Our Geopolitical Failure

A Guest Post from Christopher Nutall

In a game of chess, there are two priorities; protect your king, to prevent yourself from being defeated, and checkmate the enemy’s king to win the game.  In geopolitics, each nation must assess its priorities and ensure it upholds them to avoid defeat.

For example, Russia must maintain control of the countries immediately to the west of Russia proper.  Historically, three invasions that have driven the Russians to the brink of defeat have come through those countries; holding them under firm control (or at least denying them to the enemy) is a core Russian priority.  Therefore, the Russian moves to eventually cripple and take control of Ukraine, which seem nothing more than disgraceful bullying on an international scale, are in fact part of Russia reasserting control over its own geopolitics.

Geopolitics do not care about the moral rightness or wrongness of any particular act.  It does not matter if the German bid for supremacy in Europe (the Franco-Prussian War, World War One, World War Two) was moral or otherwise.  Germany could not survive sandwiched between two powerful enemies, Russia and France.  The Germans had strong motives to fight in all three wars that had nothing to do with conventional morality, merely geopolitical necessity.

And it is geopolitics that may eventually weaken Britain to international irreverence.

When did Britain start to exist as an independent nation?  I believe the reign of King John marked the foundation of England, while both Scotland and Ireland were separate entities previously.  Under John, England moved from being a vestigial state on the edge of the Angevin Empire to the centre of power for John and his successors.  There is something galling in considering John, perhaps the vilest and most treacherous of monarchs to sit on England’s throne, as the effective founder of Britain as an independent nation.  (What if Benedict Arnold returned to the US after Yorktown and actually became President?)  However, one cannot deny that John’s reign saw Britain largely separate itself from Europe.

This led the English monarchs to make attempts to concentrate their power and secure their fragile borders.  King Edward took advantage of Scottish weakness to attempt to overwhelm Scotland and add it to his lands, principally to prevent Scotland from being used as a gateway for France to attack England.  Ireland too was targeted for conquest.  However, these wars and the Hundred Years War (an attempt to put an English King on the French Throne) proved that there were strong limits to English power.  It wasn’t until James I succeeded Queen Elizabeth that the first true steps towards uniting Scotland and England were taken … and it would be centuries before they (and Wales) became one nation.  Ireland was never truly part of Britain.

The British geopolitical priorities, which were formulated over the years between King John and Winston Churchill, can be summed up as follows:

One – Maintain political control over the British/Irish mainland.  This prevents Scotland or Ireland being used as a base to invade England.  The Jacobite Rising of 1745 showed just what could be accomplished with even limited overseas support.

Two – Maintain sufficient naval forces to prevent a sudden descent on the British mainland by outside powers.  (One has to admire French persistence.  They probably hold the record for coming up with invasion plans for Britain.)  As long as we control the seas around Britain, we cannot be invaded and forced to surrender.  Furthermore, we must also keep the sea lanes from the outside world open to prevent starvation.

Three – Maintain a balance of power in Europe to prevent a single nation from taking control of the entire continent.

Number three probably requires some elaboration.  Historically, the greatest threats to Britain have come when Europe was largely united against us.  Philip of Spain controlled enough of Europe to launch the Spanish Amanda, Napoleon brought vast resources to bear against us, Hitler used Europe as a base to bomb Britain ruthlessly.  Our counter-action in all three cases was to back the weaker side in any European dispute, inserting British troops as a final resort, in order to maintain the balance of power.  In fact, prior to 1945, we only failed at this once; the diplomatic disaster in Europe that accompanied the American Revolution left us isolated in Europe, costing us our chance to win the war.

This may seem unlikely.  However, consider this.  In the Seven Years War, we backed Prussia to force the French to dedicate most of their resources to fighting Frederick the Great.  In the American Revolution, Prussia refused to join us openly, as did many of our other former allies.  France could fight a war against us that was more ‘our’ style of warfare – and she succeeded, magnificently.  The American Revolution was not only a major defeat, it was the closest we came to complete disaster until World War Two.

So … how well are we handling our geopolitical priorities?

Not well, I’m afraid.

Ireland won its independence from us after the First World War.  It became a minor headache during the Second World War (there were fears that the Nazis might use Ireland as a base, which never materialised) and Northern Ireland became a persistent running sore.  In the meantime, there were growing demands for greater powers (if not independence) for Scotland; we held a referendum in 2014 in hopes of putting the matter to rest.  The referendum was a sound defeat for the independence faction, but it has not settled the issue.  Scotland may yet become independent.

Is this a threat?  At the moment, it may seem absurd to consider the EU a threatening nation, but that could change.  A Scotland that won its independence than joined the EU might find itself being forced to make major concessions – like Ireland did during the financial crisis – which would eventually compromise its newly-won freedom.   Even if we choose not to regard the EU as a threat, modern technology has changed the face of military combat.  An independent Scotland, no longer part of NATO, would be a hindrance if we did wind up in a war with Russia.

But that isn’t likely, right?  History books are crammed with events that were not likely.

We haven’t done much better with our naval forces.  Historically, we maintained a sizable force right up until the end of the Cold War, but since then we have made major cuts in our deployable forces.  It is unlikely that we could refight the Falklands War if necessary (right now, the Falklands are likely to be very economically important to Britain in the near future) as well as maintain our commitments to NATO.  The absence of aircraft carriers alone placed a major crimp in our ability to take part in the campaign against Libya.

Indeed, if the Argentineans were to successfully push us off the Falklands for the second time, we would probably be unable to retake the islands.

Given the advances in technology, we should also count our air force and army as part of our second geopolitical priority.  The figures are not good.  Successive governments have made major cuts in our deployable forces, weakening both our ability to wage war and defend our homeland.  It takes time, years, to rebuild lost military capabilities.  In modern times, as Rumsfeld pointed out, you have to go to war with the military you have.  We are not well-placed to win even a small war.

At worst, we have our nukes.  Britain may lose a war, but we cannot be defeated, because we will take the enemy down with us.  Or so we believe; thankfully, this concept has never been tested in the real world.  However, nukes have purely limited value outside of all-out war.  Our status as a nuclear power didn’t prevent Argentina from trying to take the Falklands.  There are strong limits to what nukes can do for us.

But it is the third geopolitical priority that may yet prove fatal.

The European Union is not, by any definition of the term, a democratic state.  Indeed, at the moment, it is not a state at all.  The EU was created, at least in part, to bind the nations of Europe together to make it impossible for them to fight a major war for the third and (it was presumed) final time.  (Readers of The Great Illusion may have a good snicker at this conceit.)  However, as time went on, the EU took on more and more undemocratic aspects.  Unelected bureaucrats dictated more and more regulations to national governments, which were in turn forced to accept them.

Consider, if you will, a spider’s web.  A single strand may be weak, so weak that a human can snap it without noticing the effort.  However, a hundred such strands may be much harder to break – and it would be impossible to break a single strand without damaging others.  Each successive regulation in the EU might be a minor matter, on its own, but untangling the entire web safely might prove impossible.  A government that tried might wind up breaking the entire EU … or simply being unable to claim the benefits as well as the disadvantages of membership.

This is a major problem for European governments.  It was already hard to be responsive to problems in their own countries.  The bureaucrats had far more distance between themselves and the civilian populations than any elected politician.  Unsurprisingly, the bureaucrats, convinced they were doing the right thing, started issuing regulations that were actively harmful.  Matters were made worse by politicians who ignored even basic due diligence when the time came to expand the EU, allowing nations like Greece, Spain, Ireland and Portugal to join.  Between them, the pro-EU politicians and the bureaucrats created a disaster.

The current European situation is unsustainable.  Indeed, the recent elections in Greece will probably put the EU to its final test.  Therefore, we must consider our geopolitical priorities in light of this simple fact.  Our interests are simply not served by a strong EU.  At best, we will become a member state in a glorified super-state; at worst, we will be just another occupied country.

However, we have simply sacrificed too much power to the EU.   Right now, we must claw it back.

The problem with global politics today is that long-term thinking and careful contemplation – and the power to ensure there is time for both – have been sacrificed in favour of sound-bites, places in history and nonsense slogans like ethical foreign policies.  It is time, I feel, for us to remember the true foundations of British power and tend to them, before they fall in on themselves and collapse.

About The Author

Christopher Nuttall is a military-SF and fantasy author responsible for The Empire’s Corps, Ark Royal, The Coward’s Way of War, The Fall of Night and many others.

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Jeneral28

Just use your Trident SLBM…

tweckyspat

err, Is this is one of your “SF and fantasy” works ? doesn’t the economy have something to do with it ?

We are small country with a relatively mature, sizeable economy based on services (esp financial services) and trade. We are uncompetitive manufacturers, have limited natural resources (even if you believe the FI has oil ?), and an aging population/low birth rate. Some might argue we have done astoundingly well to maintain as much influence as we have since WW2

I don’t disagree the EU is in a mess and ScotNats pressure may well yet lead to breakup of the UK, but there’s something deeply illogical in pointing at them as the CAUSES of our so-called geopolitical failure …

RoundTower

The immediate geopolitical crisis has two bases, in Ukraine and in North Africa and the Levant. The problem in Ukraine arises from it coming into independence without being an effective nation state; nobody really knows where its Eastern border ought to be. It’s certainly not where it lies on the map at present. That’s not the EU’s fault, though it hasn’t helped. It was NATO that looked on the collapse of the Soviet Union as being a final victory, and that there were no ethnic problems to resolve. Every other major European conflict in the last 300 or so years has ended either solving ethnic problems, or in not solving them sowed the seeds of the following one.

Economic sanctions may well do the job against Putin. I don’t see the occasional reappearance of Tu-95s as anything to panic about. He is spending money on defence now because he knows in 5 years he may not have the chance. Ukraine is all about a gamble or a pawn-broking exercise. Putin is not the long-term existential threat.

We won’t accept what’s happening in North Africa and the Middle East because we have got too accustomed to dismantling our own beliefs and culture at home to see any value in protecting those who share similar ones such as the Eastern Churches Christians in Iraq and Syria, or the Copts throughout North Africa. In five years’ time we are likely to be looking at a collapsed Nigeria as the religious and ethnic struggle overwhelms it. If we don’t wake up to that in the next few months, we’ve had it.

Chris

An interesting assessment; a somewhat more honest critique than our political elite seem able to perform. I was prompted by this statement in the CofE Bishops’ letter to their churches: “Adam Smith, the father of market economics, understood that, without a degree of shared morality which it neither creates nor sustains, the market is not protected against its in-built tendency to generate cartels and monopolies which undermine the principles of the market itself.” to consider the changes to nations at one time just behind the Iron Curtain. They were obviously ruled and occupied by USSR as a buffer. When the wall came down, much to Germany’s relief the massive fear of the military floodgates opening and an unstoppable avalanche of Red Army swarming over the German plains all but evaporated. While the ex-Warsaw Pact nations were dormant in stunned shock of their new self-determination, all was well. But like nature, politics rushes to fill a vacuum and the EU looked so much nicer to live in than the grey sternness of Russia.

Once NATO had joined the EU in wooing the Eastern Bloc into the enlightened West, it was clear the old adversaries were yet again staring at each other over common borders, each having no trust of the other. Those of a historical, military or academic mind probably saw all the makings of ‘Cold War 2 – The Sequel’ in which bit by bit tensions built as each side in response to the other’s ‘provocation’ upped the shows of force intended to scare off the opposition. It looks very much like we are in this process now. Neither side dare let a provocation go unanswered for fear of looking weak. Its a scene played out in bars the world over as two testosterone-fuelled alcohol-enabled protagonists escalate from a minor grump to full on physical violence because neither can back down without dishonour.

Things that can be done:

1) Settle in for the new Cold War and re-arm ASAP.
2) Hope that sanctions will prevent the Russian Bear from preparing to fight (note lack of funds did not hold back the previous Cold War deployments)
3) Use whatever dirty tricks/hybrid warfare techniques possible to tug the rug from under Russia’s feet.

All the above are essentially hostile stance measures.

4) NATO backs away leaving a triumphant Vlad hailed Supreme President for life.

That won’t go down well in Western government circles.

5) EU and NATO create a two-tier system where the ex-Eastern Bloc states are grouped as quasi-independent self-defending territory, a bit like the DMZ in other conflicts. Both sides get a buffer; the states themselves need formal treaties to allow trade either way without veto but no option to directly pass through goods from EU to Russia or Russia to EU. These states might well feel abandoned and betrayed.

6) NATO & Russia crack skulls together to replace the decades of fear with formal cooperation. This option reserved for when Hell has frozen over.

My assessment is that while Option 5 makes for the most peaceful future, there would be still a power vacuum pulling at them and it would take a great deal of effort to keep it stable. So I think the EU will publicly state Option 2 is our best hope, while invoking Option 3 covertly, and the result will inevitably be Option 1.

TrT

Once upon a time, Europe was the world.
The 13 colonies were lost because they weren’t worth the fight, economically less valuable than Bermuda.

But that isn’t the world we live in today, in the World isn’t Eurocentric.
The expanded EU area combined is barely bigger than the US alone, and that won’t last much longer, how much longer till the EU27 are less economically powerful than China and the US rather than just the US?
The idea that the UK needs to hold Ireland and Scotland to prevent a French invasion borders on lunacy.

Those were our concerns once, but once, when the centre of the world was London, or Paris, or Madrid, or Rome.

The Other Chris

All the more reason to ensure the safety and help to develop the economy’s of our CD’s and BoTs.

Phil

So we’re to be undone by EU directives I see?

I think failure is a strong term for a country which has stable, legitimate, inclusive and accountable forms of governance, has one of the strongest economies in the world, is world leading in a number of important areas (scientific, educational, economic etc) and which maintains influence in Europe (more than it ever has done).

In the grand big picture we remain focused and engaged in the areas of the world that really matter – the MENA region and Eastern Europe / Med.

I think we’re backing the right horses and its easy to see activities in the past as nicely conforming to some rational and well implemented strategy when in actual fact none of those three items you posted have ever been uncontested or universal.

PS: not that your post isn’t interesting and thoughtful.

Trolim

The image projected by the /media/intellectuals/what have you/ is that conflict between the civilized nations is unthinkable. It’s unpalatable, it’s unfashionable. Why, you must be some kind of throwback to be thinking that way! But fashionable thinking is short sighted. War is difficult to imagine happening now, sure, or just doing linear extrapolations from current trends. But if history can tell us anything, it’s that the trends won’t hold. Things change, often without much prediction, and even events that are very predictable are studiously ignored.

Some governments are less short-sighted than they pretend. The extent of farm subsidies and the elaborate maneuverings for secure oil contracts and/or oil substitutes ONLY make sense in the context of preparing for the next general war.

We should work for peace. We should work for good and right to prevail such that the peace remains preferable to war. But we should never forget reality. We can’t wish it away.

Phil

Some governments are less short-sighted than they pretend. The extent of farm subsidies and the elaborate maneuverings for secure oil contracts and/or oil substitutes ONLY make sense in the context of preparing for the next general war.

That’s very hyperbolic. It’s nothing more, if we go with the direction of your thought, than risk management.

Trolim

“That’s very hyperbolic. It’s nothing more, if we go with the direction of your thought, than risk management.”

If they believed the conventional wisdom, they wouldn’t be managing the risks. These are steps in anticipation of the breakdown of world trade.

Phil

If they believed the conventional wisdom, they wouldn’t be managing the risks.

That makes no sense to me.

Dave Haine

The problem actually is the disparity between cultural Influence, economic influence and military power… For example, during the 18th and 19th centuries, the UK was the economic and cultural power, with a substantial navy, that ruled the waves (and often waived/ waved the rules) [spelling intentional!]….

Into the second decade of the 21st century, and we still have a surprising degree of cultural and Economic influence, look at the amount of films and TV programmes, made in the UK, and exported to the rest of the world, fashion, music, etc. Five out of the world top ten Universities are British. Equally London is one of the ‘Command cities’ for global finance (40% of the worlds currencies are traded through London). 2nd, or 3rd biggest aerospace sector in the world, the list goes on…

What we don’t have is the military power to back up these efforts…And military power doesn’t just mean how big your forces are, it should mean how effectively threats to our national interests can be discovered, assessed & countered.

Thus, the army setting up 77 Brigade is a belated step in the right direction. Having the CASD is, on one level, paramount. The RAF having an demonstrably, effective ADGE (Air Defence Ground Environment) is key too. The Security Services being demonstrably on top of their tasks too.

The ability to conduct substantial, expeditionary missions is where we are lacking-
The two carriers are a start IMO- but they need to be backed up by amphibious warfare vessels. Which in turn need a deployable force (not necessarily heavy). The ability to establish, secure & maintain air support (ISTARS, logistic and combat) for landed forces. The last because we cannot expect the carriers to be everywhere, and they are a high value asset, which need to be husbanded and protected.

Dave Haine

The idea that war is unthinkable between civilised nations, comes from the scarring that the 20th century has laid across national and international psyche’s(?) A bit of desperate wish fulfillment strategies.

I think in reality most governments play realpolitik, whilst saying something else…

Britains place in the world is within a European context , you cannot change geography. Britain relying on the Financial services market for big part of its income is a very very foolish thing to do. The very structure of that world being international means that exactly ,they can trade from anywhere the tax regime and regulatory framework suits them , its just numbers in computers hosted anywhere. You only have to look at the noises the industry made when the UK Gov about faced in 2008 onwards and started talking break ups , involuntary regulations etc to see they have ZERO loyalty to any nation state. A move towards energy independence be it FI oil & gas , from other BoTs or from domestic fracking is a must , we once had it and it is now slowly dwindling away and will accelerate now energy prices have slumped. Domestic farming needs to be rethought and implemented using the technology that has been pioneered in the Netherlands for a generation , intensive industrialised food production under glass using waste he’s and co2 from electricity generation. In terms of population issues we can benefit from the ‘ready made’ workers who turn up from the EU , with their home nation having paid for all their health and education from birth to 18+ and providing us with a adult capable of full time work as a contributor to our tax system at zero cost to the UK gov.
More related to this site , Europe is missing the power projection of CBG’s and what it means to our potential OPFOR for them to consider and counter and if the UK is going to provide this all to the good .

I am sure my country has been a going concern since 927AD………

http://en.wikipedia.org/wiki/%C3%86thelstan

JohnHartley

National Will, or rather the lack of it in our political/mandarin class. If we had National Will, we would be like France & have the EU on our terms. With National Will, we would invest in our factories & farms. We would maintain our borders & defences. Putin for all his faults, has National Will when it comes to Russia.

jedibeeftrix

there have been two profoundly dishonest non-debates in this, one here, and one on the continent:

1. for their part they have refused to recognise that the logic of the eurozone must be followed by economic union, if it is to survive, and that must be backstopped by political union if it is to have legitimacy. germany’s idea of a europe of rules binding sovereign nations cannot work.

‘fiskal union’, as they might term it, might work in the good times but what about the bad. the bad times will always cycle around, and when crisis measures become necessary everyone realises that there is no authority with the public mandate to make the unpopular decisions. this is precisely what the euro-crisis is about; a balance of payments crisis that exists only because there is not the recognition of ‘family’ that permits internal transfers as a ceaseless and normal act of collective solidarity.

germany’s current behaviour as a sea-lawyer is destroying the foundations of the collective ‘we’ that may permit a political thing called europe to exist in future. instead, we get something that is increasingly authoritarian as it lacks the legitimacy that derives from being [both] accountable to, [and] representative of, the people.

2. for our part we have refused to recognise….. that the logic of the eurozone must be followed by economic union, if it is to survive, and that must be backstopped by political union if it is to have legitimacy. hold on there…. yes, yes. bear with me:

we have pretended that we could remain separate to the logical consequences of ever-closer-union, and that was possibly true with our eurozone-crafted-for-the-good-times. but then the bad times cycled around. now, we have QMV governing a raft or core economic functions, we have intrusive structures micro-managing how financing is structured, how banking operates, what social purpose taxation is directed towards, how society regulates the labour model. likewise, there is a growing body of tools to enforce collective solidarity, like the ESF, tools in use which do not yet have a political mandate.

all this governed by QMV. but worse, rather than merely throwing our collective sovereignty on the roulette wheel of majority rule, what we actually face is real agency that actively works against our interests in pursuit of its own view of society. this agency is the ECB, in its admission that it will actively work of manage ‘consensus’ among eurozone members and govern europe with the tools of the EBU.

in short, britain ceases to be a sovereign entity on fundamental elements of economic governance, as it becomes subject to decisions via QMV from a caucus representing the will of the remote and authoritarian ECB.

now, without wanting to be deterministic it is only fair to point out:
a) that a political EUrope may openly accept a common destiny, and craft an accountable and representative form of governance deemed legitimate by what will become the EUropean people.
b) that britain may well prove capable of carving out a place for nation-states peripheral to the federal core of EUrope, that retain essential economic sovereignty whilst freely cooperating and collaborating.

however, it is difficult to imagine either of these happy outcomes arriving when both britain and the continent dishonestly continue to act as if neither debate needs to happen…

if a) and b) do not happen then we are back to balancing, and that is an unhappy place to be because the only actors capable of balancing against a remote and authoritarian EUrope are not nice powers.

as to russia, it is destined to be a cipher for chinese power. just as it uses the Donbass to influence ukraine, so shall china use russia to influence europe. russia has lost its friends in europe, and sold its freedom to china as the majority purchaser of its oil and gas in future.

Chris

Ref China – is the opinion that it has an Empire in mind? Would it look to rule (for example) the Eastern Pacific Rim, Argentina, Mexico, states across Sub-Saharan Africa various? In other words would it increase its control of nations its ‘helping’ as part of the assistance package, with absolute rule as the goal? If not, then surely it becomes an economic threat with local military control issues. In the latter case, its predation of Europe either directly or via Russian proxy seems less likely.

As for Europe, ultimately there must be one of three outcomes. First, that ‘ever closer union’ persists and we end up with the Federal States of Europe as a single nation. Second, that irritation between states increases exponentially (big states ruling little states, little states freeloading off big states, etc) under ever stretched Brussels rule until there’s an explosion of anger and Europe falls to war (again). Third, that irreconcilable differences between the very different nations brings about divorce (messy and disruptive) after which sub-alliances and individual countries revert to a simple free-trade model without centralised rule. Take your pick which you prefer.

Of course it the EEC had built itself as a bigger wider EFTA and stayed that way, we’d all be rich and happy by now. But that would have required politicians and Eureaucrats to leave nations to look after themselves, which as those that seek office are by nature control freaks was never going to happen.

jedibeeftrix

@ Chris – “Ref China – is the opinion that it has an Empire in mind? Would it look to rule (for example) the Eastern Pacific Rim, Argentina, Mexico, states across Sub-Saharan Africa various? In other words would it increase its control of nations its ‘helping’ as part of the assistance package, with absolute rule as the goal? If not, then surely it becomes an economic threat with local military control issues. In the latter case, its predation of Europe either directly or via Russian proxy seems less likely.”

I don’t see that a lack of explicit chinese empire does make the use of russia as a proxy less likely.

China has geopolitical interests, those interests will compete with the interests of the EU and european nations. As long as that persists they will have an need to divert or divide european opposition. Russia is a ready made tool to achieve this. It neatly divides italy and germany from france and britain. Likewise it cross-cuts the minor european nations.

jedibeeftrix

to continue my original post:

Federal US taxation is ~25% of GDP and the variation in spending levels between rich and poor states is ~5% of GDP, so a variation of roughly 20% of federal spending.

How big a budget would the EU need to be able to slosh around 5% of combined GDP into the poor regions (bearing in mind the current budget is only 1% (and heavily constrained by CAP payments)?

The other point is that americans accept this, they are all american, whereas we are rapidly finding out just how german the germans are, and finnish the finns are, when it comes to firehosing cash at nations they consider to be essentially delinquent! In the UK this ‘sloshing’ occurs in the form of:

a) National pay-bargaining which benefits poorer regions (teachers, nurses, etc)

b) National social benefits more generous than poorer regions could afford alone (eg.housing benefit in glasgow)

c) Targeted regional development grants/discounts to encourage business growth (objective 1 EU/WEFO funds)

d) Additional infrastructure spending to support the local economy (the mainland-skye bridge)

e) Operating national services hubs from depressed regions to boost wages (DVLA in swansea, etc)

the eurozone must explicitly accept or reject this:

accept it, and create a real EUrope with a people that accept a common EUropean destiny, and this means defining which EU nations are EUropean and which are not (Britain, Sweden….Greece).

reject it, dissolve monetary union, abandon ever-closer-union, and rebuild the EU as a trading partnership that encourages cooperation and collaboration wherever common interests exist.

this halfway house where we all pretend Britain is a EUropean nation, and where we all pretend that Germans/Netherlanders/Finns accept common destiny with Greeks, this is the real poison!

Topman

Operating national services hubs from depressed regions to boost wages (DVLA in swansea, etc)

It’s not so much that, but moving them from expensive places such as the SE to cut the gov wage bill.

jedibeeftrix

two sides to every coin.

Mike W

We are designed by nature for a maritime power. Experience sufficiently confirms… when we endeavour to exert our strength by sea we become the dread of the world; when by land the contempt of it. William Pitt the Elder.

El Sid

@tweckyspat
We are uncompetitive manufacturers

A fashionable view, but not supported by the facts. See this analysis by Boston Consulting Group :
https://www.bcgperspectives.com/content/articles/lean_manufacturing_globalization_shifting_economics_global_manufacturing/
In some cases, the shifts in relative costs are startling. Who would have thought a decade ago that Brazil would now be one of the highest-­cost countries for manufacturing—or that Mexico could be cheaper than China? While London remains one of the priciest places in the world to live and visit, the UK has become the lowest-cost manufacturer in Western Europe
The recent Euro weakness has taken the edge off that, but eg car exports remain strong :
http://www.smmt.co.uk/2015/02/number-car-exports-china-multiplied-seven-times-since-2009/

Going back to the original article :
right now, the Falklands are likely to be very economically important to Britain in the near future

Define “very important”. Right now the only oil deposit being developed is Sea Lion, in relatively shallow waters north of the islands. Including satellites, it is currently estimated around 400 million barrels, less than 9 months of UK consumption. The recent oilprice weakness has seen them cut back their plans, they’re now planning to start off developing only about a third of it with production of 50-60kbpd, equivalent to 3-4% of UK daily consumption. The final green light will not happen until next year, with first oil in 2019.

The only other discovery is Darwin to the SW of the islands, currently estimated at 263 million barrels of condensate, or less than 6 months of UK consumption. It’s all gone a bit quiet there – it’s just the sort of deep-water development that the Saudis were hoping to put out of business and they have probably succeeded.

The big hope is the FOGL acreage in the southeast, that was the acreage that had the potential (before any wells were drilled) to be a “new North Sea” with reserves equal to over 100 years of UK consumption. So far it hasn’t worked out like that – reservoir quality isn’t as good as originally hoped and it’s on the gassy side. Gas is bad because it’s less valuable than oil and needs big capex to bring it to market, either in liquefaction kit or pipelines, whereas you can just drive a tanker up to an oil platform and away you go to market. The southeast will probably have a couple of viable hydrocarbon fields, but nothing like the bonanza that some have hyped.

A rig is on its way down there at the moment to drill six exploration wells north and SE of the islands, so I guess we’ll see what happens over course of this year.

Nick

@jedibeeftrix

Broadly agree with you here, although I don’t agree that the UK is European.

I think our ruling classes (and quite a lot of commentary that goes on, even on here) still acts like we represent the Empire with our global role and presence (it was only 60 years ago after all). The UK/Empire largely avoid European entanglements, apart from doing our bit to avoid a European power that could readily action a global stage and interfere with our plans. Whether you’re looking at the Netherlands, France or Germany. We passed the global role onto the USA from 1941 (and the Empire followed thereafter). We still talk and think about the world as though it was. The Middle east or Libya is no more of UK strategic national importance that it is for France, Germany, Italy or Spain and yet we seem to focus on the International more than any of these nations do, with the exception of France (with their North African francosphere).

Our European experiment started in the 1960’s when we discovered the Commonwealth couldn’t substitute for the Empire for our manufactured goods and services when they ceased to be tied markets. We looked to Europe having rebuffed what eventually became the EU in the 1950s. When we eventually joined, we found much that we disliked (CAP for example) along with a federal streak (although you might argue this was a guise to create French political control over the economically resurgent Germany).

We have moaned and grumbled about it ever since. Even so, we have negotiated, signed and implemented every treaty since we joined and have even led with way with enlargement and the creation of the single market. On Defence, the cost of equipment development has led us into ever larger multi-national co-operation agreements. We literally act like we have a split personality. We see the economic benefits of Europe, but behave like a spoilt child having a tantrum.

For example, we helped create the single market for goods and services. We all realize that being able to sell the same item with the same packaging under the same regulatory environment reduces costs massively, increases competition and creates the engine to grow our collective economies faster than would otherwise happen (this is the whole rationale for EU/US trade deal). You can’t swap 27 sets of rules for 1 set without doing two things. One is agreeing what the new rules should be (a negotiation of 27 national bodies chaired by a EU civil servant infrastructure) and changing your own rules. Of course that means you might get some rules that you don’t like. However, we have agreed national opt-outs for the “worst” of these. Identifying the proposed rules you don’t like and engaging in negotiations on such issues seems to be something we don’t like to do (it certainly seems to have little political interest), which is probably why we seem to lurch from crisis to crisis.

The most important question we need to ask and answer is are we in or out of the EU. I haven’t see any serious case made why we would be economically and politically better off outside the EU. If we choose IN then we should grow up and act like a full partner (lets face it one of the 5 or 6 member countries that really set the collective rules) rather than the child having the tantrum.

JohnHartley

Nick The French have not budged one inch on the CAP, despite many other EU nations wanting change. They just send out EU directives they do not like to their regions with the advice to take note. That does not mean in any way to act on them. They just stick them in a drawer. The Spanish are still sponging a huge fishing subsidy. The Germans are willing to wreck the Eurozone just to meet their fiscal rules. It is about time UK politicians grew a pair & played hardball with the EU.
Yes I want the UK to stay in the EU, but I want semi-detached membership, where we uphold the UK national interest only & opt out of EVERYTHING we do not like. We pay them, they do NOT pay us. He who pays the piper calls the tune.
We need a new supremacy act in parliament to make all EU law/directives advisory rather than compulsory. They will throw a fit, but will they throw out one of the few countries who pays in? God knows they have plenty of sponging nations.

jedibeeftrix

@ Nick – “Broadly agree with you here, although I don’t agree that the UK is [not] European.”

I’m going to presume there should be a “not” in the quote above, for i did not i believe make the stated argument, and proceed with my response from there.

We have avoided all the serious federalising agenda put forward in the last quarter century:
1. We avoided monetary union
2. We avoided joint external borders
3. We avoided (by the skin of our teeth), the justice competance
4. We avoided the social chapter (which Blair then went and threw away)
5. We avoided common military capability (diverting it towards the st malo declaration)
6. We avoided the joint and several liability of the bail-out mechanisms
7. We avoided (more or less), the initial attempts at creating a common tax base (monsieur Tobin)

Most of all, with Cameron’s “No.” a few years back we have forced all eurozone fiscal integration to be outside the legal framework of the EU and to remain exclusively focused on eurozone membership.

So while I entirely accept what you say about a common trade zone requiring common tariffs and standards, this is quite separate from the post-crisis attempt to harmonise the very fiscal tools that are the core of economic sovereignty.

Most importantly, our actions above do very much separate us from the continental consensus that actively seeks ever-closer-union in its truest sovereign meaning.

Nick

@Jedi

my mistake. I don’t see anything in either German or French behavior that suggests they want ever closer Union; in fact the opposite is true. We have quite a lot of common ground with Germany (while Merkel is in power) except that our economy is service orientated whereas theirs is manufacturing orientated.

Practically we are in Schengen (or at least our passport checking procedure is so lame we might as well be). We have the European arrest warrant. We remained outside EMU for now. Like joining the EC will we avoid it forever ? Perhaps not. Had we been part of EMU, could we have politically managed to follow the German path ? I very much doubt it; we would have followed Ireland into an even bigger property boom than we did anyway. The bank bailout would have been bigger – as would the rebalancing of the property market – but I very much doubt we’d have had more austerity than we have had anyway. It could have worked out for the better as well. Had we attempted economic discipline German style, our economy might well b stronger and better balanced that today. Politically, staying out has weakened our position in the EU. This, when combined with our general attitude towards the whole enterprise means that we have very limited weight right now.

@John H

I can understand that position; it was the one I held until fairly recently. However, the semi-detached attitude is exactly the one we have followed since joining. We are half hearted and reluctant at best. We are now trying to pull back from the effect of the things we championed (expansion, single market). Our natural allies (Germany, Netherlands, Poland, Sweden et al) no longer respect our opinion. We have ended up with the worst of all situations; in but no influence. As the second/third largest economy in the EU, our opinion should count as much as France or Germany. Has it ever ?

If we fail to take part in the game (and the only things I can see we have done to “benefit” ourselves recently are stay out of the social chapter and to permit the City to trade Euro even though we aren’t in the club – an argument based on the single market rules) then it shouldn’t be a surprise that we end up with solutions we don’t like. Its no use Cameron turning up at the Council meeting to say no to something when its hit the political radar, when the very subject has been in discussion at junior minister/senior civil servant level for months and a consensus reached.

What ever opinion you believe, I think you have agree that the current situation is too FU to continue for much longer. I think we need to commit ourselves to Europe and act like we mean it or leave and find our place (something like Japan sounds about right given the size of our economy).

Europe also has a decision to make of equal importance. Is it on a path to federal state or not. If not, then EMU must change to a smaller grouping if the current system is to be retained.

Nick

@John H

Just to clarify; on the whole the UK has been very good at sticking to our agreements and implementing the rules. We have been absolutely crap in terms of attitude and approach and extremely poor negotiators.

jedibeeftrix

@ Nick – ” I don’t see anything in either German or French behavior that suggests they want ever closer Union; in fact the opposite is true.”

And yet every act they engage in screams the very opposite:

1. monetary union
2. joint external borders
3. the justice competance
4. the social chapter
5. common military capability
6. the joint and several liability of the bail-out mechanisms
7. a common tax base (monsieur Tobin)

Chris

Ref the EU Directives and their application – back in 2002 I was provided a fine lunch at a good restaurant by the MD of a French defence company (part of a much bigger group). The conversation turned to the effect of the EU on French business and life in general. I asked if his business had difficulty with the less helpful EU directives. With a contented smile he said “Not at all. Those we like and think will be helpful, we implement. Those which would put us at a disadvantage we ignore.” It comes down to carefully chosen labelling, bizarrely enough. To the British (and I think German/Flemish speakers too), the word ‘Directive’ has the equivalence of a command, an order. To the French the word ‘Directif’ has an equivalence to earnest advice, a strong suggestion. Whereas we do as we are commanded by Brussels, our French colleagues have the legal authority to accept, reword, revise, amend or in some cases reject the advice from Brussels. I imagine a lot of consideration went in to the selection of the term Directive.

For clarity, the Larousse dictionary defines Directif as that “Which tends to give precise guidance, a firm direction, leaving little room for spontaneity”

Nick

@Jedi

Like the single market, a single pan European currency creates massive economic benefit by reducing transaction costs and increasing pricing transparency. To make it work properly, you end up needing tax harmonization and lots of other monetary framework harmonization.

I have little knowledge of German politics, but my guess is that the German ideal works something like the federal arrangement in Germany itself. Each state has its own government and budgetary assumptions, but works within a rigid framework of rules that governs how it works. The federal government sits on top to enforce the rules and act within its own mandated role.

In this sort of model, EMU is defined by the written rules (enforced by the ECB and the council of Ministers for the Eurozone); each member state would be required to stay within the framework (effectively limiting each countries ability to manage its own finances). This doesn’t need a political union to make it work.

It fails because the rest of the Eurozone has a more laissez faire point of view and whilst they’d really really like to have an economy like Germany, it can’t be achieved today at a reasonable political and economic price. In any case, being under the German economic umbrella has a special benefit of its own (cheap borrowing).

From the outside, it seems clear that only a federal eurozone union will be able to make EMU work as designed, but that also is fraught with difficulties. Having created EMU, the Eurozone has to decide and agree on how to make it work now (probably needs to be a mixture of strong rules and some funds transfer) or to break the current model and restart with a smaller currency union between similar economies. The most important decision is to decide on what path you’re trying to get too. Federal Europe, EU max or EU light.

If the framework is right, all combinations should be possible for different member states. Ultimately though any federal state would become the dominant political and economic force within the EU. This is what the UK is finding with the Eurozone today. Our interests and concerns are not core to the Eurozone members immediate problems. The issue for Cameron and his EU renegotiation is that the more peripheral we make ourselves politically, the less bothered they become about Brexit. Greece has just been taught that political message.

jedibeeftrix

“Like the single market, a single pan European currency creates massive economic benefit by reducing transaction costs and increasing pricing transparency. To make it work properly, you end up needing tax harmonization and lots of other monetary framework harmonization.”

You don’t need tax harmonisation, you need tariff and standards harmonisation. Even if you did, it would be too too high a price to pay.

“If the framework is right, all combinations should be possible for different member states.”

Now we get to the heart of the matter; “if….”

To quote from open europe, on the dangers of eurzone caucusing of core fiscal tools via QMV under the direction of the ECB:

“De jure incentives to take common position: This incentive is reinforced by the way the Commission’s ECB/EBA Regulations are currently drafted. For example:

• The ECB Regulation envisions the ECB acting as a coordinator of eurozone national supervisors, with the view for them to take a common position. The ECB has already dropped hints that it intends to actively discourage dissenting opinions amongst eurozone national supervisors.

• Through a eurozone caucus, some member states will indirectly boost their influence as their voting weight amongst eurozone countries is proportionally much greater than in the EU-27 (EU-28 with Croatia). This is particularly true of the larger eurozone member states.

• The safeguards proposed by the European Commission (see Section 5 below) leave the eurozone with the upper hand. Given that the 17 eurozone countries already constitute a simple majority, these countries would only need to seek the support of three ‘outs’ – whereas non-euro countries would need at least four countries.

De facto incentives to take a common euro position: To avoid banks free-riding on taxpayers in creditor countries, the ECB, Germany and others could well insist on putting into place perfectly harmonised eurozone regulations before moving to financial backstops. This could include single-target capital requirements, rules on leverage or bonuses – and could even spill over to market access issues. In turn, this would heavily shape decisions at the EBA, as the eurozone is unlikely to accept an uneven playing field within EU financial services as a whole.De facto incentives to take a common euro position: To avoid banks free-riding on taxpayers in creditor countries, the ECB, Germany and others could well insist on putting into place perfectly harmonised eurozone regulations before moving to financial backstops. This could include single-target capital requirements, rules on leverage or bonuses – and could even spill over to market access issues. In turn, this would heavily shape decisions at the EBA, as the eurozone is unlikely to accept an uneven playing field within EU financial services as a whole.

Taken together, the EBA structure will therefore significantly shift the balance of power in favour of the eurozone, at the expense of the UK and other ‘outs’.”

Nick

@Jedi

This is exactly what rules based EMU means in practice. Whatever the ECB and German central bank thinks, it is doomed to fail because the economies of Southern Europe (including France and Italy) cant cope with the current fiscal framework on offer from Germany et al. Whilst they wont offer concessions to Greece (too small and too FU’ed), the rules will be bent for France and Italy.

Worse, the longer Euro designed austerity continues, the more likely it becomes that one of the big EU countries falls to an anti-EU party in an election over the next few years. The political and economic crisis following that will be much more difficult to fix and is much more likely to break EMU for good.

The problem UK has now is that we are politically disengaged from Europe under the present government and are likely to elect to continue the same for the next 5 years. Our concerns are of small interest to the Eurozone core and we have burnt our bridges with the rest. Our political position in Europe is weak at best. If we don’t join EMU in the immediate future or create a strong political block with non-Eurozone members, our political position in Europe will continue to weaken. Whether the Eurozone continues down the rules based monetary union or opts for the full federal union, if we remain on the outside of the EMU structure our influence will diminish regardless of our size and status.

I any case, even if we vote to stay in Europe in the Cameron 2017 referendum, it wont close the issue for the UK, just like the Scottish independence vote hasn’t. What we really need is a different referendum; one dealing with the long term future of the UK. If we vote in, then we have to fully commit to Europe, which most likely means joining EMU. Otherwise, we should accept what we otherwise would be. On our own like Japan, or perhaps to seek to join NAFTA like Canada and Mexico and hitch ourselves to the US economy.

jedibeeftrix

“If we don’t join EMU in the immediate future or create a strong political block with non-Eurozone members, our political position in Europe will continue to weaken. ”

Obviously, I favour the latter.

“What we really need is a different referendum; one dealing with the long term future of the UK. If we vote in, then we have to fully commit to Europe, which most likely means joining EMU.”

If the choice were a binary (really and fully) in, or, (totally) out… I will vote for out.

El Sid

@Nick
Our European experiment started in the 1960’s when we discovered the Commonwealth couldn’t substitute for the Empire for our manufactured goods and services when they ceased to be tied markets.

More like the 1860s. The original Little Englanders were Manchester millowners who wanted to kick Canada out of the Empire because she generated less trade for them than the independent USA, but she was never going to provide a source of cotton and they still had to pay taxes to defend her. Trade suffered particularly after the tariff increase of 1859. In contrast, the Europe of the 1860s experienced something of a golden age for trade.

The name was later adopted by Gladstone’s wing of the Liberal party who applied similar cost/benefit reasoning to oppose a lot of the military operations in Africa in the late 19th century, particularly the 2nd Boer War. It was only later that “Little Englander” became a term of abuse.

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