No Taxation Without Representation!

"London is the centre of financial services in Europe. It's under constant attack through Brussels directives. It's an area of concern, it's a key national interest that we need to defend."


Prime Minister David Cameron, 29 October, 2011

The 26 October, 2011 Euro Summit Statement and the decision by the seventeen Eurozone countries to move towards ever deeper economic and fiscal integration will make Britain and the British people third or fourth class European citizens, after the likes of Belgium and Luxembourg. For the world’s fifth or sixth largest economy and Europe’s strongest military power Britain’s status in the EU was changed overnight from being one of the Big Three in an essentially inter-governmental structure, to being shut out of a German-led integrated system. To force the British people to go on paying for something with which the overwhelming majority of them do not agree with and for which they gain little or no benefit would be to subject a proud, old country to humiliation. That is not going to happen.

Figures supplied by Britain’s Office for National Statistics capture the extent of the unfairness to which Britain is now subject by its European partners. Britain is the second largest net contributor after Germany having injected some €10.5 billion in the EU in 2010. Britain’s gross contribution is also second to that of Germany at €22.4 billion, having leaped 74% since 2009. Some warn that Britain’s trade with Europe could be damaged if Britain left the EU, with some 40% of exports going to the EU. In fact, in 2010 Britain ran an enormous trade deficit with the EU of €53.1 billion, compared with a trade surplus of €11.7 billion with the rest of the world.  The average British household now pays around three hundred euros per year to the EU, which for many is close to the monthly cost of keeping a roof over their head.

The Eurozone breakout of 26 October was thus more than a technical decision to save the Euro. It saw the beginning of a fundamental shift of power inside the EU in favour of Germany and the European Commission. This power shift is manifested by French and German-inspired attacks on the City of London by the European Commission, Britain most important strategic economic asset.  Berlin and Paris are moving to strengthen both Frankfurt and Paris as financial centres at London’s expense. Prime Minister David Cameron warned on 29 October, 2011 that the City of London is under constant attack from EU. He described Britain’s finance industry as a “key national interest”, and warned that the single market must be kept open to non-Eurozone members.

Cameron went on, “Sometimes it’s necessary to have regulation but the regulation is badly drafted, badly formed and it doesn’t necessarily reflect what large financial centres like London need. And, of course, all countries in Europe pursue their national interests. Would the French and Germans like a larger share of financial services in Paris and Frankfurt? Of course they would. I want to make sure we keep them in London”.

Specifically, Cameron is deeply concerned about proposals from the European Commission which are supported by France and Germany which would impose a tax on all financial transactions in the EU to help fund the way out of the Eurozone crisis. Not only would this hinder London’s ability to compete with other global financial markets such as New York, Singapore, Hong Kong, Shanghai and Tokyo but it would effectively mean that the British were contributing 80% to tax to cover debt in a Eurozone of which they are not a member.

The power shift implicit in the Statement is truly historic and historians will come to see it thus. Germany is about to win the 140 year systemic struggle for the domination of Europe.  Given Berlin is the big winner the Germans should perhaps not complain too loudly about the price for solving the crisis as the Euro has done so much for so long to fuel Germany’s export-led growth.  The single currency has in effect acted as a customs union built around Germany thus offsetting the high costs of German production.

Equally, London also has responsibility for the position in which it finds itself. Ever since joining what was then the European Economic Community (EEC) back in 1973 London sold ‘Europe’ to its people as a free-trade zone and nothing more. Indeed, Britain has been trying to hold back the development of a more political and social Europe ever since. In ever more desperate attempts to reconcile what was promised to the British people with the political moves in Europe towards deeper integration London has sought opt-outs, which has simply removed Britain ever further from decision-making in Europe. ‘Brussels’ is now an utterly hated word across much of Britain and unfairly so. Ironically, the most important opt-out was the decision not to join the Euro for the simple fact that Britain was right about the inherent contradictions in the structure of the currency driven as it was by political ambition rather than sound economic fundamentals.

So, where can the British go? In fact Britain remains one of the world’s most advanced economies and by dint of being outside the Euro has better prepared itself for the globalised market than any of the Eurozone countries. Indeed, the Eurozone crisis is the world’s first globalisation crisis of the developed world caused precisely because the Eurozone tried and failed to seal itself off from the consequences of globalisation. It is no coincidence that David Cameron spent the period immediately after the Eurozone summit in Australia with the leaders of the Commonwealth amongst the fifty-three members of which are some of the world’s up and coming economies, most notably India.

And then of course there is the Anglosphere. Ten years of bruising engagements by the British military in Iraq and Afghanistan has seen some eight hundred British soldiers killed and some three thousand badly wounded. It has also demonstrated to the British that when it comes to real danger for all the talk of European defence London can expect little solidarity from its European partners. Family are the only ones that can be trusted; America, Australia, Canada amongst others. The British have done too much of the dying for Europe these ten years past. Libya? Too little, too late and it is seen by many in London merely as a vehicle for re-election seeking President Sarkozy to grandstand. There may even be benefits for both sides as a Europe without Britain can finally get on and do what it pretends it has always wanted, but which it also pretends the British have always frustrated, not least a common defence policy.

No Taxation Without Representation was first used in the run up to the American Revolution against Britain by Reverend Jonathan Mayhew in 1750 Boston. James Otis then said that "taxation without representation is tyranny”. What was right in 1750 remains just as right in 2011.

The day will now come when Britain leaves the EU and it will be perhaps the saddest day of my life.

Julian Lindley-French

A Bridge too Far: Britain Must Now Leave the European Union

There will be “a further strengthening of economic convergence within the euro area, …improving fiscal discipline and deepening economic union, including exploring the possibility of limited Treaty changes”.

Herman van Rompuy, President of the European Council, 27 October, 2011

Alphen, the Netherlands. 27 October, 2011. You will forgive your faithful blogonaut a third blog in a week on the same topic – the Eurozone crisis. However, the mission of this blog is to peer through the political murk and the fog of jaw behind which the Euro-Aristocracy and their faithful Eurocrats love to hide and bear witness to real strategic change. Before me I have the Euro Summit Statement of 26 October, 2011 (strange how it was issued at 0400 hours CET 27 October but is dated 26 October). Historians will come to regard this document as perhaps the most important since the EU’s founding 1957 Treaty of Rome. A political Rubicon was and had to be crossed last night by the Eurozone countries towards political and economic integration, but Britain for a whole host of reasons cannot, nor will she ever follow.

Quite simply the statement marks the moment when the countries of the inner-union broke once and for all with those of the outer-union. For someone who has spent much of his adult life believing in the essential unifying mission of Europe it is with the most profound sadness that I now call on Britain to leave the European Union. To save Greece, Britain has been sacrificed and given the stakes there was little alternative. However, for Britain to stay now would simply heap humiliation upon cost without influence and my proud, old, badly-led country deserves better than that.

As ever the devil is in the detail of Union-speak. It is not the headlines that matter, although as a Dutch taxpayer I am the one who is really going to take the now infamous ‘haircut’…and I will be bald for many years to come. Europe's Dear Leaders are simply inventing ways to avoid saying that. Private banks that hold Greek debt will write-off 50% of their returns; the ‘firepower’ of the European Financial Stability Facility (EFSF) will be increased from €440bn to €1 trillion (it will be €2 trillion within a year); and European banks will be required to raise about €106bn in new capital by June 2012...much more is needed. 

The key breaker with Britain is Annex 1 (the truly dangerous strategic bits of EU-speak are always hidden in the ‘language’ of annexes): “Ten measures to improve the governance of the euro area”. There will be twice yearly Euro-summits at which the Eurogroup meet under the leadership of a President of the Euro Summit who will be ‘designated’ by the Heads of State and Government (HofSG) of the Eurozone. The “Eurogroup will ensure ever closer coordination of the economic policies and promoting financial stability”. One can tell how weak is Britain’s influence as whoever writes this stuff is clearly not English. The non-Euro members and the European Parliament will be “kept informed” by the Euro-summit president, which will be nice.

There will be a Eurogroup work-plan towards deeper integration drawn up by a Eurogroup Working Group, “drawing on expertise provided by the Commission” which will be chaired by yet another “full-time Brussels-based President”…who will be different from the President of the Euro Summit. Still with me? Fantastically, the Onion will soon have five presidents – more high-paid jobs for the Euro-Aristocracy and their Eurocrat friends. What is the collective? A plethora of presidents, or merely a pain? Critically, the ECOFIN Commissioner, Head of the Omission's Economic and Finance Committee; the President of the Euro-Summit; the President of the European Commission; and the President of the Eurogroup shall be responsible for “communicating the decisions of the Eurogroup”. That should be clear then.

Make no mistake for all the Byzantine complexity and secrecy beloved of the democracy-defying Brussels Mafia this moment is the decisive break with Britain. London had an opportunity to shape this moment but woke up too late and did too little.  London will of course do what it has always done at such moments of retreat. Play down the significance of the statement, assure the British people that its impact will be minimal, and that assurances and opt-outs have been secured. There will be failure-masking talk of leading the non-Eurozone members towards a counter-balancing bloc. History will prove that London’s ‘assurances’ will be as empty as the people who make them. The simple fact is that Britain is the big loser (again) from the Euro-crisis. My old country must now take its chances with the wider world which represents over 60% of Britain’s trade. Bring on the Anglosphere!

The statement marks the decisive end of the fifty year struggle between a sort of ‘intergovernmental’ Europe and a sort of integrated Europe. The latter is not at all what the British people signed up to. To stay further would be to pay for someone else’s party and that would be unfair. A German-led inner core will now make decisions with implications far beyond mere issues of economy. Economics is after all power and Britain has no part of it.

Therefore, I call upon the Euro-Aristocracy on both sides for once to do the right thing; prepare for the departure of Britain from the European Union and recognise that Britain has trading rights under the World Trade Organisation that must be respected.

To paraphrase Winston Churchill; this is not the end of the beginning, but rather the beginning of the end for Britain in the European Union.

It is a bridge too far for Britain…and we all know what that means.

Julian Lindley-French

Euro-Crisis: A Little Bit Pregnant, David?

Alphen, the Netherlands. 25 October. Right now your faithful blogonaut should be on a Royal Navy warship somewhere off Europe. No, we are not planning an invasion, but it might come to that. Instead, I am in bed writing this missive on my steam-powered lap-top. Yesterday, having gone through the Eurotunnel, and back into Blighty as far as the ancient town of Rye, I had to turn back laid low by the Dutch Disease – the dreaded lurgy. The long run home through enemy territory – Calais, then Dunkirk and up to the Belgian border was touch and go. But in the end I made it flaps down with seconds to spare, in spite of some dense flak in the form of Belgian traffic near Antwerp and eventually belly-flopped into bed. Gallantly and valiantly I had decided to abort the mission and head home in the national interest, not wishing to infect what is left of Her Majesty’s navy. There is however some good news. Being full of flu for once my head is clear to think.

PR-Meister Cameron is trying to create a position for Britain in the Onion that simply no longer exists - being half in Europe. This Eurozone crisis will end that absurdity and confront Britain with the most profound of choices. We are all moving inexorably towards that moment. Last night almost half of Cameron’s Conservative Members of Parliament voted for a referendum to be put to the British people. The question on offer would be simple; should Britain stay in or leave the European Onion? In doing so they voted expressly against the wishes of PR-Meister Cameron. Rightly in my view, the PR-Meister made the point that now is not the time for such a question to be placed before the good citizenry and honest burghers of Britain. He sympathised with his rebels by suggesting that the British Parliament was "ever more impotent" as the "tentacles" of the European Onion "intruded into more and more areas of national life". The time for reform was at hand, he said…but not just yet.  What matters now is that we all pull together to avert what is a European crisis of the first order.  But the day of reckoning approacheth!

Time will prove the obvious; the PR-Meister is defending the indefensible.  On the one hand he believes the British interest is best served by staying in the Onion but on the other he is promising his revolting back-benchers that a "fundamental change" in the UK's relationship with Europe will soon take place. How?

The contradictions in Cameron’s position are indeed profound. First, the political space Britain now occupies in the Onion is eroding fast. Given events being in the Onion but not in the Euro makes little sense now, let alone a year hence when the consequences of this moment unfold. Logically given London's current position all that is going to happen is that the British will inevitably incur more cost for less influence.  Second, “repatriating powers” from Brussels will not free London from the grip of the Onion. With the European Omission’s powers inevitably strengthened Britain will still be ever more subject to a whole host of European Directives rightly designed for and by the political and monetary core of Europe. The PR-Meister will of course demand ‘opt-outs’ but all these ever do is ensure Britain has next to no influence over the strategic track of the Onion. It is precisely Britain's penchant for opt-outs that over time has led to the loss of critical influence in and over the Onion.  Third, fiscal and economic integration will lead inevitably to even further political integration in areas such as home affairs and defence which are a vital British interest but over which London will have no say. Fourth, having promised no more British cash to solve the Euro-crisis PR-Meister Cameron’s call to us all to douse the fire in the neighbouring house will mean just that – more British cash.

Britain’s real position was captured by President Sarkozy at the EU-summit this week. “We are sick of you criticising us,” the French President said, “…and telling us what to do.” Note the ‘us’. Britain simply is not regarded as one of 'them'.  So much for solidarity. 

Sadly, PR-Meister Cameron’s position on the Euro-crisis is symptomatic of the muddled and contradictory strategic thinking at the heart of the British Government.  Indeed, over Europe Cameron finds himself in the political equivalent of being a little bit pregnant. But here’s the real tragedy – so is Ed Milliband, the Labour Party leader and Nick Clegg, the leader of the Liberal Democrats. Whatever one might think of the Tory rebels at least they see how ridiculous Britain’s European ‘policy’ has become. It is about to get an awful lot worse.  Britain is in the worst possible of all strategic/policy positions - no influence/ high cost.

To properly influence events Britain must be at the core of the Onion. Or, to avoid the costs Britain must leave the Onion. There is no middle ground. In other words, Britain must join the Euro, or leave the Onion. It is as simple and straightforward as that.

Talking of symptoms – where’s the Lemsip?

Julian Lindley-French

Der Plan and the Onion: Under New Management

“Those who have checked improvement, because it is an innovation, will one day be compelled to accept innovation when it has ceased to be an improvement”.

Lord Palmerston, 1848

Alcala de Henares, Spain. 23 October, 2011. There is something vaguely disturbing watching a Brussels European Onion summit from afar; especially when the topic is how to waste even more of my money. Watching a few with an awful lot of money in offshore tax havens (the Euro-Aristocracy) instructing a few others on huge tax-free salaries (the Onionistas of the European Omission) how to spend my money leads me to paraphrase Oscar Wilde; it is the unspeakable in pursuit of the too-taxable to save the hides of the responsible. 

Der Plan to save the Euro, well-intentioned and necessary as it is, effectively re-orders the political map of Europe and confirms once and for all who really calls the shots; Berlin.  London? Nowhere, as usual.

I am writing this missive beneath the eaves of Cervantes’s home on a sun-draped street in central Spain with Chancellor Merkel now cast in the role of Don Quixote and trying-to-be-re-elected President Sarkozy as her faithful squire Sancho Panza.  In fact, Der Plan is a stroke of German genius; the Euro-Aristocracy will get the banks to bear much of the cost of the Greek tragedy whilst simultaneously using my money to save the banks. Those who have been calling for decisive leadership have now got it – German leadership. Come next week the Onion will be under new management – German management. 

Here in Alcala one sees the real human cost of this crisis on the proud, honourable and decent people of Spain who have come so far since they rid themselves of Western Europe’s last tin-pot dictator Franco back in 1975. Der Plan will leave the heirs of Philip II with little alternative but to abandon principle and accept what they are given – orders. They are too deep in debt to do otherwise and the soon-to-be new government will be forced to take the cheapest option on offer. It is a sign of things to come

Der Plan, I am told, will also contain the German joke. The powers of the European Omission will be extended to ensure proper management of national budgets. I told you it was a good one. Physician, heal thyself, I hear you utter in despair. It is like putting an arsonist in charge of the Pentagon. Oh sorry, we tried that. Not that Germany…and, er, France. has any alternative and neither Berlin…nor, er, Paris see this as a power grab. It is leadership that has been thrust upon them, but such is life.  Nor will said leadership come cheap…either for Germans or the rest of us in the Onion-zone.

Der Plan could also prove a tad tricky for the British, particularly if London ever again wakes up (unlikely) and realizes that just because some woman from Lancashire is in ‘charge’ of EU foreign policy Britain does not control Europe. British PR-Meister David Cameron, has promised the British people a referendum if there are treaty changes pursuant to this stitch-up, er, sorry, Plan. Concerned about a vote in Parliament he even got arch anti-Onion William Hague to suggest that the British Parliament might be a ‘distraction’ for the PR-Meister at this time. Don’t you just love the Euro-Aristocracy?

Many commentators, including your faithful blogonaut, have characterized the choices facing the Eurozone as state up or break up. To Brussels or to de-Brussels; that has been the question. In fact there is a Third Way (oh no, not another one!) hybrid integration, which is the second German joke. It goes something like this. Germany will lead the way towards much deeper and intense political and economic co-operation between the larger member-states of the Euro-Onion-Zone, supported by Sancho Panza, er sorry, France. If they can get away with it the little onions outside will be offered ‘guarantees’ about future access to Berlin, sorry, Brussels. However, in return they will also agree to pay to fix the Euro, although every effort will be made to avoid telling their taxpayers. Quietly, the European Omission will be invited to push towards deeper fiscal onion with a particular emphasis on using the crisis to promote political integration via the smaller European states (they are all broke anyway).

PR-Meister Cameron might thus be induced to go along with the second German joke and present it to the British as a ‘technical’ adjustment of little import to the British thus, of course, not requiring a referendum. The British people might after all get the referendum answer wrong; just like their Danish, French, Dutch and Irish confreres before them.   It will be of such little import to the British that a series of other minor 'adjustments' will follow soon thereafter.   The Omission, freed to bring more power unto itself, will issue a whole array of entangling Directives of financial regulation mainly aimed at the City of London. This will strengthen Frankfurt at the expense of City and eventually break the all-important link between the City and Wall Street. A special relationship will be established between Germany and the European Omission that will then lock German leadership into the Onion.  That cannot be good for Britain, nor Paris, as the latter soon finds itself replaced as Sancho Panza by the Omission, nor indeed for Berlin.

In fact, I have no particular problem with the leadership of Europe of a modern, democratic Germany.  It is a fact of power life.   However, what is at stake in Brussels concerns the checks and balances that need to be in place to ensure sound leadership. Britain’s effective absence from influence over this crisis is leading inevitably to a re-ordering of state and institutional power in Europe that is not in Britain’s or in anyone else’s interest.

Palmerston’s first dictum of British foreign policy was simple – London must do whatever necessary to prevent a dominant power on the Continent of Europe. It is time the British remembered that – crisis or no crisis.

But do not despair. There is always the European Parliament there to prevent any abuse of power. Baarf! Baarf!

Perhaps I should be quoting Goethe!

Julian Lindley-French

The Strategic Influence Game 3: The Loser

“A man in peril of drowning catchest whatsoever cometh next to hand… be it never so simple a stick”

Sir Thomas More, 1534

Alphen, the Netherlands, 17 October. Strategy is the art of gaining the greatest influence at least cost. For at least a generation the British elite have specialised in gaining the least influence at the greatest cost – be it in Europe, the transatlantic relationship or the wider world. Why?

The factors are many but put simply Britain’s political elite have made just about every strategic mistake there was to make over the past fifty years or so – apologising for Britain abroad, apologising for old Britain at home. Today an impotent, rudderless political class lacks strategic imagination and is incapable of strategic leadership. All too conscious of failure the state is resorting to creeping authoritarianism and political correctness to quash the concerns of middle Britain about the consequences of decadent decline; the excessive influence of special interest groups over government – be it big business or minorities. Common sense and the will of the majority have been cast asunder.  Sadly, it is hard to imagine Britain surviving the next fifty years. Surveying the wreckage there is very little for Britons to be proud of.

The strategic political correctness that suffuses the British elite is evident in British foreign policy - the longest post-Imperial apology in history.  Keeping foreigners happy at almost any cost is not national strategy. The retreat from international realism has been reinforced by a retreat from domestic realism.  The constant and failed ideological experimentation on the British people by both the political left and right has led to a society so fractured that all government can do today is talk of Britain as a series of ‘communities’.

Abroad so far and fast is Britain's retreat from real strategic influence that soon London will no longer be able to mask systemic failure by appealing to and exploiting fading symbols of past glories. The European crisis will reveal the extent of Britain’s retreat from influence; ever more cost for ever less influence - the very antithesis of sound strategy.

London’s retreat from strategic influence was painfully apparent at a meeting at which I spoke last week on transatlantic defence relations.  As ever the British unable to talk strategy preferred to talk cost and capabilities, or rather the lack of them. My American colleagues tried hard to be sympathetic eschewing what they saw as London's doom and gloom by looking for new ways to cheer the British up in this age of aggravated austerity. And yet even as I spoke I knew in my heart that the strategic depression that pervades all and every corridor of Whitehall would ensure nought would come of it. London has given up, surrendered. Now resigned to being a very third rate power my once great country has become a strategic basket case.

This lack of duty and responsibility at the top of politics is particularly unfair on the proud men and women who have worn the uniforms of the British armed forces with such distinction and who have put their lives on the line for a Britain that no longer exists. Rather, they serve a political class so utterly self-obsessed and so lacking in any vision of what Britain could still achieve in this world if just for once they did what they are paid to do; lead. Sadly, British leadership today has been reduced to little more than political PR. Never have so many been so poorly led by so few so high.

Talking of which some fifty metres from the Royal United Services Institute (RUSI) where I was speaking British Defence Minister Dr Liam Fox was resigning. He had in his own words ‘blurred’ the distinction between private and public life. Allegedly he had given inappropriate access to a right-wing friend allegedly close to foreign powers who had also appeared frequently during Dr Fox’s official trips abroad allegedly implying an official status he had no right to. Sadly, there is probably more to come out but what is clear is that another landmark has been surrendered on the political road to public contempt.

No wonder the British people are abandoning politics in despair worn down by the essential hypocrisy and self-serving shallowness of contemporary British politics. The average life expectancy now of a British Defence Secretary is one year; that means a pool of six politicians are needed to get through one parliamentary term or six scandals - which is more or less the same thing these days. There is a joke there somewhere.

Why does this matter? For Britain the Fox resignation marks simply the latest example of a political elite too many of whom believe in a culture of entitlement. In this case it also shows a Coalition Government so ill-disciplined as to be virtually dysfunctional deep into perhaps the worst crisis since the Second World War. It also reveals a culture of deceit in government reinforced by a belief that the people cannot be trusted with the facts. Not because the facts are inimical to national security but because the facts are too embarrassing for political leaders.

As I walked through the Victorian grandeur of Whitehall I was struck by Britain’s past mocking Britain’s present.  Britain's little leaders – both left and right - in big rooms huddling behind their thin rhetorical facades awaiting the economic equivalent of the Blitz. Somewhere to the East something nasty is happening in ‘Europe’ (one is never really in Europe in Britain) about which apparently the British can do nothing but yet for which the British will pay.

London is thus drowning in a sea of rhetorical irrelevance between the capitals that do matter – Washington, Berlin and Paris. Britain is the big loser in the strategic influence game; no longer America’s ‘special relation’ and utterly marginalised in Franco-German efforts to save Europe from disaster.

What a little country Britain has become…and how cheap it sells itself.

Julian Lindley-French

The Strategic Influence Game 2: China in Space

"People should not be unfamiliar with strategy. Those who understand it will survive, those who do not understand it will perish"

Sun Tzu

Alphen, the Netherlands. 13 October. On 29 September at 1316 hours GMT a Long March 2F missile, China's latest lifter, powered into the sky carrying Tiangong-1, Beijing’s first space laboratory. Shortly, China will launch Shenzhou 8 which is designed to link up with the orbiting laboratory some 350 kilometres above the Earth. Soon the Long March 5 will be in service capable of putting a 50 ton payload into low Earth orbit. On 10 August China’s first aircraft carrier began its sea trials. Although it is a re-fitted former Soviet carrier and by no means state-of-the-art, taken together with China’s investment in submarines, a new ‘carrier-killer’ ballistic missile and stealth aircraft Beijing is clearly intent on entering the strategic Premiership of world power. This ambition should be clearly understood as such...with all that implies for the West. 

The timing is no mere coincidence. With the West mired in debt and much of Europe suffering strategic depression China is signalling that the Western world order is over. A challenge is being laid down to the United States and its allies that has enormous implications for NATO and European defence.  Critically, as China invests in expeditionary military capability much of Europe is effectively unilaterally divesting itself of said capabilities. This is not without a certain irony.  The loss of Europe’s conventional deterrent will almost certainly lead to much greater reliance in time on nuclear deterrence, something the legions of soft power disarmers in Europe might wish to consider.

Like Russia, China has a classical view of international politics. The state comes first – at home and abroad. Alliances, such as they exist, are designed merely to further the national strategic interest the aim of which is decisive influence over the neighbourhood and in time peer competitors. China’s grand strategy, which is euphemistically entitled Strategic Harmony, represents a world view that is essentially zero sum – a stronger China means a weaker America.

It is within than context that the space launch must be seen. Beijing clearly understands the psychological impact of power symbolism. With the Euro crisis accelerating Europe’s precipitate decline into strategic impotence China is establishing its psychological and ‘moral’ supremacy over much of the West. Strangely, Europe seems to be happily complicit in its own decline with little regard for the medium and long-term strategic consequences of its debt-dependency on China. This can be partly explained by the decadent nature of the debate in Europe about the ‘right’ to power. Indeed, so confused have Europeans become about the relationship between values and interests that the making of what might be termed European grand strategy is now nigh on impossible.

With Europe trapped in a self-defeating debate about the morality of power China is driving forward to make best use of it by re-defining the rules of the strategic game. China’s practice of power is to use the West against itself. By keeping the Yen artificially low China has used the West’s consumer obesity to force potential peer competitors into debt by effectively warping the global economy in its favour. The global economy is no level playing field.  When the US threatens retaliation (Europeans are of no consequence in Beijing) China concedes just enough ground to maintain the system in its favour.

The transfer of wealth from West to East generated by China’s effective capture of globalisation has been used in part to fund an increase in defence expenditure of some 247% over ten years. It has also been used to fund national prestige projects that help convince the world of China’s emergence as a superpower and mask the many contradictions that exist in the Chinese economy and its complex society.

Cleverly, the Beijing elite is strengthening its grip on power by offering China a new social contract.  The Communist Party agrees to draw back from overt interference in the lives of its citizens (to a point) and to promote improved living standards by embracing capitalism in return for the Party enjoying an untrammelled right to the exclusive exercise of power – both at home and abroad.

Having created this new social contract the reform pressure on the Party has by and large gone. However, the pressure on Beijing to exert Chinese power and influence abroad has increased.  It is a high-risk strategy.  So long as economic growth can be maintained the Party's freedom to act will be maintained. However, if China’s economy falters then the temptation to resort to narrow Chinese nationalism will become a very real danger.  Like Russia massive state power is concentrated in the hands of a relative few with a very traditional view of power and strategy.

When the 'correlation of forces' is deemed appropriate Beijing will certainly move to resolve the status of Taiwan and China's various territorial disputes in the South China Sea. Over time China will seek to further extend its strategic footprint further into the Indian Ocean and South Pacific. And, this process will inevitably lead to increased tension with the US as China seeks to remove the US from its sphere of influence.

Chinese strategy does not mean war is inevitable nor does it suggest that China is implicitly or explicitly warlike. China is merely the latest player of a geopolitical game that Europeans invented but have now forgotten. However, China’s determination to exert strategic influence is clear.  The power to influence is after all the purpose of its wealth creation.  This simple strategic truism of Chinese power and strategy will thus shape the strategic balance of power of the century to come.

Forays into deep space are merely steps on the Long March of Chinese national strategy on the road to a new strategic space.  China's strategic space.  Who or what will exert strategic influence over China?

Julian Lindley-French

The Strategic Influence Game 1: High Noon in the High North

"The view from Moscow is that...decline in Western power makes it more difficult for NATO to ignore co-operation with Russia”.

Keir Giles

Alphen, the Netherlands. 9 October. Who said geopolitics is dead? Ninety-four years on from the October 1917 revolution if anyone had any lingering illusions that Russia is a democracy they were surely dispelled by the 24 September announcement that President Medvedev and Prime Minister Putin would simply swap jobs in 2012. Moscow likes to call Russia a ‘managed democracy’. In fact Russia is a micro-democracy of two…and even that is suspect.

President ‘elect’ again Putin will thus be in power until 2024…at least. Moscow also announced recently an increase in defence spending of some $66 billion over three years, which amounts to some 3% of the Russia’s gross domestic product. With the economy slowing, entrepreneurial activity being squeezed by an increasingly rapacious Kremlin and civil society all but moribund the Putin regime is beginning to look very much like the Brezhnev regime of Soviet old. Then, a self-serving regime sought to offset its lack of legitimacy at home by causing trouble in Russia’s self-designated ‘near abroad’.

The obvious flashpoint will be the Baltic States, the security of which must remain an absolute priority for NATO and the EU. Ukraine is also a worry. However, it is the mineral rich High North of Europe where an increasingly assertive Russia could perhaps play its most aggressive card.

Prime Minister Putin has repeatedly said that Russia intends to defend her strategic Arctic resources with military might. On 28 June the Russians conducted the third test-firing of the new Bulava submarine-launched ballistic missile in the Barents Sea. In July Foreign Minister Ivanov indicated that Moscow intended to extend her territorial borders in the Arctic by some 2 million square kilometres and that Russia intended to keep two brigades of troops at high readiness in the far north, rather than one. In August Russian Defence Minister Bulgarkov announced the decision to acquire 120 more of the highly-capable Iskander M nuclear missiles and that the first battalion had been deployed to the Northern Military District near St Petersburg. With a range in excess of up to 500 kilometres this deployment potentially threatens much of eastern and northern Europe.

Furthermore, the Norwegians are reporting a marked increase in sorties by Russian strategic bombers along the Norwegian coast with simulated attacks now a regular occurrence. On 7 July as the Russian and Norwegian foreign ministers exchanged ratification documents for the delimitation treaty on oil exploration and exploitation in the Barents Sea a Russian strategic bomber formation flew down the Norwegian coast. Nor are the Norwegians alone. Britain has noted a marked increase in Russian air and naval operations against British air and sea space.

Why does Russia do this? Much of this is traditional Russian bluster that anyone working on Russian strategy has come to know well. Some of it is Moscow’s frustration with a lack of progress on co-operation with the Alliance over missile defence and concerns about NATO’s intervention in Libya – Europe’s ‘near abroad’.  Russia sees the West as two-faced. However, strategic opportunism is also a factor.  Moscow’s strategy must thus be seen as a truism most Europeans seems to have forgotten; when one lacks power to make the rules strategic influence is not solely a function of being ‘nice’.

Fortunately for the West Russia is a clumsy exponent of the geopolitical art and too often permits frustration and the power parochial to trump strategy. In effect, it is déjà vu all over again. Declining oil and gas revenues, a hole in Russian Government finances and increasing defence budgets simply did not add up to a sustainable grand strategy – then or now. However, the impules to play Strong Russia is ever-present.

A stable relationship between Russia and the West is clearly in Moscow’s geo-political interest. One only has to look at a map to see the challenges Russia faces to its south and east. However, two things prevent that. First, whilst the 2010 NATO Strategic Concept hinted at better relations with Russia uncertainty, irresolution and retreat has made the West an uncertain partners/adversary. Second, the small Kremlin cabal that holds power have very parochial political and strategic agendas that by and large contradict financial and economic reality. Taken together the drivers of Russia’s strategy in the High North become clear.

Sooner or later there will be a domestic crisis in Russia. The Baltics and the Ukraine are too sensitive for overt adventurism but not the High North. Indeed, in spite of extant treaties boundaries and borders are sufficiently fuzzy for Moscow to exploit if it feels the need to send a message to the West without necessarily provoking a direct confrontation.  It is as ever a high-risk strategy.

In the iconic film High Noon local sheriff Will Kane (Gary Cooper) finds himself alone against a ruthless gang of outlaws. The little man standing firm against the bully eventually wins the day when the local citizenry finally realise that his fight is their fight. Think Finland, Norway, Sweden…and Russia.

High Noon in the High North? It could be coming soon to a screen near you.

Julian Lindley-French

Afghanistan Ten Years On

“They [the Haqqani Network] didn’t agree on several things, so the meetings were without any outcome. That’s why we are seeing now all these reactions and attacks going on.” A senior Afghan official.

Alphen, the Netherlands. 6 October. The first Afghan war of the twenty-first century is coming to an end as the first Afghan civil war begins. Ten years ago today the first Western soldiers were about to set foot on Afghan soil. The Taliban were then routed and it seemed likely that Al Qaeda would soon be denied the space that is Afghanistan from which to launch lethal attacks on Western civilians. Ten years on tens of thousands of Afghan lives have been lost; some 1700 American soldiers are dead alongside 400 of their British comrades, with many more dead from coalition nations. $21 billion of aid has been spent – much of it wasted or spirited away. And still the ‘strategic’ goal of a stable Afghanistan at peace with itself and the world seems an elusive dream. Yesterday’s War?

To talk privately to officials in European capitals Afghanistan has become the non-war. After all, they say, Bin Laden is dead, the Americans want out and Europeans in any case have more pressing matters, such as saving European society from financial ruin. They tell themselves that ‘they’ have done their best for what was after all another failed American war. Of course, in spite of all this no damage has been done to NATO which must now consider other futures.

There is much talk of transition – transition in to Afghan rule; transition out for the West. End 2014 is now the magic date when all major combat operations will end and by which time some grand political bargain will (of course) have been fashioned for Afghanistan. The West will (or course) stay in Afghanistan for years to come offering its aid and advice – members of a well-meaning international community. In reality only the Americans will be formally present on the ground and few at that.

The Afghans, ever-savvy fence-sitters, have not missed the meaning of the moment. The attacks by the Haqqani Network on Kabul are merely the first salvoes of a new power struggle between and within the Pashtun-led Taliban and Afghanistan’s ‘others’ over who will control what bit of the Afghan space, how and at what drug price – fuelled of course by generous doses of mischief from Afghanistan’s ever-interfering neighbours.

The race to fill the Afghan space with something that looks ever so slightly like a functioning Afghan state now enters its final, dangerous stage. What will the end look like? Will it be a formal handover of power with a nice flag-swapping military ceremony, or will it look more like the chaos of 1973 Saigon? Who knows? Whoever does know in Afghanistan?

2012 will be the pivotal year. The trick for the Americans will be to intensify peace-talks whilst fighting. Campaign momentum is everything,  Sadly, it is unlikely the Karzai Government will shift off its own fence. History suggests it will continue with some efforts to establish basic but acceptable levels of governance, whilst cutting informal deals with the members of the not-so-loyal opposition, and prepare to get out.

As ever, the situation in the south will be critical but not exclusively so. It is too early to tell if the Kandahar murder of Ahmed Wali Karzai in July 2011 has eased or complicated what passes for a political process in Afghanistan. The Pashtun represent 42% of the population but are by no means a unified body and whilst they are the political centre of gravity in Afghanistan their appeasement will only lead to conflict with the Tajiks (27%) Hazara (9%) and Uzbeks (9%).

The 2014 state of the Afghan National Army and the Afghan National Police will thus be the true test of the West’s legacy. It is in them the West must now focus its main, last effort. Will they be able to act as a unifying national force? Will they be strong enough for Kabul to exert real control over Afghanistan? Or will they be just strong enough to spare the West’s blushes on departure? The nature of the West's departure depends on the answers to these questions.

It is not Switzerland that is being so painfully constructed in the Hindu Kush but chaos still beckons if we simply walk away. Ten years on all of us in some way engaged in the campaign - from the loftiest politician to the humblest squaddie or grunt - need to grip the importance of this moment. If not, the sacrifice will have been in vain and history will condemn those on whose inattentive watch they perished.

Yesterday’s War?

Julian Lindley-French

Euro-Crash! Now, Britain! Now's Your Time!

“I never worry about action, but only inaction”

Winston Churchill

Alphen, The Netherlands. 3 October, 2011. At the climax of the Battle of Waterloo Napoleon’s Imperial Guard tried to force the road to Brussels.  The Brigade of Guards was waiting in ambush. “Now Maitland! Now’s your time!” Wellington thundered. Immediately the Guards emerged from the long grass and fired volley after volley into the Old Guard until for the first time it broke and ran. The Battle of Waterloo was won and Brussels was saved. It is time again for Britain to save Brussels...from itself.

Throughout Europe’s long and turbulent history the English/British have always been the guarantor of Europe's stability. The British have stepped in at critical moments of crisis either to prevent an overweening neighbour from dominating the Old Continent or to prevent the worst excesses of an unhinged ideology. It is a mark of Britain’s decline and the lack of leadership at the top of power in London that David Cameron and his team have been reduced to talking about the Eurozone crisis as if a) it is ‘nuffing to do with us, guv’; b) something to be swept under London’s increasingly threadbare political carpet; and/or c) wailing like some latter day Cassandras from the rapidly eroding margins.

The bottom-line is this; as Europe’s second or third largest economy, biggest financial market and Europe’s most capable military power it is precisely at this moment of existential crisis for the EU that Britain must show its traditional genius for pragmatic leadership…or leave the EU. That is effectively the choice on offer to London. No ‘ifs’ or ‘buts’.

Britain still has real political and popular influence over here but it is fast waning. My Dutch neighbours are puzzled by Britain’s impotence, and not a little offended by it. Where is the country that twice in the last century saved Europeans from servitude? The village in which I live was liberated by a huge British-led army that swept through here in 1944. Much of the democratic shape of modern Europe is down to Britain’s leadership. People are again looking to Britain and Britain is failing them.

The good news is that Britain has not had such an opportunity to lead for at least a generation. For my Dutch neighbours it is precisely because Britain is not in the Euro that Britain should lead. People all around me are suddenly volunteering the belief that Britain was right after all – the Euro as conceived back in the 1990s simply does not work and never will. And yet, more or much more Brussels seem to be the options on the table and the Dutch, that most European of nations, have no appetite for more Brussels.

Britain thus needs a plan to return the EU from whence it came; to enable Europe’s democratic nation-states to influence better together today’s hyper-competitive world under the leadership of Europe’s democratic nation-states. The mantra? More cooperation, less integration.

Britain’s plan would re-assert national sovereignty over key areas of European policy and strategy.  To that end Prime Minister Cameron should first join Chancellor Merkel and President Sarkozy to stabilise the immediate crisis, even if that costs money. In return Cameron must insist on the repatriatriation of key areas of policy, such as social, labour, foreign and security policy - even if that means a new treaty.  He should move decisively to end ever closer political union, i.e. more political integration, and insist that the European Commision's powers of decision-making be returned to the European Council  - where the will of the member-states is enacted.  The European Commission should be reduced to a much smaller enabling body with its powers of policy initiation removed.

The size and cost of all European institutions should be reviewed so that the damaging confusion over 'competence' is brought to a rapid end.  Many of the meaningless but expensive posts and structures created by the Lisbon Treaty should be scrapped; such as the European President and the European Foreign Minister and the hopelessly Byzantine European External Action Service (EEAS). The European Parliament should be reformed and reduced in size so that real politicians, i.e. national parliamentarians, rotate through a much smaller consultative institution that sits solely in Brussels. The pretentions for the EU to have a separate legal and political identity on the international stage should also be scrapped. Finally, Britain should agree to a revised monetary union for those who a) want it; and b) agree to fiscal harmonisation but insist that ALL EU member-states have a say over the running of such a union.

If not the unelected Euro-fanatics could well win the day in the name of short-term expediency.  That will mean an even more unaccountable, ‘communitarian’ Brussels.  In time, it will also mean more national sovereignty will vanish down a Brussels black hole and thus be lost to incompetence and secrecy. It will certainly mean that any pretence to a link between European power and the European people will vanish leading to a ‘Europe’ run by faceless Eurocrats overseen by toothless and meaningless institutions dangerously far distant from the ordinary citizen.

What gives Britain the right? As one of my Dutch neighbours said to me, “We could not understand when the Euro was created why you British did not want to join. Now we do and you were right, just as you were right about the Constitutional Treaty and European defence”. This crisis is too important for Britain to stand aside. London must lead the EU or leave it.

Now Britain! Now’s your time!

Julian Lindley-French