Europe's Crumple Zone

Alphen, Netherlands, 26 April.  London in the spring sunshine feels like an episode of the X Files.  A strange bright, warm object appears in a rare clear, blue sky of which no-one can make sense.  On Wednesday I had the privilege of providing evidence to the House of Commons Defence Select Committee at its first meeting to consider the 2015 British Strategic Security and Defence Review alongside Lord Hennessy and Major-General Mungo Melvin.  Those of you sad enough to wish to see Friendly-Clinch with Battle Ensigns flying can go to http://www.parliament.tv Perhaps the most important contribution I made was to suggest to collected British politicians of all shades that whatever reforms are made to Britain’s strategic security and defence structures little will change unless the political class imposes effective oversight. 

 

However, Britain’s strategic future is not the purpose of this missive.  Rather it is a comment made by an old university friend over lunch in the City, London’s financial powerhouse.  He suggested that the Eurozone crisis was still in what he called the “crumple zone”, i.e. that part of the car designed to implode on impact to protect the occupants.  In other words the crash is still happening.

This week a six-page European Commission memorandum was leaked which revealed concerns that a Financial Transaction Tax (FTT) would not only drive up costs of government borrowing across Europe but damage the all-important bond markets.  As the FTT is an ever-so-thinly-veiled attempt to get the British to pay for the failed political experiment that is the Euro it is causing both alarm and irritation in London.  Even if Britain excuses itself from this tax firms based in Britain would be badly affected by it and one of the first laws of economics is that there is no such thing as a free tax.  So why are they doing it?

One has only to look at the figures to see why those few Eurozone countries paying for the Eurozone disaster want to spread the costs as widely as possible.  The Eurozone faces a perfect storm that will take at least a decade of pain to resolve.  It is a storm caused by the coming together of fragile banks in need of bail outs and governments that cannot pay for themselves due to debt interest and deficits and bond markets.   The markets are only willing to lend because the European Central Bank is either transferring tax income from the wealthier Eurozone states to the poorer, or simply printing money and damn the long-term growth and inflation consequences.

Take Greece.  Total Eurozone exposure to Greek debt is about €300 billion ($390bn) or some 3% of Eurozone GDP.  German exposure to Greece alone is approaching 5% of GDP.  Six Eurozone states have now sought bailouts with Slovenia about to follow when it is politically appropriate for their banking crisis to be publicly declared.  As each crisis unfolds foreign investors are pulling out their money forcing the ECB to plug the gap by impoverishing the northern, western European taxpayer.

Economic theory suggests all six debtors should leave the Euro, devalue and thus regain competitiveness.  However, in so doing the already immense social pain being suffered will only deepen (Spain’s unemployment rate yesterday reached 27.16%). Moreover, even if only Cyprus, Greece, Ireland, Portugal and Spain pulled out the costs of transitional arrangements could be as high as €1.2 trillion ($1.6tr) or 15% of Eurozone GDP.  That increases to around 20% of Eurozone GDP when the likely additional bank bailouts are factored in.

Consequently, and here’s the rub, Germany is likely to see its national debt increase from 81% in 2011 to around 100% in 2014-15.  German banks alone would need an injection of €500 billion ($600bn) if the Euro fails due to their exposure to toxic debt, threatening the loss of Germany’s AAA credit rating.  However, go the other way towards banking and fiscal union and that would cost €300-€400 billion ($390-$520tr) with Germany bearing at least 30%.  Therefore, post-German elections in September some form of debt mutualisation is inevitable which will push German interest rate costs up by €15 billion ($19bn) per annum.  Indeed, simply holding the resources of the poorer EU states at their current levels to pay for welfare is likely to require transfers from north to south of €250 billion ($325bn) per annum.

Which brings me back to Britain.  The Brits are also sort of broke, with the British national debt likely to peak at around 85% 2017-2018.  However, debt is relative and British debt compares with Japan at 194% and Italy over 100%.  Moreover, Britain’s national debt is only 30% of that between 1920 and 1960.  More importantly 70% of British debt is held in the UK, whereas with the notable exception of Italy, up to 100% of southern European debt is held by flight-risk foreigners.  In other words the British enjoy more flexibility than any Eurozone country, unless that is they are suckered into paying for the Euro-disaster.

The future?  In the long run Germany will consolidate its position as Europe’s strongest economic power, but the crown it wears will be hollow given the constraints imposed on it by Eurozone debt.  Britain will remain and strengthen its position as Europe’s second biggest economy and strongest military power.  Critically, damaged by the crisis and enmeshed in  ever-expanding, growth and competitive-killing Brussels regulation both will decline in relative terms against North America and Asia-Pacific. 

As for long-runs John Maynard Keynes was right; we are all dead.  A crumple zone indeed. On that happy note...

 

Julian Lindley-French

At the Tip of the Spear

A Royal Navy warship at Sea. 22 April.  Exercise Joint Warrior 2013.  This is certainly Europe’s, and possibly the world’s biggest maritime amphibious military exercise this year, and I am having the pleasure to observe and be sea-sick all over it.  Led by the Royal Navy and 3 Commando Brigade the exercise involves some forty ships from fifteen nations with over forty thousand personnel as part of a Response Force Task Group (RFTG) designed in military-speak for ‘theatre entry’ from the sea.  This is Britain’s global reach maritime amphibious spear-tip which will soon be strengthened immeasurably with the commissioning of the two aircraft carriers HMS Queen Elizabeth and HMS Prince of Wales.   The force affords London reach, flexibility and political discretion during crises that only the Americans can match.  What key lessons have I learnt from the exercise, not just for the British but all Western states grappling with defence strategy, austerity and affordability?

Core Message: Britain’s 2015 Strategic Security and Defence Review (SDSR) will fail unless London properly balances ambition, resources and commitments.  To that end the defence review must look upward and outward at the world and down and dirty into the services to drive efficiencies.  Above all it must have the ambition to answer the seminal question at the very heart of Britain’s strategic defence dilemma: what role does Britain seek to play in the world, why and with whom?  

1.       The People Lessons: The quality of personnel is quite simply outstanding.  Indeed, for all the impressive capability of the ships and aircraft on display it is the people that are the real spear-tip.  Sadly, too many British personnel to whom I speak often with many years outstanding service tell me they will soon leave because changing tax and pension rules effectively make it impossible for them to stay beyond forty. 

2.       The ‘Harmony’ Lessons: The Royal Navy ‘harmony’ rule is that personnel must be on duty 220 days deployed per annum, the Army 166 and the RAF 140 even though all three services are in harm’s way in Afghanistan.  On the face of it this apparent imbalance undermines the ability of Britain’s armed forces to deliver the same with less through deeper synergies.

3.       The Leadership and Command Lessons: The endemic tribalism at the higher levels of all three services must be ended.  Indeed, tribalism is doing real damage to the case for national investment in the armed forces.  The British military will need to radically rethink the way it does business across the security and defence piece.  Britain’s military leaders must demonstrate to both their political masters and the taxpayer they understand that.  Critically, no single service will be able to ‘own’ the five domains of twenty-first century military effectiveness – land, sea, air, cyber and space.  The new Joint Force Command (JFC) is a start but it goes nowhere far enough and at the very least must have high-level representation from all three services.  A first step would be for the service chiefs to properly support the Joint Expeditionary Force with the RFTG as its realisation. 

4.       Lessons for the Defence Review:  The 2010 SDSR was what one senior figure called a “spreadsheet review”, where balancing the books came well before a coherent military capability. Whilst those involved understood this requirement and accepted capability “holidays” there was apparently very little linkage between cost-cutting and the ‘faux strategy’ trumpeted by government.  Whilst the British government was essentially correct to close a 2010 funding gap of some £38bn pounds the 2010 defence review signally failed to align resources and commitments.

Next Steps: It is critical that London remains the alternative (to the Americans) coalition force generator and leader of choice as this ‘buys’ London influence in both capitals and institutions far beyond the simply military domain.  However, London’s systemic short-termism is undermining Britain’s ability to influence key allies and institutions, not least Washington.  This is not just important for the British but also for NATO and the EU.  One Dutch officer admitted to me that neither the Royal Netherlands Navy nor the Royal Netherlands Marine Corps would exist but for their British counterparts. 

The Royal Navy’s motto is; if you want peace, prepare for war. Thankfully, Britain today does not have to prepare for war.  However, in a world full of friction if Britain is to help prevent conflict injurious to its national interests it must think and act strategically.  Therefore, SDSR 2015 must finally look beyond Afghanistan and not simply re-fight it better.  Indeed, the switch from so-called campaigning to contingency operations will make the 2015 review as close to a grand strategic year zero as Britain has known for a century.  It is an opportunity to be seized not squandered. 

Let me conclude by thanking the Commodore commanding the exercise together with his staff.  My sincere thanks are also offered to the captains and crews of respectively HMS Bulwark, HNLMS Rotterdam and HMS Westminster and 3 Commando Brigade, for their kind hospitality and for clearing up after me.

Julian Lindley-French

 

Euro-Realism: A British-German Axis?

Alphen, Netherlands. 15 April.  Former German Chancellor Gerhard Schroeder once said, “They have it wrong if they ask if Schroeder favours Britain over France or France over Britain.  Schroeder favours Germany”.  Watching David Cameron with family enjoying a German weekend break with Angela Merkel one could be forgiven for thinking all is well in the British-German relationship.  And yet for all the well-publicised frictions it is equally clear that Cameron and Merkel get on.  It is also clear that the two countries need and will need each other.  Is this the beginning of a British-German axis?

 

There is after all much to unite Britain and Germany.  According to the CIA World Factbook (it must be true then) Britain and Germany are the two biggest EU countries with the two largest economies by purchasing power parity.  Germany is Europe’s economic leader whilst Britain remains (just) Europe’s military leader.  The two countries also share a surprisingly close strategic relationship on a whole raft of issues not least the two most pressing; the lack of fiscal resources and the need for Europe to become competitive.

Furthermore, Cameron and Merkel are natural political allies.  They are both moderate conservatives committed to the control of public spending through strong austerity programmes which is rejected by France and many other EU countries.  Merkel has a strong sense of history and respects the role played by Britain in both World War Two and the Cold War.  Indeed, she believes fervently that EU influence and legitimacy without Britain would be dangerously weakened. 

The weekend’s photo opportunities also sent a strong political message to France’s President Hollande that Berlin has options.  The Franco-German axis long the core pillar of the European project is not what it was.  Perhaps in the week Margaret Thatcher died Cameron and Merkel were also sending a message about the importance of personal chemistry between leaders implicitly recalling the Reagan-Thatcher years. 

Berlin also seems to have grasped another reality missed by many commentators.  However it is dressed up come the German elections in September if Merkel is to save the Euro thereafter some form of debt mutualisation will be necessary.  This could cost Germany over time some 10% of its GDP if France goes over the edge of the fiscal-debt cliff where it is headed.  Equally, for all its current travails Britain does not face the growth-destroying consequences of the coming decade of Eurozone debt mutualisation/restructuring and can and is competitively devaluing the pound. 

That’s the good news; here’s the euro-realism.  There was a paradox in the Cameron-Merkel speak that emerged from the weekend that also highlights the very deep structural divisions between Britain and Germany over Europe.  Yes they both talked of reforming the EU and yes both suggested there would be need for treaty change.  However, what Cameron seeks is the partial deconstruction of the EU. He is particularly keen to put the European Commission back in a box in which its ‘competences’ are both defined and finite.  Merkel, on the other hand, is desperate to avoid any suggestion (as some are implying) that the EU is fast becoming the “Fourth Reich”.  She thus needs Brussels, and in particular the Commission, to legitimise much-needed German leadership and thus wants more ‘Europe’ not less.  In other words, Cameron and Merkel may appear to agree but in fact are fundamentally opposed on the key issue of more or less Europe.  This is something which will become all too apparent in the year ahead and which will test the Cameron-Merkel relationship sorely.

Cameron said last week that the support of the British people for the EU is “wafer thin”.  He was being polite.  The moment Merkel moves to deepen integration the bottom is likely to fall out of pro-EU arguments in a Britain that already suffers a huge trade deficit with the EU, even as it enjoys a trade surplus with the rest of the world.

Therefore, in the coming test it is vital that Berlin and London somehow find projects on which to work closely together.  Critically, they must emphasise those areas of shared and pragmatic NATIONAL interest both in Europe and the wider world.  That will take confidence-building in each other, which was after all the purpose of this weekend’s visit.  What can Britain do now to reciprocate?  Cameron must come out unequivocally against growing anti-German sentiment in Europe.  Attack Berlin for policy mistakes by all means (that is democracy) but any parallel drawn between today’s Germany and the Nazis is offensive and must be confronted.

Why Britain?  A senior German once told me that the only ordinary state-to-state relationship Germany enjoys with any European state is that with Britain.  Every other relationship still somehow suffers from guilt on one side and fear on the other.  With Britain it was different, he said, “...because we bombed you and you bombed us!”

So, no British-German axis but Britain and Germany will need each other.

Julian Lindley-French

Reflections on Thatcher

Alphen, Netherlands. 12 April.  "To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: 'You turn if you want to. The lady's not for turning.’” That famous statement to the 1980 Conservative Party Conference captured in an instant the combative style of Margaret Thatcher, Britain’s only woman and longest-serving peacetime prime minister who died this week aged 87.  Regarded today as one of Britain’s political giants she was also one of the most divisive leaders in recent history.

 

Her views and style were intrinsically linked to her origins and her moment in history.  The daughter of a Grantham greengrocer (a fruit and vegetable seller) she had to fight against class and privilege throughout her life.  This struggle was of course compounded by her being a woman at a time when Britain and the Conservative Party were deeply patriarchal.  In a sense Thatcher was a series of inspired contradictions.  She was both deeply conservative and yet revolutionary, unyielding but yet pragmatic. 

 

Known today for her role as a victor of the 1982 Falklands War and the Cold War she came to power in 1979 on the back of disastrous governments of both political hues which had reduced Britain to the “sick man of Europe”.  From the moment she stepped into 10 Downing Street she rejected the cosy Establishment consensus that government was simply the management of Britain’s inevitable decline.  She sought the re-invigoration of Britain and in so doing broke the post-war statist consensus and moved the political centre ground to the centre-right where it stayed until this current age of focus groups and political correctness. 

 

Her methods at home were little short of brutal believing Britain needed a short, sharp, shock if it was to compete in a changing world.  Her neo-liberal economic policies were not universally successful and certainly not universally popular and she probably did more damage than was necessary to Britain’s industry.  Moreover, her focus on keeping interest rates high did much to damage small business and many of the home-owning class she claimed to champion.  However, that much had to change cannot be questioned.  In 1984 she successfully faced down the mighty National Union of Mineworkers during a strike that was as much about who governed Britain as industrial policy.  

 

Her foreign policy stature grew in the wake of the Falklands War.  She was by no means slavish to the US like Tony Blair and had few illusions about the Americans.  Whilst her ideological ‘marriage’ to fellow-conservative US President Ronald Reagan clearly boosted her own standing she understood critically that the Special Relationship had to be founded on political and indeed military strength (something David Cameron singularly fails to understand).  Under Thatcher for a time Britain enjoyed a genuine Special Relationship with the Americans which in turn strengthened her internationally.  This was evident in her 1985 meeting with soon-to-be Soviet leader Mikhail Gorbachev, a man with whom she “could do business”.  Equally, inspired by her Hayekian belief in freedom ‘doing business’ with the Soviet Union meant a Europe ‘whole and free’, as she made clear in her amazing, uncensored 1987 interview with Soviet TV.

 

However, it was perhaps her attitude to European integration that perhaps most defined Thatcher internationally.  She was deeply concerned about German reunification believing that in time it would lead to a German-dominated Europe.  She successfully righted the patent unfairness of Britain’s 1973 terms of entry into the then European Economic Community (EEC) by negotiating a rebate with the famous slogan, “I want my money back!”

 

And yet that very slogan also highlighted a fundamental problem in her dealings with other European leaders.  Maybe, just maybe, had she been able to build relationships with the likes of France’s President Mitterand and Germany’s Chancellor Kohl Britain may have been invited into the inner leadership sanctum of the Franco-German axis.  However, her instincts told her otherwise (almost certainly correctly).  Moreover, her tendency to ‘handbag’ other leaders undermined Britain’s ability to build a counter-coalition to the French and Germans.  Today that moment has passed and Britain faces a choice of subjugating itself to the German sphere of influence or standing aside from it.  Something, David Cameron will discover today (ever so politely) in his meeting with Chancellor Merkel at a schloss outside Berlin.

 

Her basic beliefs were those of a lower middle class Englishwoman whose formative years witnessed first the appeasement and then the defeat of Hitler and then the emergence of the socialised state.  She rejected both appeasement and the socialised state.  In her fervour to tackle the latter she perhaps placed too much importance on the goodness of the market.  It was Thatcher who in 1986 liberalised the City of London which first boomed and then in 2008 crashed under the weight of its own corruption.  Indeed, she had an essentially Adam Smithian view of the world by which small government should support the talented to work hard and succeed precisely to keep government small. 

 

Has Thatcher left a legacy?  The neo-socialist obsession of London’s out-of-touch metropolitan liberal elite would suggest that Britain is again facing many of the same problems as in the 1970s.  She would have utterly rejected the current obsession with equality over quality, and the disastrous liberal mantra that diversity somehow generates strength.  Above all, she would have hated the all too comfortable return to short-termism and mediocrity even if that very mediocrity over time guarantees Britain's renewed decline.

 

Even in power she was the antidote to the hollow professional political class that is today so despised in Britain.  Thatcher was the conviction politician of all conviction politicians who stood on a set of principles that today seem alien to Britain’s current lightweight political leaders. 

 

Above all, Thatcher’s political instincts were invariably correct about the big issues of the day. The simple maxim she followed throughout her political career was that of the greengrocer’s daughter she was; a country cannot spend more than it can afford. 

 

For a brief moment she made Britain count again.  As such Margaret Thatcher spoke to a silent majority who shared (and share) her patriotic beliefs, and who were desperate for a leader who believed like them that Britain could again aspire to greatness. 

  

Julian Lindley-French

This blog is based on an article that appeared this week on Aspenia Online. 

North Korea: Sad, Bad and Mad?

Alphen, Netherlands. 8 April.  In 2000 Cranfield University’s Professor Helen Smith posed the now seminal question about North Korea, “Bad, Mad, Sad or Rational Actor?” Kim Jong-un, the thirty-ish leader of the somewhat mis-nomered Democratic People’s Republic of Korea (DPRK) would indeed seem on the face of it to be bad, mad and sad.  On 13 March, 2013 Pyongyang unilaterally abrogated the July 1953 Armistice that ended the 1950-1953 Korean War, last week the military was apparently given the go-ahead to begin military operations and Seoul thinks North Korea will conduct its fourth nuclear test at its Punggye-ri testing site this coming Wednesday.  But is the DPRK really bad, mad and sad?

 

Rather than involve myself in the usual shark-infested ‘analyst’ media feeding frenzy such occasions generate I took a step back and over the past week spoke to several senior people with real knowledge of DPRK (as much as that is possible) in search of policy perspective.  Several common themes emerged.

1.           Honouring the ancestor:  Kim Jong-un may be trying to honour his grandfather and DPRK’s founder Kim Il-sung by trying to re-generate some ‘ideological’ fervour in the run up to the 27 July sixtieth anniversary of the Armistice that halted the Korean War.

2.           Remembering Stalin: March saw the sixtieth anniversary of Josef Stalin’s death.  This anniversary may have also contributed to the search for renewal of the world’s last Stalinist state with Kim consciously trying to re-create the Stalinist cult of the leader.

3.           “Military First”: Kim’s father, Kim Jong-il, crafted the policy of “Songun” or “military-first”.  This oppressive regime in which much of its population is starving or close to starving is kept going by a close system of patronage between the governing dynasty and the military top brass.  Certainly, if Kim loses the support of the military he is finished and he may well be demonstrating his commitment to them.

4.           China is shifting:  Chinese President Xi has made it clear Beijing is no longer willing to tolerate the racketeering and other practices of the dynasty it has hitherto supported.  This weekend President Xi came as close to issuing a warning to its long-time ally as Beijing has ever uttered.  Irritated by the constant war rhetoric Xi said, “No-one should be allowed to throw a region and even the whole world into chaos for selfish reasons”.  Critically, China is also building ever closer trade relations with the Republic of Korea (South Korea) which is known to concern Pyongyang.  

5.           Kim Jong-un believes: Kim Il-sung once famously said (famous at least in DPRK), “We are opposed to the line of compromise with imperialism. At the same time, we cannot tolerate the practice of shouting against imperialism, but in actual fact being afraid to fight it”.  Worryingly, Kim Jong-un may actually believe this to be true.

There can be no question that all of the above considerations are exercising the minds of the small policy clique close to Kim Jong-un who are normally quite considered in the actions they advise.  However, perhaps the most intriguing possibility is that this whole crisis may have been triggered by the well-intentioned, but perhaps naive private diplomacy of American basketball star Denis Rodman.  At the end of February Mr Rodman made a surprise visit to Pyongyang.  It is known that in a meeting with Mr Rodman Kim Jong-un said he wanted a direct face-to-face meeting with President Obama. 

Such a meeting would be in line with Pyongyang’s long-standing demand that any negotiations for a final peace treaty be conducted directly with Washington rather than with the six-party Contact Group or through the UN.  Moreover, one of my contacts also suggested that Kim may have placed a lot of political capital on Rodman’s visit seeing it as something akin to the Nixon-Kissinger “Ping-Pong Diplomacy” in 1971 by which Beijing and Washington signalled to each other the desire for a new era in US-China relations.

Therefore, the current stand-off just could be the result of Kim losing face with the military over Rodman’s visit.  Here’s the rub; in spite of the current nuclear foot-stamping the ruling dynasty could be signalling that it wants a formal peace treaty with the US (and not the Contact Group) prior to the July anniversary of the Armistice or at least an agreement by Washington to begin negotiations by then.  A peace treaty would both remove DPRK's inherent and constant sense of vulnerability and guarantee the regime’s survival.  In other words, this crisis could eventually lead to an opportunity.

Even if half correct Kim would be taking a very big risk with the military and may need to prove his hard-line credentials prior to any peace move.  Washington clearly understands this bigger picture and intelligently cancelled an unrelated, routine missile test over the weekend.

North Korea; sad, bad but perhaps not completely mad.

Julian Lindley-French

Connecting NATO Forces...And Minds

Alphen, Netherlands. 5 April.  “A thorough examination of the way our military is organized and operates will...highlight our inherent strengths.  Our strategic planning must emphasise these strengths, which include leader development, training, mobility and logistics, special operations forces, cyber, space, research and development”.  Speaking at Washington’s National Defense University (NDU) this week, US Secretary of Defense Chuck Hagel, who I have had the honour to meet as a member of the Strategic Advisors Group of the Atlantic Council of the US, could have been any European minister of defence.  With sequestration the US armed forces are now facing what has been a reality of European militaries for too many years – doing too much with too little for too long over too great a distance.  So, how can NATO address it most pressing emerging security challenge; how to close the strategy-austerity-capability gap? 

The Alliance and its members have an as yet untapped capability too often overlooked – knowledge, education and training.  The fact that Secretary Hagel chose to deliver his realistic message about US defence strategy at NDU speaks volumes.  Put simply, the more NATO militaries face capability and capacity cuts and the more the need to think creatively across narrow domains.  That means quality NATO people.  It also means a wholly new approach to professional military education and much greater synergy and cohesion between the defence academies across the Alliance who deliver both education and training (they are two sides of the same quality coin).

If I have a passion (apart from my wife and Sheffield United – I think in that order) it is professional military education.  To my mind education, the knowledge it is built upon and the connectivity it breeds is the missing link between NATO nations that will help the Alliance close the strategy-austerity-capability gap.

NATO 2020 pre-supposes defence modernisation at a time of acute defence austerity.  NATO have created both Smart Defence and the Connected Forces Initiative both of which further pre-suppose much greater synergies between capabilities and capacities.  Today, value for money in defence strategy is as much about ‘human software’ as hard capability.  Therefore, critical to NATO 2020 must be a model of professional military education that aims to promote comparative advantage of NATO personnel both on and off the battlefield. 

Such a goal will only be realised if a) lessons-learned are properly captured to ensure corporate memory is translated into best operational practice; b) exercising and training really tests weaknesses rather than confirms strengths and as such are scientific, rigorous, structured and connected; and c) such lessons are communicated into the defence (and security) classroom.  In other words NATO must become as much knowledge nexus as military nexus.

Thus far professional military education has been remarkably immune to the revolution in professional education that has taken place in other fields such as medicine and engineering.  The knowledge base tends to look backward and little is made of life-long learning concepts to properly support mission success at every level of command in which and for which education and training are simply two sides of the same coin.  Moreover, the link between commanders and academic expertise is too often weak, preventing effective reach-back from the field to knowledge communities (much of which can be explained by at times frankly ridiculous sensitivity over information).  Sadly, too many commanders remain dismissive of knowledge and expertise. 

However, defence academia has also to ask itself some searching questions.  The research undertaken by defence academics too often either solves yesterday’s problems or has nothing whatsoever to do with the military challenges of today.  And, too often the syllabus is narrow and fails to involve the wider security community. Finally, the revolution in technology that is changing education seems to have been only partially grasped by defence academics.

Therefore, in my own modest way I am trying to do something about it and putting the usual backs up in the usual places for daring to try.   In May I will lead a project entitled Connected Forces, Connected Minds.  This project will start to address some of the important issues raised in Secretary Hagel’s statement. 

Knowledge transformation is the way ahead. To that best practice end new models of professional military education are needed and must be worked up in a new partnership between armed forces and defence academics.  This is both to support NATO 2020 and all important strategic unity of effort and purpose in a rapidly destabilising world.  The goal must be clear; to continually enhance and develop the education and training of NATO officers (and Partners) so that a) in effect they never leave professional military education; and b) they are continually made fit for mission success in their next command challenge.  Too often they are not.

Almost a year ago, NATO Secretary-General Anders Fogh Rasmussen launched Smart Defence.  There can be neither Smart Defence, Connected Forces, nor indeed NATO 2020, without smart education, smart training and smart research.

Thank you, Mr Secretary Hagel for being so clear and candid.

Julian Lindley-French

 

Little Britain

Alphen, Netherlands. 3 April.  Britain has created a monster.  One in every three pounds the British state spends is on welfare.  This week London embarked on the greatest reform of the once great Welfare State since its inception in 1947.  The welfare budget has doubled over the past decade.  In Brussels yesterday a senior economist told me that given the changing demographics Britain will need to grow at least 5-6% per annum simply to sustain the current Welfare State.  This is compared with a post-1945 mean average of between 2-5%.  Indeed, a leading think-tank recently suggested that if London continues to protect spending on health, education and international aid then in the absence of growth by 2018 other big departmental spenders could see their budgets cut by up to 30%.  Quite simply, funding welfare has become the single biggest factor in Britain’s international decline and if nothing is done Britain will be bankrupted by it.

 

The welfare divide has also created a political class no longer able to conceive of Britain’s true national interest.  Indeed, be it on the Left or Right the ‘national interest’ has become a metaphor for whatever policy can afford Britain’s welfare dependency.  As such this very narrow view of the ‘national interest’ has fundamentally undermined the making of national strategy and critically weakened London’s ability to wield influence in either Europe or beyond.

The welfare divide has also made bipartisan politics virtually impossible.  The 2008 banking crash was by any stretch of the political imagination a national disaster.  It was the kind of disaster that a responsible political class would have put aside their differences to come together in the true national interest.  Indeed, the national debt (the year-on-year accumulation of the annual gap between state spending and income) is due to peak at 85% of GDP by 2018.  Therefore, the state re-capitalising of failed banks will take a strategic economic cycle to fix not the electoral cycle London’s political class obsess over.

Instead, both Labour and Conservatives (temporarily allied with the rent-seeking Liberal Democrats) have chosen to play politics with this crisis thus making it both worse and longer.  The Labour Party compounded the banking crisis by gross and irresponsible over-spending when in office (Gordon Brown called it ‘investment’).  They also placed all of Britain’s future economic eggs on relying on a sclerotic EU obsessed with protecting failing industries and thus guaranteeing Europe’s relative decline. 

Once in sort-of-power the Conservative Party decided the only way to get re-elected was to drive the debt down through a programme of austerity at the bottom of the worst economic cycle in over a century…and hope for growth.  For all the rhetoric an increasingly desperate government is making increasingly warped policy decisions much of it to feed the welfare monster in the hope it can get re-elected in 2015.  The Government now admits all it can do is control the rise of welfare spending.

The effect of warped policy is nowhere more apparent than the country’s defence.  The 2010 Strategic Defence and Security Review (SDSR) was meant to be the baseline for a radically-reformed force.  Costs were to be driven down and a new force created that would balance efficiency and effectiveness, capability and value.  However, the money-driven and hastily-contrived SDSR really had to be THE bottom-line.  Britain’s armed forces could be cut no further without really putting the military itself in danger.  Still, the mantra went if London held its nerve and given a return to growth a new force would emerge over time that could be afforded.  To that end London created a $200bn military equipment budget.   

Sadly, the forthcoming Comprehensive Spending Review will likely see further cuts to a defence budget already stretched beyond breaking point.  Critically, cuts could well be made to the vital $200bn military equipment budget without which the British armed forces will simply be unable to recover from over a decade of continuous operations.   

The impact of further cuts will go way beyond defence.  With Scotland about to decide its future one of the last unifying British institutions - the British armed forces - will to all intents and purpose have been emasculated compounding the sense of British decline that is fuelling separatism.  Influence institutions vital to Britain such as NATO will be weakened. Worst of all, politicians will simply transfer yet further unacceptable risk onto Britain’s young men and women in uniform as they try to mask decline on their watch with over-stretched action.

Unless the British state for once begins to think creatively about the balance to be struck between welfare and influence then another disaster beckons.  That means a truly radical re-organisation of state power with aid, diplomacy and force combined into a new, tight and real national strategy (rather than the current PR stunts).  Why?  Because national influence and national wealth are two-sides of the same devalued British coin.

Britain is standing on the edge of precipitous national decline.  Somehow Britain’s political class must be shaken out of their welfare-driven Little Britain complacency.  If nothing else Little Britain will mean more Europe.  Perhaps that is the plan?

Julian Lindley-French