interact with our US and European based NATO allies but importantly, on how the UK is now perceived by our European colleagues in terms of trust.
The reality is that despite the rhetoric there is bound to be a change in how we interact with our US and European allies from here on. They are almost bound to see us in a different light and the truth is that if I was sitting in the Pentagon right now I would be extremely annoyed that the UK has inadvertently changed the rules that have governed political stability in Europe for so long. We must all work hard to ensure that NATO is made all the stronger for it by recognising the rising level of threats against us and by spending more on defence.
From a security position even though I doubt that, apart from the expression of resentment from certain NATO members, there will be any direct impact in respect of our existing or future NATO role,, it would be surprising to me if the upcoming NATO Summit that is due to be held in Warsaw, Poland early in July is unaffected by the changed position that the UK has taken on future EU membership. Again, while the regrettable Brexit decision will be unlikely to change anything within NATO itself it will undoubtedly cast a shadow if the belief is allowed to emerge that that the UK, the largest European based contributor to NATO, may because of additional economic pressures caused by its decision to leave the EU be forced to further cut resources devoted to the role that NATO plays in European defence and security.
In addition I would have to say that the notional idea agreed at the Wales Summit two years ago that all [NATO] member states work toward spending 2% of GDP on defence has been blown out of the water.
And so to the issue of Trident replacement. While the present Government has been fully committed to ‘Successor’ it has so far failed to put the ‘required’ vote to the House of Commons. I had anticipated that HMG might well choose to do so immediately after the referendum/plebiscite vote in order not just to cement the necessity that we get on with moving the programme to modernise our Trident nuclear deterrent capability forward but also to appease the Governments own back benchers. That thought was however based on the greater probability that the ‘remain’ vote would win out last Thursday. For now I am unsure of what they will do and I worry too that the Treasury/Cabinet Office could further confuse the issue by putting even more obstacles to progress in the way.
Trident renewal is absolutely crucial in my view and also in the view of the majority of members of the House of Commons. On that view and despite Emily Thornbury (Labour Shadow Defence) saying on Saturday that she would now 9following Brexit) need to rewrite parts of her ‘Defence Review I for one would wish to see no further delay made in putting the Successor issue to the House of Commons for what I hope will be the final debate.
I sincerely hope that Prime Minister decides not to delay the Trident debate any further. Lame duck or not, given that at worst a larger number of Labour MP’s would likely abstain, it seems pretty clear that Mr. Cameron would come out on top by choosing to have the vote now.
Russia will of course be delighted that Britain has chosen to break away from the EU pack not least because it knows full well that even if the UK possessed leverage, power and desire to increase spending on defence right now it will, within two years or so, almost certainly be constrained from so doing within a potentially weakened economic environment.
For Poland, the Balkan States and others in the region that feel or that actually are being directly threatened by Russia the decision by Britain to stand outside the EU weakens the organisation as a whole and does nothing but harm to the individual parts. In the process of this NATO is in my view also partially weakened by the decision of the UK to leave the European Union.
The EU has in recent years set out to revive the proposal that was first put forward in 1950 by the French to set up a European Army and to appoint a European Minister of Defence.
Arguably, even though Britain has long made it clear that it would not participate in a European Army, I suggest that by walking away from Europe the dream that the partners have of creating a defence force of its own may have been blown out of the water as well. Why? Simply because while the UK may have reduced the level of individual specialist capabilities that is has over recent years, the UK remains the only European member of NATO that still has a significant ISTAR (Intelligence, Surveillance, Target Acquisition and Reconnaissance) capability as well as mission capable strategic lift capability.
Look at it this way, of all NATO member states in Europe only Britain could lend Raytheon Astor Sentinel R1 Airborne Stand-off Radar Aircraft and Boeing C-17 strategic heavy-lift capability to France two years ago when it was urgently required by France in its Mali mission
Nevertheless, without Britain as a member of the EU to argue against the idea of creating a European Army could damage the status quo of NATO. Indeed, one may naturally be concerned as to the soon to be silent impact of the UK’s intended departure as a member of the EU.
It was the European Political Strategy Centre (EPSC) which is the in-house think-tank of the European Commission that last year highlighted that a divided Europe fails. As a whole between 2005 and 2014 spending on defence in Europe declined by 9% whilst that in the US over that same period declined by just 0.4%. Note that Russia all but doubled it expenditure on defence over that period whilst China increased its expenditure on defence by a massive 167%. These are messages that should not be lost in the EU and neither must they be allowed to be lost in the UK or by its NATO allies.
In the aftermath of the Brexit result I conclude that some extreme dangers for UK defence have resurfaced. While I will stop short of suggesting that Brexit has blown a complete hole in SDSR 2015 the likelihood that growth will slow on the back of reduced confidence is almost bound to result the Chancellor of the Exchequer calling for more tightening.
While UK defence may appear to be ring fenced the reality is that it will not escape the hands of a Treasury determined to cut the cost of it. This, when the dust has settled I am bound to fear that there will be even more pressure exerted to delay and to further push capability programmes back. Be prepared that while I am sure that most of us know and agree the importance of reversing the huge damage done to UK defence by what occurred in SDSR 2010 that by voting to leave the EU and that by causing uncertainty in the impact that this will initially have on the UK economy and the ability to reduce the unacceptable level of deficit there is almost bound to be further pressure placed on defence to cut costs.
I suppose that the bottom line is that if the economic view that reasoned opposition to Brexit is proved correct – lower growth impacting on lower than anticipated taxation receipts, higher costs of funding the already massive level of UK debt, further delay to reducing the government deficit, lower value of sterling raising the cost of imports and that because we produce far too little of what we consume we are forced to buy, potentially higher interest rates, reduced business and consumer confidence – we must anticipate that whoever the new Prime Minister’s Chancellor of the Exchequer is will need to further reduce public sector costs. Ring-fenced or not, Defence then becomes a too easy touch.
CHW (London – 27th June 2016)
Howard Wheeldon FRAeS