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

Building BRICS?

Alphen, Netherlands.  27 March. They represent 25.9% of the world’s land mass, 43% of the population and 17% of global trade.  The UN Development Programme states that by “2020, the combined economic output of three leading developing countries alone – Brazil, China and India – will surpass the aggregate production of Canada, France, Germany, Italy and the United States”.  Today the five BRICS countries (Brazil, Russia, India, China and South Africa) at their fifth annual summit in Durban will announce a new BRICS Bank, under the catchy 1960s throwback title of “Partnership for Development, Integration and Industrialisation”.  The aim of the Fabulous Five is clear; to counterbalance what they see as a) the western-dominated International Monetary Fund and World Bank; and b) plug a gap in development financing caused by the West’s financial and economic woes.  Is the BRICS laying the foundation of a new world order?

 

On the strategic face of it the Durban summit would seem a natural extension of Chinese President Xi Jingping’s Kissingeresque Moscow démarche of last week.  Clearly, the vacuum created in strategic leadership by the West’s rapid decline, accentuated and accelerated by the EU/Germany’s incompetent handling of the Cyprus default, will see new actors emerge.  However, for all the clear ambitions of China (and to a markedly lesser extent Russia) the five countries are still divided on many issues.

The most obvious is the strategic provenance of the BRICS.  Whilst China and Russia clearly think in terms of classical Kennanesque Cold War Realism, and thus see the strategic game with the West as ultimately zero sum, Brazil and India come from that rather woolly tradition of non-alignment.  The Non-Aligned Movement emerged in the 1960s as an attempt by India in particular not to be dragged into somebody else’s potentially destructive grand strategy.  For a country that had lost well over a million people fighting Britain’s grand and not-so-grand wars this made sense.

Today, India is emerging in its own right and is as a much regional-strategic competitor of China as partner, particularly given China’s role in nuclearizing New Delhi’s arch-adversary, Islamabad.  To that end, as an example of constructive multilateralism a BRICS that promotes stability and co-operation rather than competition is a good thing. 

Brazil fits into pretty much the same category as India.  At several conferences of late I have attended the Brazilians present clearly identified their strategic interests with those of the West.  Moreover, in my Oxford Handbook of War a leading Franco-Brazilian academic summed up Brazil’s foreign policy as essentially Latin American in focus and by and large aligned with that of the US, so long as Washington worked with Brazil.  The BRICS can thus be seen very much in the light of a Brazil keen to remind America of its burgeoning regional-strategic influence.  

As for South Africa the ANC-led government still sees its roots as having been established in a form of colonial war and as such is instinctively drawn to any form of non-alignment with a vague anti-Western tinge.  And, of course, Pretoria is desperately in need of Chinese capital.

Furthermore, for all the grandiose talk last week of a new strategic partnership between Russia and China, Moscow has no desire to be Athens to China’s Rome, particularly if tensions between the US and China reach a point where Moscow’s commercial and energy relationship with Europe is affected.  That may change over time but Moscow will continue to hedge its strategic bets.

However, if there are divisions between the BRICS based on geography, alignment and allegiance there are also huge gaps.  Indeed, it is the issue of capital that will most probably highlight such gaps.  The choice of ‘partnership’ as the key word for the summit is critical.  If the BRICS become seen too overtly as part of a new Chinasphere it will rapidly fall apart.  However, partnership means equality and the word at the summit is that each member will put some $10bn (€7.8bn) into the BRICS Bank.  This figure represents only 0.1% of Chinese GDP and yet some 2% of South African.

Therefore, for the moment the BRICS will remain far more a non-aligned movement than a counter-balancing mechanism.  However, it is the long-term context that makes the BRICS interesting.  One report suggests that whilst Asia alone accounts today for some 24% of world trade, it will be 42% by 2030 and 48% by 2050.  Whereas thanks to the EU, Europe’s mutual impoverishment pact, whilst Western Europe represented 48% of world trade in 1990, it is 34% today and likely to fall to 19% in 2030 and 15% by 2050. 

If the report is right the BRICS could one day find itself at the very core of a new world order.  This summit is clearly building BRICS for the future.

Julian Lindley-French

Xi's Kissinger Move

Alphen, Netherlands. 25 March.  At the start of his historic visit to Russia last week newly-installed Chinese President Xi Jingping said that the “two countries spoke a common language”.  If America sees itself as the indispensable global pivot China clearly has the ambition to become the other global pivot in a new bipolar order.  Xi’s visit to Moscow last week, just over forty years on from Henry Kissinger’s famous 1971 visit to Beijing, makes it is clear that China is embarked on a grand strategy to balance America on the world stage.  This will be a tumultuous twenty-first century.
 

Kissinger’s 1971 visit to China was set against the backdrop of a Nixon administration desperate to extract itself from a failing Vietnam War.  Henry Kissinger, the grand architect of Cold War Realpolitik, wanted to force the Soviet Union to look both east and west.  Moscow was already at the time embroiled in a full-scale border war with China, its supposedly Communist partner.  In a sense by forcing the Soviet Union to face the prospect of a ‘zweifrontenskrieg’ (two-front war) Kissinger applied lessons from his native Germany’s history to US grand strategy

Cue Xi.  The aim of Chinese grand strategy is certainly not to trigger a war with the Americans.  However, Chinese strategic logic is still embedded in Sun Tzu; force an opponent to confront so many options over such time and distance that to all intents and purposes they render themselves weak by uncertainty.  And, Xi clearly understands Kissinger’s dictum that “no country can act wisely in every part of the globe at every moment of time”.

Xi’s timing is impeccable.  There are of course perfectly legitimate reasons for close Chinese-Russian relations.  They are partners in the Shanghai Co-operation Organisation.  China is the world’s biggest energy consumer whilst Russia is the biggest energy provider.  Trade between the two countries is booming and is now worth some $88bn or €68bn per annum. 

However, Xi’s visit and indeed his vision is grand strategic and must be seen as such. China intends to lead the strategic counter-balance to the American not-so-well led West and to that end will forge relationships that exploit American uncertainty and Europe’s precipitous decline. 

Kissinger famously said that “If you don’t know where you are going, every road will get you nowhere”.  As Xi was speaking to Russian President Putin I was attending a conference in The Hague organised by the excellent Atlantic Commission on the transatlantic partnership.  Set against Xi’s visit to Moscow the extent to which Europe’s political class has completely lost the strategic plot was all too evident.  As Xi talked about a new anti-democracy global balance of power pact with Putin all my fellow Europeans could worry about was Cyprus and trying to blame America and Britain for causing the Eurozone crisis. Not only is that laughably wrong it completely and dangerously misses Xi’s point. 

And there is a link.  The Russian media has been running stories all week about the EU’s attempts to resolve the Cyprus crisis as being anti-Russian.  Given that the deal struck over the weekend will possibly see a levy of up to 20% on depositor’s accounts worth €100,000 and more the deal will indeed have a real impact on Russian depositors.  Now, much of that money is of very dubious provenance and it is clear that Germany in particular wants to stop Cyprus being used as an offshore bank haven within the Euro.  However, the timing could not have been worse and will simply help push Russia towards a new anti-Western strategic partnership with China. 

That dynamic will be made all the more certain by the strategic denial that now afflicts the Euro-world.  For example, the Chinese are clearly building a blue-water navy and Xi’s comments demonstrate clear intent to use the Chinese fleet as a platform for strategic influence.  Do not worry, I was told by a senior NATO official, because the Chinese do not know how to use such a fleet.  Sorry NATO but should you not be thinking about these developments?

Clearly, the West must not fall into the trap of concluding that legitimate Chinese ambitions are a precursor to conflict and somehow a new narrative is needed in the US-Chinese strategic relationship (the only strategic relationship that now matters).  Equally, neither Americans nor Europeans can ignore Chinese intent as stated by Xi in Moscow or its burgeoning capability.  In others words the transatlantic allies need a China strategy. 

Sadly that was not the worst of it in The Hague.  A senior European said that in December the European Union will devote a WHOLE session of the European Council meeting to defence.  Whoopee!

Kissinger said that “power is the great aphrodisiac”.  Perhaps he should now add that weakness is the great sedative.

Xi’s Kissinger move – it will not be his last.

Julian Lindley-French

Oxford Blues

Alphen, Netherlands. 20 March.  Sometimes my alma mater Oxford University needs to be dragged kicking and screaming into the eighteenth century (Enlightenment).  The sacking of a librarian and graduate student, the wonderfully-named Calypso Nash, is just another example of a college leadership completely out of touch with the young people it serves.  The 'crime' was that some students performed something called the Harlem Shake in the library of St Hilda's College (always a bit uppity and conservative).  One can almost hear the tut-tutting amongst the fossilised academics in the Senior Common Room who probably think the Harlem Shake is a cocktail and are still wondering how one can dance such a thing. 

 

What is particularly galling is that back in the seventies when I was an undergraduate at University College, Oxford (the oldest and the best) some of the things we got up to in the college library makes a thirty second performance of the latest u-tube craze seem like a papal inauguration.  We even played cricket! 

 

So, Hilda's wake up, smell the coffee and remember that you are an institution dedicated to the education of young people and that within reason a little bit of creative exuberance should be celebrated not crushed.  Above all re-instate Ms Nash because her sacking is unjust and makes you look like an ass.  Clearly, someone called Calypso can hardly be sacked for permitting the occasional library dance!  As some of your young people might say (so I have heard) - der!

 

Julian Lindley-French

Who Will Pay for Cyprus?

Alphen, Netherlands.  19 March.  In “1984” George Orwell wrote, “Doublethink means the power of holding two contradictory beliefs in one’s mind, simultaneously, and accepting both of them”.  I was reminded of doublethink (to that add double-speak) watching Europe’s politicians and Eurocrats dance on the head of a political pin to distance themselves from the so-called ‘one-off’ Deposit Tax Levy Confiscation of ordinary Cypriot’s  money.  So, who will pay for Cyprus and will the money be put to good use?

 

The logic is brutal.  With Cyprus representing only 0.2% of the Eurozone economy, the Cypriot banking sector some 330% of Cypriot GDP and with 30% of deposits in Cypriot banks Russian (and much of it of very dubious provenance) Cyprus can only fund its side of the proposed €10 billion ($13 bn) bailout via bank depositors. 

Why this particular deal and why now?  For once the EU is being unfairly blamed for a crisis not of its making (aside from the fact that the Euro is a political project that does not work).  German Chancellor Angela Merkel, supported by her Finnish and Dutch counterparts, wants to demonstrate prior to the September German elections that she is being prudent with German taxpayer’s money.  And, under no circumstances must the bond markets be spooked so that the borrowing costs soar of the bigger Eurozone debtors such as Greece, Italy, Ireland, Portugal and Spain – at least not until after September. 

As of today all involved are either retreating fast from imposing the now infamous ‘haircut’ on the small depositor or blaming the Cypriots themselves for this disaster.  The suggestion is that depositors with over €20,000 ($26k) will now have 6.9% of their savings in Cypriot banks taken from them whilst those over €100,000 ($130k) will have 10% confiscated.  This means dodgy Russians and retired Brits neither of whom are hugely popular with those who run the Eurozone will be hit.

Would the money be put to good use?  Well, this reflects yet another fundamental untruth this crisis has spawned.  Yes, it is true that the northern, western European taxpayer has already paid a lot either funding or under-writing ‘loans’ that will never be repaid.  At the same time Berlin has done all it can to ring-fence its taxpayers and find other people to pay for a crisis that by and large had its origins in the ill-conceived leadership of Berlin, Brussels and Paris when the Euro was set up.  The half-measures under discussion simply prolong the agony and increase the costs which have effectively turned the EU into a mutual impoverishment pact.

Therefore, ‘haircuts’ will fail because they do not address the fundamental problem of the Eurozone; the need for tight and common fiscal discipline and structural reform of southern Eurozone economies.  In other words, the Euro will only ever be stable if there is real fiscal and banking union or if the Eurozone contracts into a customs zone of reasonably similar economies organised around Germany.  However, the former would demand the effective end of national sovereignty and democratic accountability, whilst the latter would see southern European economies cast out into the global economy and forced to compete.  That would make current austerity measures look like benign charity.

There is a more immediate consequence; the future cost of crisis-management will now inevitably grow.  This morning the spokesman of EU Council President Herman van Rompuy tried to play down the Cyprus crisis by suggesting it was a special case.  Special or not a clear message has been sent that future bailouts could well involve EU-inspired raids on the small savings of small people.  This will almost certainly mean that when the next crisis inevitably erupts in Spain, Italy or elsewhere people will rush to withdraw their savings from banks and thus triggering a massive banking run. It is banking runs that kill currencies.  In other words this proposal will make contagion more not less likely. 

So, making small depositors pay for the crisis makes little or no sense other than to stave off the immediate disaster.  Indeed, without federation or fracture the crisis cannot be resolved only temporarily contained.  Critically, the Cypriot fiasco reinforces the toxicity that is the political incompetence that created the Eurozone crisis and which is sustaining it.

Orwell also wrote in “1984”, “The choice for mankind lies between freedom and happiness and for the great bulk of mankind happiness is better”.  Sadly, as Cyprus reveals the Eurozone is generating neither freedom nor happiness, just fear.

Come September and the German elections these realities will have to be faced and the EU’s current phoney war will come to an end with a bang…if not before. 

Who will pay for Cyprus? All of us sooner or later.

Julian Lindley-French

A Tragic Moment in History

Alphen, Netherlands. 19 March.  Tony Blair suggested yesterday that the West would come to regret not intervening in Syria.  He is of course right.  Tony Blair had to make a terrifying call ten years ago which clearly weighs heavily upon him.   Equally, he must accept it is precisely his ill-conceived and under-planned invasion of Iraq ten years ago tomorrow that makes impossible any attempt to rescue the Syrian people.  Indeed, the tenth anniversary of the Iraq invasion and the linkages that could be inferred between that act and any Western intervention in Syria today that will doom the Syrian people to their terrifying fate.  Something more for Mr Blair to ponder.

Julian Lindley-French    

Power, Prejudice and Paranoia

Alphen, Netherlands. 15 March. “The ides of March have come” says Shakespeare’s Julius Caesar. Standing in the Vatican’s St Peter’s Square Tuesday, watching on a big, incongruous screen the Princes of the Roman Universal Church file into Mass I was struck by the power of this moment when a new Pope is chosen to lead the world’s 1.3 billion Catholics.  I am not a Catholic and I happened to be walking past St Peter’s but one could feel the electricity of change in the air.  The sense of occasion was made all the more powerful by the tented media city that had sprung up all around St Peter’s.  It was as though Charlemagne’s army had returned to enforce the Emperor’s fiat.  Something else was apparent; the interaction of the ancient with the utterly modern, of faith, belief and identity and how across much of the world that friction is casting an ancient world in a new light but only so often to highlight old thinking.  There is a almost a presumption of future conflict which sure enough will guarantee it.
 

It is in the domain of power politics that the interaction of old and new with power, prejudice and paranoia is now more intense than at any time since the end of the Cold War.  Nowhere is this more apparent than in the world’s most important power relationship, that between the US and China.  Naturally, as a Briton and a European my instincts are for and with democratic America.  That said, there is nothing in my soul that is particularly anti-Chinese, although like many westerners I am having to force myself to recognise the consequence of Europe's wilful decline and learn to think anew about this new power world.

Equally, I am no European apologist for China.  There are many aspects of China’s one-party rule that I find disturbing and there are quite a few aspects of China’s increasingly aggressive foreign and security policy that worry me.  Whilst there is no reason to believe conflict is imminent, as China has clearly invested in a system the West invented, danger (the ides of March) lurks. 

The metaphor of future conflict is the developing cyber cold war.  A close friend of mine has just come back from Beijing where he attended a high-level conference on all things cyber.  What struck him was the extent to which American concerns about China’s strategic hacking are mirrored in Chinese concerns that the Americans are embedding software in programmes that will enable Washington to pirate Chinese secrets. 

That the Chinese are carrying out strategic hacking there can be no doubt.  This is all part of the presumption of future conflict generated by then strategic hyper-competition that is emerging between China and the US.   And, for the sake of fairness, I will avoid being dewy-eyed about my American allies.  I am old enough to recall those long lost days back in the 1980s when the US routinely exaggerated Soviet military capability to justify a huge defence budget and control over allies.  The American tendency towards power, prejudice and paranoia is certainly no less pronounced than the Chinese.  Sadly, it is just such power, prejudice and paranoia (not Europe’s wilful weakness) that is today setting the rules of this new/old strategic game.    

Therefore, in his humble way Pope Francis seemed to be saying something new to all of us – Catholic and non-Catholic alike; we still have free-will and the power of choice.  We can decide not to presume future conflict.  We can if we want to change the terms of the engagement with each other and in so doing better understand the perspective of the other.  Even a hard-bitten Realist like me can recognise the dangerous logic of so embracing the past that we instinctively repeat it.

That was what I was trying to do in St Peter’s Square – challenge myself to see the world through the perspective of a faith I was brought up to distrust.  Ironically, so much of my healthy English realism about Brussels and the EU has its roots deep in the Protestant Reformation of the sixteenth century when England stood alone against the Catholic princes of Europe.

Have I undergone some Damascene conversion?  No.  Do I think the world will become less adversarial?  Probably not.  However, I think it wrong to assume that conflict and friction are the natural state and that somehow the period of relative (and I stress relative) strategic calm of the recent past will automatically be replaced by confrontation and friction and ulitmately conflict and war between America and China.  The idea that a new East-West showdown is sooner or later inevitable to establish the world's new strategic pecking order is sadly implicit in far too much that is written these days.

The risk is certainly there.  For as Shakespeare wrote, “The ides of March have come. Ay Caesar, but not gone”.

Julian Lindley-French

Syria: Between Sarajevo and Baghdad

Alphen, Netherlands, 11 March.  Thucydides, the great-great grandfather of unforgiving International Relations once said, “The strong do what they have to do and the weak accept what they have to accept”.  British Foreign Secretary Hague’s announcement last week in Parliament that Britain will send armoured vehicles and bullet-proof vests to support the Syrian National Coalition came just at the moment when the UN declared one hundred thousand Syrians refugees.  The level of human suffering in that benighted country is now biblical in its proportions.  In a twist of fate the decision comes almost ten years to the day British troops joined US and other coalition forces in the March 2003 Iraq invasion which rent the international community asunder.  Just how far has humanitarian interventionism come in those ten years?

 

Humanitarian interventionism goes back to the end of the Cold War.  It was a brief moment in history which reached its zenith in 2001 when two contrasting 'evangelical champions’ came together to form an unlikely alliance between an American conservative and a British social democrat – George W. Bush and Tony Blair.  Bush was at war fighting Al Qaeda; Blair believed deeply in Just War.

The Americans wanted to eradicate 'AQ’ which to many on the Washington right would be only achieved by 'modernising' the Middle East after America’s image.  A mission that was in no small way linked to the security of Israel.  Blair was haunted by the tragedies of the 1990s in the Balkans and Rwanda in which millions perished for want of action. 

At America’s brief unipolar moment the judicious use of force made everything seem possible.  In 1995 the US had finally led NATO to end the Bosnian Serb assault on the Bosnian capital Sarajevo and in 1999 Blair successfully persuaded US President Bill Clinton to force the Serb military out of Kosovo.  Finally, in 2000 Blair ordered Britain’s armed forces to intervene in Sierra Leone to prevent a genocidal massacre in its capital Freetown.  The blueprint for humanitarian interventionism was established.

Come 911 American power, Bush’s war and Blair’s creed came together as neo-conservatism met humanitarianism.  First came Afghanistan in November 2001 when the two creeds deployed side-by-side.  The Americans led the robust counter-terrorism whilst Europeans sought hearts and minds.  Then came Iraq.  The 2003 invasion not only split Europe down the middle and diverted effort from Afghanistan but forced Tony Blair and Britain to make a terrible choice between war-fighting America  and peacekeeping Europe. 

In fact there were deep differences between Bush and Blair.  An exchange I had at the time with Richard Perle in the International Herald Tribune reflected the tension.  Perle suggested that Iraq was just the beginning of US efforts to transform the Middle East with Iran the one-day objective.  The UK would be willing to support the US over the issue of Iraqi weapons of mass destruction, I countered, but London would never support some wider American ‘crusade’.

With bucket-loads of hindsight what became Blair’s tragedy is now Syria’s.  To bridge the immense political gulf between Bush and Blair London had to find some ‘legal’ justification to make the Iraq invasion ‘just’, – hence the Europe-splitting controversy over UN-mandate.  For Blair only a Saddam that posed a very real and present danger could possibly bridge the ideological divide between Bush, Blair and sceptical European public opinion.

In effect Blair placed the entire future legitimacy of Western interventions on the existence of Iraqi WMD.  The subsequent failure to find any WMD in effect destroyed not only Blair but the very cause of humanitarian interventionism that he had championed and which still has much to commend it.  Worse, the Iraq disaster critically undermined belief that Afghanistan could be stabilised amongst many of America’s closest allies and impressed upon the West’s adversaries a sudden vulnerability.  That vulnerability has now been compounded by economic disaster and a widespread and exaggerated belief that the West is in terminal decline.

 

Yes, small-scale interventions have been tried since in Libya and now Mali, but none of them have anything like the Responsibility to Protect ambition that grew out of the the Balkan and Rwandan tragedies.  They are more strike, hope and withdraw operations and as likely to lead to one set of monsters replacing another than offer any real hope to ravaged peoples.

Ten years on from Iraq the British decision must be seen it that light.  A genuine but half-hearted attempt to offer a little support to a brutalised people that is far too little, far, far too late.  Tragically,  in its half-heartedness such 'intervention' becomes non-intervention.  It also effectively marks the grave of Blair’s humanitarian interventionism. 

So, the strong will do what they always do and the weak will suffer what they always suffer whilst the declining will wring their collective hands and feign strength, as they have always done.

How far has interventionism come?  It has come as far as Syria but is now trapped on the rocky, grave-pitted road between Sarajevo and Baghdad.

Julian Lindley-French

How Much Does EU Solidarity Cost?

Alphen, Netherlands. 25 February.  Italy has gone to the polls and Greece and Spain are facing continuing anti-austerity demonstrations.  Here in the Netherlands EU Council President Herman van Rompuy yesterday appeared on Dutch TV to tell the ever more sceptical Dutch that the Netherlands could not survive without the EU.  Last week I highlighted the concerns of my Dutch neighbours that ‘Brussels’ does nothing for them and they are tired of being lectured by Eurocrats and southern and eastern European politicians about the need for ‘solidarity’.  Since that blog I have been inundated with comments from varying degrees of Europhilia and fanaticism berating my neighbours for their lack of aforesaid ‘solidarity’.   So, how much does EU ‘solidarity’ cost? 
 

The International Monetary Fund (IMF) estimated the size of the EU economy (gross domestic product or GDP) in 2012 at €12,629 trillion ($17,578 trillion).  The 8 February agreement by EU heads of state and government set the budget limit at 1% of the EU's GDP for the 2014-2020 EU Budget or €1.26 trillion ($1.76 trillion). According to Open Europe this year the biggest net contributors to the EU Budget will be Germany €14 billion ($18.6 billion), France €9 billion ($12 billion), UK €9 billion ($12 billion), Italy €6 billion ($8 billion) and the Netherlands €5 billion ($6.6 billion). 

Official Dutch figures set the size of the Dutch population in 2011 at 16,696,000.  Therefore, the cost of the EU Budget to each Dutch citizen is roughly €299 ($396) this year.  The cost of the EU Budget per annum to my Dutch neighbour’s family of five is thus around €1500 ($1988) per year IF the Budget is confirmed.  However, if the EU Parliament carries out its threat to veto the Budget then this year’s planned spending will be rolled over at 2% of Europe’s GDP, which will cost my by no means wealthy, ordinary Dutch neighbours about €3000 per annum.  There is a lot they could do with €3000 ($3977) to ease their very real worries.  No wonder EU Parliament leader Martin Schulz wants a secret vote so he can again hide the truth from my Dutch neighbours.  So much for democratic transparency!

However, that is not the true cost of solidarity.  One must also add the cost of the various bail outs to southern European countries and the debasing of the Euro due to the printing of money by the European Central Bank (ECB).  It is hard to get accurate figures for this mainly because governments, the European Commission and the ECB are determined to keep the true cost of the Eurozone crisis from my Dutch neighbours.  However, estimates vary between €10,000 ($13,200) and €15,000 ($20,000) per annum, per head (and possibly as high as €20,000 ($26,500)).

There are also additional hidden costs.  The Dutch Vice-President of the European Commission Neelie Kroes said yesterday that as much as 4% of the so-called Cohesion and Structural Fund is lost to national corruption or “silly projects”   She highlighted a new EU-funded (i.e. funded by my Dutch neighbour) Polish highway between Warsaw and Poznan that is sound-proofed even though it passes through empty fields.   Therefore, my Dutch neighbours and their fellows are seeing €13 billion ($17.2 billion) of their money effectively stolen or misappropriated each year.

The madness does not stop there.  Some hailed the EU Budget as a victory because for the first time it was cut.  However, what the Budget also reveals is that far from trying to invest out of the crisis by modernising Europe’s economy most member-states and the European Commission simply want to preserve vested interests.  In other words the EU is investing in the past. 

According to the BBC the snappily-named Multi-Annual Financial Framework (MAFF) or EU Budget is to be spent in 2013 as follows: Cohesion and Structural Funds €325 billion ($450 billion), Competition and Growth €125.6 billion ($166.5 billion), the Common Agricultural Fund €278 billion ($368.6 billion) (even though agriculture represents only 2% of the EU GDP), “EU as a Global Player” (aid) €59 billion ($78.2 billion), Security and Citizenship €15.7 billion ($20.7 billion), Rural Development €95 billion ($126 billion) and the worryingly entitled “off-budget spending” €37 billion ($49 billion). 

In other words only 13% of the EU Budget is being invested on preparing European for the hyper-competitive twenty-first century global economy.  The rest is being spent on propping up failure.  It also means that when Italians, Greeks and Spaniards protest about austerity they are really asking my modest Dutch neighbours to go on indefinitely funding a way of life they cannot afford.   In effect, they want the EU to become a mutual impoverishment pact.

Now, like me my Dutch neighbours are prepared to pay so much for ‘solidarity’ as they genuinely feel for the suffering of their fellow Europeans.  However, what they want to see above all is an end to this crisis.  For them that means modernising southern European economies (and others) in return for their ‘aid’.  However, there seems to be little appetite for that in Athens, Madrid, Rome or Brussels.  And they certainly do not want more ‘government’ by a remote Euro-Aristocracy in Brussels Centre in the name of 'stability' to fix a crisis they in fact caused. 

Therefore, Mr van Rompuy, unless you and your elite colleagues understand my Dutch neighbours and quickly the question for them will not be whether or not the Dutch can survive without the EU, but whether or not the Dutch can survive with the EU. The cost of ‘solidarity’ is fast becoming far too high to bear for the relatively few who have to pay for a crisis that is by no means over.

Julian Lindley-French