hms iron duke

hms iron duke

Thursday, 30 October 2014

EU Rules, Damned Rules and Statistics


Alphen, Netherlands 30 October.  In 1906 Mark Twain wrote: “Figures often beguile me particularly when I have the arranging of them myself in which sense the remark attributed to Disraeli would often apply with justice and force: “There are three kinds of lies: lies, damned lies and statistics””.  The same can be applied to EU 'rules' because as this past week has attested everything the EU does is political and nothing the EU ever does is purely ‘technical’.  That is why the European economy is today in a mess and in danger of taking much of the rest of the world down with it.  

Proof of politics and indeed Twain’s truism was all too evident this week in three ‘technical’ rulings by EU institutions: the imposition of a huge retrospective super-tax on Britain and several other EU member-states by the European Commission; the approval by the European Commission of the 2015 French and indeed Italian budgets; and the publication of the so-called “stress tests” on Eurozone banks.  

The imposition of a huge €2.1bn (£1.7bn) retrospective tax on Britain was met with howls of protest in London.  The European Commission insists that the demand was a ‘normal’ adjustment built on an impartial analysis based on figures supplied by London’s own Office for National Statistics.  And yet one week on from the demand the Commission still refuses to reveal the methodology or mechanism by which it arrived at this figure.  Even the finance minister of the normally supine Dutch said that he wanted to know just how the figures were calculated.  My own contacts reveal the sum demanded of Britain is very much a maximalist interpretation of the ‘rules’ for calculating national wealth which were adjusted back in 2010.

This same week the same European Commission ‘approved’ the 2015 French and Italian budgets in spite of the French deficit standing at 4.3% of GDP or 1.3% above the ceiling established under the Eurozone’s European Growth and Stability Pact.  Miraculously Paris said it had found the money to cut the deficit next year and by €50bn by 2017.  Equally miraculously a significant part of that money is due to France getting a rebate under the self-same ‘technical adjustment’ that hammered the British and being asked to pay lower than expected contributions to the EU budget.  Now, there’s a surprise.  Or, to put it another way the Commission has applied to France a minimalist interpretation of the ‘rules’.  

However, it is the third ‘technical’ announcement that is perhaps the most political and most dangerous.  This week in Rome in a lecture I said the greatest threat to NATO was neither Russia nor American disinterest/over-stretch.  It is the risk of Eurozone deflation and the crippling impact it would have on European growth, demand, consumption, taxation, public national debt and eventually public expenditure.  The still insufficiently shock-proofed European banking sector is particularly vulnerable to deflation.

On 27 October the European Central Bank and European Banking Authority announced the results of the so-called “comprehensive assessment” (stress tests) of the strength of Eurozone banks.  Although deflation is already eating away at the Eurozone’s peripheral economies the ‘test’ failed to even consider the impact of possible deflation on Eurozone banks.  And yet the IMF says that deflation in the Eurozone poses one of the greatest threats to the world economy and in public that there is a 30% chance of deflation in Europe.  Privately the IMF puts the likelihood of deflation in Europe much higher.

And yet, in a breathtaking public statement of politics dressed up as technical strategy ECB Vice-President Vitor Constancio said, “The scenario (deflation) is not there because indeed we don’t consider that deflation is going to happen”.  Interestingly and revealingly, whilst Italian banks were particularly hard-hit by the assessment similarly vulnerable French banks were given a very soft ride.  The dangerously vulnerable German Sparkassen savings banks were not even assessed.  Why Italy?  Rome simply lacks the political clout of Berlin and Paris.

Danish Prime Minister Hell Thorning-Schmidt said this week: “I respect that the UK wants to discuss this (the retrospective super-tax) amongst ministers but these are the rules that must be kept.  Countries must follow the rules as they are”.  The problem Mrs Thorning-Schmidt as this week has shown all too clearly is that the European Commission does not even follow its own rules.  Rather, it uses maximalist and minimalist interpretations of the ‘rules’ to reward powerful ‘friends’ and punish ‘enemies’. 

This tendency towards favouritism has nothing to do with the old Commission as some suggest but everything to do with the new.  Indeed, Jean-Claude Juncker’s fingerprints are all over at least two of these ‘rulings’ and reflect four principles to which he has adhered all his political life: get your revenge in first; avoid political transparency at all costs; get someone else to take the blame; and divide and rule by rewarding friends and punishing enemies.  By the very nature of Jean-Claude Juncker’s political appointment as President the European Commission is about to become an awful lot more political.  The past week is just the beginning.

So, why are the British in particular being singled-out (as they are)?  Some months ago Prime Minister Cameron managed to engineer a cut in the EU budget for the first time in its history.  The European Parliament from whence Juncker hails is packed full of Members that simply want the EU to remain a massive wealth redistribution mechanism.  Saving taxpayer's money is anathema to these people.  The Commission also refuses to do little or nothing to combat the huge waste and corruption which year after year sees the EU budget ‘signed off’ by the Court of Auditors only with what it calls deep reservations about “deep errors”.  Consequently, the EU demands ever more taxpayer's money for ever more, ever-less transparent, reasons.  

For the Commission this is a delicate balancing act to perform because the essential need is to soak the taxpayer’s of the formerly-rich EU member-states, both Eurozone and non-Eurozone, so that the day can be delayed when the fundamental structural and potentially catastrophic economic, fiscal and financial contradictions at the core of the Euro must be confronted.  To be fair to the Commission that is because most Eurozone states simply do not want to face this reality and want other people's sound money forever for nothing.  

However, it is a balancing act further complicated by the golden rule of the Commission; under no circumstances confront France or Germany.  That is why in within the EU politics forever trumps strategy and that is why Britain is singled out for ‘special measures’.  It is also why the EU is fast becoming the world’s greatest ever Ponzi scheme.

So, with respect Mrs Thorning-Schmidt don’t be so naïve.  This time Denmark has been marginally rewarded by the Commission precisely to prevent a counter-bloc of non-Eurozone states emerging.  Next time you will be in the firing line precisely because EU ‘rules’ are all about politics and have little or nothing to do with strategy or ‘rules’.  As for statistics - they are all about interpretation.  

Indeed, if Mark Twain were alive today he would have understood this long week of politics all too well; there are EU rules, damned ‘rules’ and EU statistics...and they are political not technical.


Julian Lindley-French

Monday, 27 October 2014

Afghanistan and the Future of Conflict


Rome, Italy. 27 October.  In 1963 when Sir Alec Douglas-Home briefly became British Prime Minister his predecessor Harold Macmillan said: “Let me give you one piece of advice, young man.  As long as you don’t invade Afghanistan you’ll probably do fine”.  Yesterday in Afghanistan in a low-key ceremony the Americans handed Britain’s Camp Bastion over to Afghan forces marking the end of US and UK-led combat operations in Helmand Province the crucible of a thirteen year counterinsurgency campaign.  At the peak of operations Joint Operating Base Bastion supported some 14,000 troops and acted as the hub for over 100 forward operating bases or FOBs.  Bastion still boasts a 2.2 mile (3.5km) long runway and a 20 mile (32kms) long perimeter.  What are the lessons and what indeed does Afghanistan say about the nature of future conflict?

At the political and strategic levels the campaign suffered from a lack of a consistent political strategy worthy of the name.  Indeed, political leaders in Washington, London and across the coalition too often imposed politics on a strategic campaign and simply lacked the strategic patience to get an uncertain and unclear job done.  There was also at times an appallingly low level of strategic unity of effort and purpose between the NATO allies in particular which manifested itself in the form or national caveats with too many European governments trying to do the least possible.  

At the military-strategic and operational levels for much of the campaign American and British military chiefs (in particular) failed to realise the sheer level of investment – political, forces and resources- needed to transform governance, justice, the Afghan economy and society.  Too often “can do” bore no relation to “must do”.  Sadly, it was a military philosophy necessarily reinforced by the incompetence of both the EU and UN missions. 

US forces dubbed their British counterparts “The Borrowers” at one point because British personnel were simply not supplied by London with sufficient kit given the scale of the mission over time, space and distance.  Equally, for all the frustrations the Americans had with their British counterparts the four English-speaking powers – US, UK, Canada and Australia – were the core of operations where it really mattered in southern and eastern Afghanistan. 

This group now forms an operational hub for future coalitions and the basis for an informal Anglosphere.  In no way wishing to disrespect the many very brave men and women of other nations who gave their lives on this campaign with the very partial exception of the French and a couple of others trust in the political reliability of continental European allies to be present at the point of contact with danger is now very low in both Washington and London.

However, the paradox of Afghanistan is precisely that such trust needs to be rebuilt. That is why September’s NATO Wales Summit was indeed important because it implied three forms of future conflict the tackling of which all reinforce the lessons from the Afghanistan campaign.  Specifically, the vital need for strategic unity of effort and purpose as hybrid warfare drives the shape and scope of the future multinational force.

Strategic ambiguous warfare: Russia’s use of ambiguous warfare in Ukraine confirms the need for a twenty-first century NATO concept of collective nuclear and conventional deterrence that includes strategic reassurance and a layered, modernised collective defence that must in turn include advanced deployable forces, missile defence and cyber-defence.  Such a defence would also suggest the need to revisit the old Cold War REFORGER concept whereby US reinforcements are flown in from Continental North America to assist Europeans acting as effective first responders. 

Super-insurgencies: The campaign against Islamic State in the Middle East suggests a new form of super-insurgency that will in and of itself demand forces able to operate at distance as part of a sustained, sustainable super counter-insurgency strategy.  Super-insurgencies will operate in the spaces between the emerging great power blocs in the kind of ungoverned spaces which Islamic State is exploiting.  This is particularly the case in the Middle East where the entire Sykes-Picot state structure is facing collapse and which is contiguous to Europe.  Combating such super-insurgencies in extremely complicated political environments will also require a clear understanding that strategy is designed first and foremost to support the Middle Eastern state in its battle with the anti-state and thereafter to shape the interests and choices of those states. 

Strategic humanitarianism:  As the Ebola crisis has so tragically demonstrated the twenty-first century West acts in pursuit of a complex mix of values and interests which merge desired strategic outcomes with humanitarian imperatives.  That in turn imposes on Western armed forces the need to work effectively not just across government but with civilian branches of foreign governments, international institutions such as the UN and EU.  It also suggests the need for an efficient and effective method of engagement with different and differing non-governmental communities across international civil society if influence and effect is to be generated - the Comprehensive Approach.

US Lt General H.R. McMaster was once asked why the US military won the 2003 Iraq War but lost the peace.  “There was nothing to join up to”, he said.  Therefore, the future force must not only better join up the six domains of twenty-first century warfare: air, sea, land, cyber, space and knowledge.  It must also be better joined up with other like-minded forces and indeed across government and the wider international community.  In short, joining up strategy, purpose, effort, force and resource is NATO’s twenty-first century mission.

As for Afghanistan it is true that the campaign has not achieved the unrealistic goals set for it at the 2001 Bonn Conference.  And, it is certainly true that without the continuing commitment of the US to back-stop Afghan forces out to 2024 Kabul could lose control again of vast swathes of territory, particularly the Pushtu heartlands that bestride the AfPak border.  However, hindsight is a wonderful thing.  Back in November 2001 the US-led coalition was right to deny Al Qaeda the ungoverned space that was Afghanistan from which to launch attacks on the West post-911.  And, lumpy though it undoubtedly is progress in re-building a form of civil society has been made in Afghanistan and continued efforts MUST be supported both in Afghanistan and regionally. 

Therefore, far from turning political backs on Afghanistan which politicians in Europe did some time ago now is the moment to systematically and scientifically consider its many lessons. 


Julian Lindley-French

Friday, 24 October 2014

Imperium: Why Europe Must Re-establish Equilibrium


Alphen, Netherlands. 24 October. Henry Kissinger in his brilliant new book “World Order” writes: “The vitality of an international order is reflected in the balance it strikes between legitimacy and power and the relative emphasis given to each…If the balance between power and legitimacy is properly managed actions will acquire a degree of spontaneity…When that balance is destroyed, restraints disappear, and the field opens to the most expansionist claims and the most implacable actors; chaos follows until a new system of order is established”.  This week newly-confirmed Commission President Jean-Claude Juncker demonstrated just how he sees the role of his European Commission; an Imperium founded on three dangerous principles - false legitimacy, intolerance and implacability. 

This week in Vienna I stood next to the car in which on 28 June 1914 the heir-apparent to the Austro-Hungarian Empire Archduke Ferdinand was assassinated in Sarajevo together with his wife Archduchess Sophie.  A small hole still evident in the rear door of the car was the “shot that rang around the world” and triggered the collapse of European order and World War One.  That such a small hole could lead to a Europe engulfed in chaos and destruction reflected a Europe that had lost the essential political equilibrium between power and legitimacy that Kissinger identifies as critical to order. 

The Europe of 2014 is fast losing political equilibrium.  Within the EU this slide is most obviously represented by Britain’s growing estrangement from Brussels.  Often this debate is expressed simplistically as symptoms of politics rather than reflections of structural and strategic change, such as immigration.  Many Britons fail to realise that pan-European migration is as much a consequence of the West’s victory in the Cold War and the downing of the Iron Curtain as it is EU rules that enshrine free movement.  Indeed, something like free movement would be apparent EU or no EU because it was one reason why the Cold War was fought. 

Sadly, the British also fail to see that political disequilibrium across Europe is being driven in part by an EU that is today neither alliance nor federation but a strange amalgam of the two, albeit with only one direction of travel.  Worse, a divided London also fails to understand that the implicit anti-Britishness of the European Commission (see the number of Britons working for the Commission) is in part driven by a desire by Brussels to replace Britain in the traditional role of power balancer. With a properly strategic view Britain could still act as the traditional balancer of implicit power that is the EU.  The strategy is clear; punish Britain for dissent and ‘reward’ Germany and France to signal to Berlin and Paris that the Commission wishes to ‘rule’ Europe in conjunction with a re-invigorated Franco-German axis.

This drift towards Imperium and the Commission’s role as balancer is all-too-apparent in today’s announcement Britain must pay a surprise additional levy of £1.7bn (€2.1bn) to the European Commission, adding a fifth to Britain’s EU bill whilst at the same time France and Germany will be offered rebates.  Britain is of course not alone in being asked to pay more.  Ludicrous though it is Greece too has been asked to cough up.  However, Britain has been hit with by far the biggest bill.  The Commission suggests (as it always does) that this hike in Britain’s payment is a purely technical matter.  In fact the timing and the manner by which the Commission has ‘calculated’ the ‘growth’ in Britain’s wealth since 1995 is entirely spurious and utterly political.   

As equilibrium evaporates within the EU the Commission is instead trying to reinvent itself as a form of Imperium in which it is the sole guardian of the 'rules'.  Imperia are about power and they express power usually in various forms of taxation that are designed to both confirm power and maintain an imbalance of power.  The EU today is fast consolidating around the Eurozone as for Juncker and the federalists the single currency for all its disastrous flaws remains at the centre of the European Project and the move towards “ever closer union” as enshrined in both the 1951 Treaty of Paris and the 1957 Treaty of Rome. 

The idea of the implacable Imperium Commission was reinforced by an absolutist speech by outgoing Commission President Jose Manual Barroso in London this week. Barroso told his audience he wanted a ‘fair’ deal for Britain before telling the British people that resistance is futile.  Specifically, Barroso told the British that there can be no re-visiting of the 1957 Treaty of Rome because the treaty enshrines the four fundamental freedoms; goods, services, capital and people.  This is nonsense.

The founding treaties were drafted in a very different age and a very different world.  However, for an increasingly political Commission power is justified and codified by the Commission’s maximalist interpretation of those self-same founding treaties.  Any treaty amendment now could only mean less power for the Commission.  Therefore, implicit in this week’s raft of Commission actions is not just recognition of the coming power struggle but also the political method of Jean-Claude Juncker; “divide et impera” (“divide and rule”).  A core function of Imperia is to re-distribute wealth from the dissenting margins to the faithful core.  Such actions also demonstrate why David Cameron’s efforts to reform the EU are almost certainly doomed to fail and that the best he can hope for are a few political fig-leaves.  Much will depend on Berlin and which side it takes.

Britain is not alone in expressing concern.  The May 2014 elections to the European Parliament revealed growing popular dissent at the centralisation of power in Europe.  Democratically the elections were a chance for the European Parliament to evolve from a rubber-stamping, cheer-leading puppet of the Commission into a real legislature imposing accountability on power via checks and balances.  Instead, this week Euro-sceptic groups representing up to 30% of the electorate were systematically denied leadership of key parliamentary committees by Juncker’s fellow federalists.  Indeed, there is now a very real danger that the European Parliament will become much like the Roman Senate under imperial rule in first century AD Rome; a political facade for illegitimate action. 

The problem for Juncker and his ilk is that they fail to see that if they implacably try to impose ever-closer union from the top-down they will exacerbate political disequilibrium between Europe’s core and periphery and between the elite and the people.  Implicit in the Juncker Strategy seems to be a political gambit.  Confront those states outside the Eurozone with the consequences of marginalisation by taxing them to the point they conclude that their best interests are served by joining the Euro and thus the Imperium. Certainly, today’s surprise levy moves Britons ever closer to a dangerously simple choice; vassal state or Brexit. 

Imperia do not just exert pressure on their margins.  They also impose order on neighbours in the form of tribute.  Russia’s actions in Ukraine and aggression against Eastern Europe are utterly unforgivable.  However, when I speak to senior Russians they clearly see themselves cast in the role of Sparta to what Moscow sees (and not without irony) as Brussels’s Athens.  In the fifth century BC Thucydides argued that the attack by Sparta (the Peloponnesian League) on Athens was a pre-emptive strike to halt the growth in Athenian power that would sooner or later eclipse Sparta.  

So can equilibrium be restored?  The great adage of the American Revolutionary War “no taxation without representation” is as good a starting place as any.  For that reason now is precisely the moment when the EU treaties SHOULD be revisited.  First, a new balance of obligations and responsibilities must be established between those in the Real EU (the Eurozone) and those not. Such a treaty would tidy up the huge number of inconsistencies and unfairnesses across the Union that is helping to accelerate disequilibrium.  Second, new treaties will be needed with the powerful non-EU peripheral powers such as Russia, Turkey and Ukraine that have a direct interest in the changing nature and reach of the EU and which are reacting more or less competently to Europe’s new disequilibrium.   

For me the greatest tragedy is that I still believe deeply in the ideal of Europe and the idea of sovereign European states working closely together in pursuit of peace and prosperity.  However, the over-concentration of power in a few elite hands ‘legitimised’ by a one-view-fits-all European Parliament 'majority' that marginalises dissent however obnoxious is not the Europe I can believe in.  Indeed, as the gap between power and legitimacy grows and with it Europe’s loss of political equilibrium a very real danger exists is that the EU will take on much the same form as the Roman Republic in the aftermath of Octavian’s coup.  As the Great Henry suggests sooner or later “chaos follows until a new system of order is established”.

Europe must re-establish political equilibrium before it is too late and that means real fairness, proper accountability and the encouragement rather than punishment of political diversity.  

Julian Lindley-French

Sunday, 19 October 2014

Ebola: WHO is in Charge?


Alphen, Netherlands. 20 October. As EU foreign ministers finally meet to discuss the Ebola epidemic and Liberian President Ellen Johnson Sirleaf makes a desperate open plea to the world to get its act together the disease is taking hold.  According to the World Health Organisation (WHO) more than 4500 people have already died of Ebola in West Africa. Well in excess of 9500 people are infected of whom 70% are expected to die.  WHO estimates there could be as many as 10,000 new cases each week by early December. 

Three actions are desperately needed to stop Ebola spreading and then establishing itself as a perennial disease.  First, the provision of effective preventative and curative healthcare is needed across West Africa and indeed beyond.  Second, a longer-term strategy is needed to properly establish basic but robust healthcare systems.  Third, an end is needed to the brain drain of qualified West African medical practitioners to the West.  Britain’s National Health Service is a major recruiter from the region.

However, the control of pandemics (which Ebola is not as yet) also needs the world to take a new approach. Specifically, a Global Disaster Action Centre is needed for which healthcare would be a major responsibility and which would act in a similar way to the US Centers for Disease Control or CDC (even though the CDC has not covered itself in glory of late).  Such a Centre would be ideally focused on the UN Security Council (UNSC) and supported by military-style structures with a Situation Centre at its core that would assimilate and interpret real time intelligence and analysis to provide support for command decisions.  Logistics would need to be pre-positioned and provided by the five Permanent Members of the UNSC and reinforced by other members of the G20 group of rich and emerging rich states.  Such a centre would act as emergency reinforcement for national health professionals and help properly and better co-ordinate the vital work of the non-governmental community.

All well and good but…Many years ago when I was a callow youth in the salad days of my strategic evolution my boss seconded me to the United Nations to design a ‘strategy’.  This was probably because a) I kept asking awkward questions of the powerful at home; and b) because whilst the UN of the day was huge on “strategy” it viewed the word “action” as a crime against bureaucracy and thus it was probably felt I could no harm.  The good news was that I got to spend time at the UN both in Geneva and New York. 

One of the UN agencies unfortunate enough to ‘benefit’ from my strategic guidance was WHO.  At WHO I found a core of seasoned, brave and dedicated medical field people surrounded by a strange assortment of fellow-travellers.  There were sons and daughters of African and Asian potentates who may or may not turn up for work alongside officials seconded from one Soviet bloc state or another of whom not a few had the title ‘colonel’ or some other such military appellation.  The former knew nothing about anything whilst the latter knew nothing about health the ‘function’ of whom was not at all ‘clear’, if you know what I mean.  With the end of the Cold War I hoped things might have changed, now I wonder.

Last week an internal WHO report was leaked cataloguing the egregious errors made by the UN in first identifying and then containing the West African Ebola plague.  This was not exactly a surprise to me and suggests that within the UN bureaucracy personality and politics still remains more important than strategy and action.  The plain fact is the UN and its agencies are simply not geared for crisis management in spite of the many ‘offices’ that claim to be crisis managers in some form or another.

Blame for the Ebola failure cannot be laid solely at the many marble portals of the UN.  As the predictably tardy EU response demonstrates the somewhat misnomered ‘international community’ has been predictably lamentable, fragmented, tardy and haphazard – too little, too late.  As per usual it is not until the Americans and the wider West take action that anything substantive happens, although it is good to see China taking its international responsibilities ever more seriously.  Some 4000 US military personnel are now engaged in Liberia.  The British are sending additional forces and resources to Sierra Leone and the French likewise to Guinea whilst the EU is providing medevac.
Tragically, in a world ever more connected and interdependent global crisis response is anything but.  So why does something like a Global Disaster Action Centre not already exist?  There are three reasons.  First, the lack of trust in the UN Security Council between P5 members as the world slides back towards echoes of the Cold War and the frictional geopolitics that paralyses effect policy and strategy.  Second, the eternal donor gap in which UN members pledge support but rarely if ever deliver it prevents the systematic application of forces and resources.  Third, the complete lack of pledges from a host of UN members for which Africa in particular remains the Dark Continent little understood and even less cared about.

Over the past decade there have been several immense natural disasters ranging from a 2006 tsunami that is estimated to have killed at least 200,000 people to deadly typhoons and hurricanes and now an outbreak of plague that in some African countries could have the same population-scything effect as Europe’s fourteenth century Black Death.  Each time the world’s inadequate response has turned a crisis into a disaster.

Therefore, the Ebola crisis must be seen as a ‘wet-run’ for future crises – both human and natural.  Prevention, engagement and consequence management are the three pillars of effective crisis management.  However, such structures, strictures and sutures need to be worked up.  This is because effective crisis response requires government to government action, individual governments to function effectively and rapidly from top to bottom and civil society to play a full role through awareness, prudence and if needs be engagement.

Last week the British Government held a best-practice exercise which for the first time in many years involved ministers.  Too often in the past ministers have excused themselves from such efforts and sent officials instead.  Consequently, crisis preparedness was politically decapitated and not just in Britain.  This high-level absence helps explain why crisis response mechanisms have for so long lacked experienced, committed political command and leadership. 

As President Johnson-Sirleaf writes: “The time for talking or theorising is over.  Only concerted action will save my country, and our neighbours, from experiencing another national tragedy.  The words of Henrik Ibsen have never been truer: “A thousand words leave not the same deep impression as does a single deed””. 

For the sake of humanity here are my thousand words.

Julian Lindley-French


Thursday, 16 October 2014

Il Sorpasso 2014: Can Europe Balance Defence and Economics?


Rome, Italy. 16 October. Cardinal Richelieu, that great sixteenth century French homme d’état once said, “Rulers are the slaves of their resources”.  In 1979 the Italian economy surpassed that of Britain.  It was a great moment for Italians which they proudly dubbed “Il Sorpasso” - the overtake.  In spite of chaotic government the Italian economy was booming.  Italian satisfaction did not last long. In 1995 the British economy was once again ahead and the gap between the two economies widened rapidly.  Today, the British economy is some 22% bigger than the Italian with the gap still widening.  This week the IMF highlighted a new Sorpasso.  In spite of ‘soft’ world growth Asian economies are surging past European economies underlying the rapid extent to which the balance of world power and wealth is shifting.  Il Sorpasso is not only apparent in the economic sphere.  Europe and its defence is sliding rapidly down the defence league table.  Since 2012 thirteen of the ‘top’ twenty defence cutters are in NATO Europe.  Europe is sacrificing defence for economics. Can a balance between the two be struck?

Yesterday in London General Sir Rupert Smith, Professor Mike Clarke and I discussed hard defence choices with British defence chiefs.  The UK may be in a far healthier economic position than Italy but in spite of David Cameron’s rhetoric to the contrary the British military still faces significant further cuts after the May 2015 general elections.  Consequently, unless new moneys are found the British will no longer be able to afford the ‘little bit of everything, but not much of anything’ high-end force of today.  They will be forced to opt instead for an even smaller force that retains a significant amount of a few significant things but only at the expense of some very important things. That will mean; a) a further loss of British sovereign independence; and b) ever more reliance on allies.

However, a British strategy that is more reliant on allies faces a big problem.  Well, lots of them actually. Italy is of course an important friend and ally of Britain.  However, the Italian public debt crisis could soon devastate public expenditure here. Like France Italy this year will not meet its EU commitment to keep the deficit no bigger than 3% GDP as part of the Eurozone’s Stability and Growth Pact.  Defence expenditure will again no doubt be raided by the Italian Government to maintain other ‘essential’ services such as health and welfare.

Contrast Italy and indeed Europe with the world beyond Europe's borders.  Frederick the Great once captured the ethos of the aggressive geopolitics when he asked to justify the use of force.  “The superiority of our troops, the promptitude with which we can set them in motion, in a word the clear advantage we have over our neighbours”.  President Putin is clearly a disciple of Frederick. Indeed, Russia for all its current economic travails, surpassed the UK some four years ago, now spends 20% of its entire public budget on defence and seems determined to continue to do so.  

The contrast between Asia and Europe is even more worrying.  China will increase its defence expenditure 12.7% this year, the latest double digit increase since 1989.  India and Japan will soon surpass Britain and France to become the fourth and fifth biggest global defence spenders respectively.  

Anyway and anyhow one cuts these figures they mark a massive and dangerous shift of military power away from Europe’s liberal powers and in the cases of China and Russia in favour of illiberal powers. If unchecked or unbalanced the implications for Europe’s future defence (or lack of it) and world security are profound, not least because of the pressure Europe's defence 'abstinence' puts on the Americans, irrespective of the promises Europeans made at last month's NATO Wales Summit.

Last week French IMF Chief Executive Christine Lagarde called on European leaders to do two things; undertake deep structural reforms to Eurozone economies to bring them into the real world and invest in economic stimulus in the form of big infrastructure projects.  Viewed from here in my beloved Italy one sees the urgent need for such reforms.  And yet it is questionable whether Italian society or indeed Italian state institutions are strong enough to cope with the kind of long, hard austerity shock favoured for example by Germany.

Faced by a collapse in tax revenues and living standards many EU leaders have in effect abandoned defence for economics.  Consequently, many European militaries are on the verge of an obsolescence meltdown and are virtually unusable. And yet the defence of Europe and Europeans is a legitimate political and strategic obligation that cannot simply be opted out from.  

Therefore, in parallel with improving Europe’s infrastructure via the proposed European capital investment funds it would also make sense for Europeans to create a capital defence investment fund.  Such a fund would act in tandem with efforts to modernise and harmonise the European Defence and Technological Base (EDTIB).

Montesquieu once said, “…whenever an accidental, that is, a particular cause, has destroyed a state, a general cause also existed which led to the fall of this state...”  If Europe allows defence to be sacrificed for economic ‘security’ Il Sorpasso 2014 could mark the moment when the illiberal triumphed over the liberal in the pursuit of power and influence in the twenty-first century.  Do Europeans really want such a world?  If not Europeans should heed the words of Madame Lagarde this week; “just get on with it!”


Julian Lindley-French 

Monday, 13 October 2014

The March of the Kippers


Alphen, Netherlands. 13 October.  “If I should die, think only this of me; That there’s some corner of a foreign field That is forever England”.  Watching the United Kingdom Independence Party (UKIP) win its first parliamentary seat last week in England I could not help but be reminded of Rupert Brooke’s century-old requiem for a soon-to-be lost England and his soon-to-be lost self.  The March of the Kippers is a very English political insurgency but no less potent for that.  There are three main drivers of this insurgency: political disconnect between the narrow uber-elite who run England and the people: elite failure and a refusal of the elite to listen to the English people; and the loss of patriotism or any belief in the country at the highest levels of government and governance in England.

Political Disconnect: A clue to the cause and the depth of political disconnect between the uber-elite and much of the English population is apparent in two pieces written last week by Times columnist and former MP Matthew Parris, a fully paid-up member of the liberal London uber-elite.  In a couple of articles stunning in the ambition of their arrogance he called the electorate ‘out of touch’, and advised his uber-elite friends to tell them so.  His shrill chimes rang in unison with those in the London and Brussels Kommentariats who talk about political dissenters such as the Kippers as failed little people left behind by globalisation the voices of whom must be dismissed and if needs be actively marginalised.
 
Elite Failure:  If England was some form of idyll the dismissive howls of an aggrieved elite might be understandable.  However, England today is far from being an idyll.  Rather, it is a rudderless, broken, divided place, a political and social mess that has lost much of its identity in the face of the relentless tide of elite-led immigration and the ghetto-creating multiculturalism that has so undermined social cohesion.

In other words it is the London elite who have failed the people not the people who have failed the elite as Parris implies.  Indeed, it is the same elite who in the space of a generation have allowed the conditions for home-grown terrorism to spawn in England; handed over sovereignty and power to Brussels and denied the English people a promised referendum on the Lisbon Treaty; allowed the banks to bring Britain to its economic knees; lost control of migration and drove down living standards; and who by appalling political miscalculation this year brought the United Kingdom to the point of disintegration.  Indeed, it is the self-same elite who over the past fifty or so years have made just about every wrong strategic decision it is possible to make and thus fulfilled their own self-fulfilling prophecy of absurdly rapid national decline.

First, it is the London and Brussels elites who daily fail the challenge of globalisation.  Critically, they fail to understand that globalisation and Europeanisation as currently conceived are mutually exclusive.  Second, whilst past London elites were just as much ‘out of touch’ as the current leadership they at least had the interests of the country at heart and the power to do something about it.  Today, much of that power has been handed to Brussels.  Third, much of the London uber-elite are part of a new elite European politico-intellectual complex who talk far more to each other than their compatriots.
 
Loss of Elite Patriotism: It is also the self-same elite who privately sneer at the ordinary, decent patriotism of the ordinary, decent folk of England who are now rebelling. Sadly, the very people who run England are the very people who seem no longer to believe in England.  And that includes Parris and many of his elite fellow-travellers in the scribbleocracy.  They think that Little Britain can only survive as part of the ghastly mutual impoverishment pact that the EU has become.  These denizens of exaggerated declinism dismiss those who with no sense of hubris still believe that Britain, the world’s fifth or sixth most powerful economy with one of the top five world militaries, could and should matter and could if necessary forge its own future, forge its own partnerships and build its own alliances.

Indeed, it is the dignified quiet patriotism of millions who still believe in their country that the intellectually all-over-the-place uber-elite simply do not get so lost have they become in their theoretical ‘isms’ and ‘ations’.  Yes, many of the ordinary people now voting in huge numbers for Nigel Farage are no doubt to quote Parris “intellectually all-over-the-place”.  Some of them are no doubt the ‘Little Englanders’ belittled endlessly by the self-satisfied ‘liberal’ London uber-elite.  Some of them may also be guilty of the racism with which the politically-correct elite love to charge anyone with legitimate concerns about the social, political and cultural impact of rapid, uncontrolled hyper-immigration.
 
However, many millions of England’s political dissenters are also decent, ordinary people who feel let down by their political overlords and rightly so and who are finally breaking out of the political docility which the elite have for too long exploited.  People now willing to challenge directly the many dangers to democracy, identity and indeed security that to all intents and purposes unaccountable elitism has created.
 
But, here’s the political rub.  In England these ‘little people’ might well be close to forming a majority precisely because of uber-elite failure and that will in time matter.  London and indeed Brussels better realise that and quickly.  However, so long as the London and indeed Brussels elites continue to dismiss the Kippers and their like as the errant, ignorant voices of a few political Luddites, political troglodytes who cannot be trusted with ‘reality’ then England’s political insurgency will not only grow it will spread across western Europe.

Surrounded by self-interested ‘Special Advisors’, bombarded by special interest groups and daily in receipt of ‘research’ that tells them what they want to hear the London political elite too often content themselves that their warped picture of society is in fact reality.  In such a world the people become sheep that can be bought off with political placebos (ever more spending on the National Health Service), lied to (immigration and Europe) or simply insulted.  Parris calls UKIP political “parasites” even though millions of his compatriots vote or indicate they will vote for UKIP leader Nigel Farage.  By so doing Parris implies that millions of voters are parasites too and that by definition they are parasites on his uber-elite.
 
It is my firm belief that in time a new England will emerge.  However, experience suggests it will do so because of the good, decent, ordinary people of England of all creeds, races and orientations.  And it will most likely happen in spite of London’s failed uber-elite.


Julian Lindley-French

Thursday, 9 October 2014

The Euro has no Defence


Deepest England, 9 October.  This week the IMF declared “Among advanced countries, the United States and the United Kingdom are leaving the crisis behind and achieving decent growth”.  Indeed, the IMF expects the UK economy to achieve “sustainable growth” of 3.2% in 2014 and 2.7% in 2015.  At the same time the IMF has cut deeply its growth forecast for the Eurozone, most notably and most worryingly the three biggest Eurozone economies; France, Germany and Italy.  There is no schadenfraude here in Britain (well not much) because a strong Eurozone is clearly a British interest but there is deep concern.  Leaders are doing nothing to resolve the inherent contradictions of the Eurozone.  It is again politics at the expense of strategy and the implications are terrifying. 

The enormous scale of the challenge faced by the Eurozone is put into stark relief by the contrast in fortunes between the Euro-free British and the Eurozone.  The French economy is slated by the IMF to grow by no more than 0.4% this year, mighty Germany is now downgraded from 1.7% to 1.4%, whilst the Italian economy has not grown in real terms since the creation of the Euro in 1999 and is again contracting.  Worse, the IMF suggests there is a 40% chance of a triple dip recession in the Eurozone and a 30% chance of deflation.  The ‘best’ way to prevent deflation according to the IMF is for debt-laden Eurozone governments to flood their economies with even more debt.  That will only lead to stagflation and the worst of all Euro-worlds, a chronic mix of economic stagnation and inflation. 

This wholly EU-made mess has been caused by a cacophony of disastrous decisions.  First, the creation of a currency was a political project rather than a shared financial instrument established on sound economic and fiscal fundamentals.  Second, a one-size fits all interest rate policy for wildly divergent economies first stimulated insane borrowing and now prevents competitive devaluation by weaker economies locked into the Euro.  Third, the Stability and Growth Pact implied a set of rules rather than imposed them.  Fourth, the refusal of big states to observe those rules when politically inconvenient, as France has again done this month by missing its 3% debt-to-GDP target has undermined by the credibility of the currency and its governance. 

Worst of all few of the vital structural reforms have been enacted that would make weaker economies with over-regulated labour markets more competitive.  Indeed, several Eurozone countries simply lack the political stability or sufficiently strong political institutions to cope with such reforms.  The consequence is that taxpayers such as me in a few formally rich countries such as Germany and the Netherlands are bankrolling the Eurozone crisis whilst its leaders fiddle the books to give the appearance of a solution to the crisis where there is none.  Locked into their own inaction Eurozone leaders vaguely hold out the prospect of world growth as the panacea for all the Eurozones many problems.  It is not therefore not without some pathos if not indeed tragic irony that the IMF also makes clear that the greatest threat to world growth remains the Eurozone.  In truth the Eurozone could well be trapped in a near-zero growth no man’s land for at least a decade with leaders simply trying to mask the extent of their own failure from their increasingly irate, ever more unemployed and eventually impoverished voters. 

Nor are the consequences of such failure merely academic or economic.  This week a 1200 page report by auditors KPMG and lawyers Taylor Wessing came out on the state of the German armed forces.  Its main conclusion is that after years of cuts and under-investment the German armed forces are in no position to undertake any new assignments.  This deplorable state of affairs reflected poor project management and delays in equipment delivery which imposed extra costs now totalling €50bn or 66% of the entire German defence budget.  Germany has pledged to provide 60 Eurofighters to support an ally under attack.  In fact Germany has difficulty deploying 6 aircraft or half a squadron.  However, the core of the problem is the eternal Eurozone crisis. 

Indeed, the plight of the German armed forces is reflected if not magnified across the Eurozone as austerity and zero growth bite into government budgets.  To maintain core services such as health and welfare defence budgets are being raided in countries across the Eurozone.  The consequence is that Europe’s security and defence is ever more at risk. Moreover, with no end in sight the Eurozone crisis is now placing NATO and indeed the wider transatlantic relationship at severe risk of collapsing. 

The EU today is a mutual impoverishment and insecurity pact precisely because to all political intents and purposes the EU and the Eurozone are one and the same.  The hard truth is that the Euro cannot survive in its current form and yet the choices leaders face are to say the least stark.  1.  Deepen the political and economic integration of the Eurozone at the expense of its member-states and democracy.  This will cost an immense amount of taxpayer’s money, will almost certainly trigger a Brexit and increase Europe’s strategically-inept self-obsession.  2. Split the Eurozone up into a core area of fiscally-strong economies focused on northern and western European states and allow states such as Italy to return to their former currencies so they can competitively devalue.  This will also cost an immense amount of money as the new/old currencies would need to be underpinned by an EU fund to soften the social impacts of leaving the Euro. 3. Simply end the single currency.  That would mean an end to the European Project beloved of the elite and would also cost an awful lot of money.  Given the difficulties of all three choices Eurozone leaders will instead adopt the Merkel Approach and do next to nothing.  In time that option will prove to be the most expensive of all.

For the Euro to be fixed its power-brokers need to realise that the Euro itself is the problem.  If not the Euro could destroy Europe.

The Euro has no defence.


Julian Lindley-French