Global Britain and the Future of Europe

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EVENT TITLE: GLOBAL BRITAIN AND THE FUTURE OF EUROPE

DATE: 16TH JANUARY 2019

TIME: 18:00 – 19:30

LOCATION: THATCHER ROOM, PORTCULLIS HOUSE, WESTMINSTER, SQ1A 2JR

SPEAKERS: IAN BOND, HANS KUNDNANI, RT HON GISELA STUART, JAMES ROGERS

CHAIR: BOB SEELY MP

 

BOB SEELY MP:

Hello, yep we’re two minutes late so I’ll just get on with it. Hello, I’m Bob Seely from the Isle of Wight sit on the Foreign Affairs Select Committee as well. It’s a pleasure to see you all here. I’m going to make some apologies pretty soon because all the events here I’m also down to speak so I have to go back and do that for the next hour and then going to see if we’ve got a government come 9 o’clock I think we probably will but I’m pretty sure we’ll win the vote of no confidence but it does mean I’m going to have to cut short my time here.

I’m going to introduce my panel, all of which I know – I’m going to make slight reference to their CVs. But I know them all pretty well, especially these three because with James I’m writing a report which I hope you’re all going to read. It’s coming out in about 3 weeks or there about depending on Brexit chaos on what is Global Britain and you ask the question what is Global Britain? We have to write a grand strategy for Global Britain and that’s what James and I are ambitiously trying to do. So that’s coming out in about three weeks but it does mean I’ve been close with him over the past couple of months but it has been a pleasure.

Ian Bond, very well known, director of foreign policy at the centre for European reform. I’ve heard him on many occasions on TV and radio talking very eloquently about foreign affairs and Britain especially in relation to Europe. Hans Kundani, I hope I’ve correctly pronounced that, fantastic, Senior Research Fellow at Chatham House focusing on Germany and Europe. And I’ve just been telling them I’m actually half German, she said nobody’s perfect. Either way I am half German. It’s actually just worth remembering now because of all the misery talking about Brexit you know peace in Europe is incredibly important. I lost a British grandparent who was killed by the Germans and I lost a German grandparent who was killed by the Russians. One was a soldier, one a civilian, so I lost half my grandparents in the last great chaos to hit Europe in the middle of the last century so I am, despite being a Brexiteer, I am immensely aware of the destabilising of peaceful and prosperous Europe is in everybody’s interests.

I’m going to make one point about Global Britain and the Future of Europe that I know Ian Bond is going to disagree with, because he’s just told me he is. But I’m still going to make it for the sake of the argument then I’m going to sit down and in 5 minutes I’m going to scarper if you don’t mind and if there’s any problems of getting kicked out I think Oscar my assistant is going to stay in the room and text me if I need to run back if there’s any problems with keeping the room.

In the 18th and 19th Centuries, Britain was not a continental European power. We had armies in Europe largely because we had a small standing army and we paid for a lot of allies who we funded in part or allied people within Europe be it the Dutch, be it some other German state who helped us and supported our agenda of fighting the Hegeman power at any given time. In the 19th Century we went through a period of so called splendid isolation and actually it was a very peaceful period from 1815 through to 1915 there was one war in Europe – the Crimean war, arguably shouldn’t have happened but it did we were on the right side straight after which Russia did its famous turn to the East and again we’re sort of seeing that now so its history repeating itself. But from 1945 the United Kingdom became a continental European power because we had a significant standing army in Europe and it was permanently there. Arguably in a way that had not happened in our history in the past 250 years. Now, I think we are ceasing to become a continental European power because trade is shifting, the centre of wealth is shifting to the Pacific and the India Oceans. Its shifting away from continental Europe. So we are having to focus much more on the world even if some of us want to stay very much focused on Europe. So we’re ceasing to be a continental European power. Its slightly going back to what we were in the 18th and 19th centuries especially with Brexit if we ever leave, where we’re looking into Europe from the outside and trying to get it to do what we want whilst not necessarily being a part of it and having allies in the new and current European structures. So, anyway that’s my one thought that I know Ian is going to shoot down very quickly.

Is everyone going to speak for about five minutes? And then the more question and answer and discussion the better. So can we do a tight five minutes? Is that correct? From right to left, would you like to start?

HANS KUNDNANI:

So I think the title is Global Britain and the Future of Europe and I think I’m doing the future of Europe part of this. In other words, I’m not going to talk about the UK much at all, I’m going to talk about what I think is happening in continental Europe in the EU27 as it were. And then –

BOB SEELY MP:

Is it okay if I’m fascinated by something you say that I’m allowed to butt in? Chairman’s rights.

HANS KUNDNANI:
Of course, please heckle me. So I’ll touch a little on Brexit at the end but really just to kind of say something about the concerns which drove Brexit. So since the beginning of the Euro crisis in 2010 it seems to me that it’s been a kind of creeping transformation of the EU that’s taken place as it’s become more German on the one hand and more coercive on the other hand and these two developments are quite closely connected it seems to me. Integration has continued since 2010 there’s been a series of steps in integration that actually would have been unthinkable without the Euro crisis. It’s not as if European integration has ground to a halt on the contrary. However, it seems to me that this integration that has taken place since 2010 has a different quality than previous steps I European integration. In particular, what the steps in European integration since 2010 have meant is essentially the extension of rules and the use of internal conditionality to enforce those rules. As a result of that, it seems to me that the EU has increasingly perceived in the East of Europe and the South of Europe as a vehicle for imposing German preferences on the rest of the continent. A Europe of discipline and punishment is how I think about it.

BOB SEELY MP:

Nicholas Ridby described it during Thatcher era and he was forced to resign. He said it’s a German racket. I don’t think it was at the time. DO you think it is becoming –

HANS KUNDNANI:

I wouldn’t use that term and I for example argue against Germany as a hegemon within the EU. It’s not a hegemon it actually doesn’t have that amount of power but what is certainly the case is that Germany is by far the most powerful country within the EU and is becoming more powerful. And as I say the steps in integration which are taking place to a large extent enable Germany to impose its preferences on others more than it was able to in the past. So I’m thinking particularly of the EU fiscal rules which have been driven from the beginning by Germany and since the Euro crisis began there’s been this kind of ratcheting up of the system of rules and the enforcement of those rules. Because they were perceived to have failed having led to the Euro crisis so the response to that was to tighten them even further. Against that background, multiple overlapping fault lines have opened up within the EU. In particular, between the North and the South on economic issues around the Euro and between East and West around issues on refugee policy. I mean it doesn’t quite work out as neatly as that, but that’s the simple way of thinking about it. North and South and East and West. And it seems to me that those two sets of issues. The economic questions around the euro and the questions around the refugee policy are essentially the two existential issues for the EU. Mainly because they’re the two issues that have driven the rise of Euro scepticism over the last decade or so.

BOB SEELY MP:

What is economic and what is very strong cultural in the sense of indigenous population either being a nowhere or a somewhere.

HANS KUNDNANI:

Exactly, yes. The real problem it seems to me is that there’s now a zero sum game of Euroscepticism. What I mean by that is that what it would take to reduce Euroscepticism in the South of Europe is precisely what would lead to an increase in Euroscepticism in the North of Europe and vice versa. And the same thing works East / West as well. What it would take to reduce Euroscepticism in the West of Europe would increase Euroscepticism in the East and vice versa. So its very difficult to see how you break out of that zero sum game. So Europe’s kind of entrapped as the German political class often put it. However, I’m not predicting the future of Europe, I’m not predicting that the EU is going to break up or even that the Euro is going to break up anytime soon.

There’s such political will behind the European project in general and the project within the project as it were – the Euro – that it seems to me that pro member states or at pro European elites in EU member states will do almost anything to keep the project and this project within the project together. So I don’t think that’s going to happen. What I think is more likely is this transformation that I was outlining at the beginning that the EU becomes more coercive that it becomes increasingly about discipline and punishment. It seems to me that is like to continue and get worse with a corresponding increase in Euroscepticism.

BOB SEELY MP:

Why? Why? Is that simply because of the dynamic between Germany slightly exporting its problems to the South and the South blaming low employment?

HANS KUNDNANI:

Yes, I think so because of German power it seems to me Germanys much less willing to compromise than it was in the past. Sometimes it doesn’t always get its way and sometimes its forced to make concessions. It hasn’t been able to do exactly what it has wanted since 2010. But it’s much less will to make compromises, particularly with France than it used to be. So classically the way European integration worked in the past and this is why I think the EU functioned because you had these grand bargains particularly between France and Germany but also between other EU states. It seems to me Germany is much less willing to do that than it was in the past and so whether you’re talking about economic policy around the euro to issues around refugees but also this whole question of rule of law, the way the EU is in Poland essentially what’s happening is this approach that was developed in the Euro crisis of having a system of rules and then having conditionality to force countries to conform to those rules is sort of gradually being extended. So you see this in these debates around the rule of law. There’s this idea that there would be these advanced conditionality in other words the hope of Poland for example would no longer have access to EU structural funds unless they do what Germany wants on these rule of law questions.

So without getting into the merits of whether these are the right things for Hungary and Poland to be doing are not just as on the Euro. You can argue it both ways, but looking at it objectively it seems to me what’s happening is that Germany is increasingly using the EU as a vehicle to impose its own preferences.

Just a final thought as I say on where Britain fits into this picture because I think this kind of complicated question about the extent to which the concerns that drove Brexit and you make this distinction between economic and cultural and I think both factors play a role in the British debate. There’s an interesting and difficult question to answer I think to the extent to which these concerns are shared in the rest of Europe. In some ways they are and in some ways they aren’t. So we could go through a series of issues and you know discuss in some cases these are things where other EU citizens look at Brexit and understand why this has happened and in some cases not. The point I simply want to make is that I think there’s one issue in particular where the UK is quite exceptional and that’s the whole question of the freedom of Europe which has been central to the debate around membership of the EU and the driving force of Brexit. That interestingly is not something that the concerns around freedom of movement are not something which are shared widely in the rest of the EU. To some extent in France the whole debate around the posted worker’s directive and the polish plumber and so on. There’s some of that in France but nothing comparable to the UK and most other EU states and Germany in particular are not worried about Freedom of Movement at all. So immigration is something which is a concern throughout the EU but actually it seems to me that in most of continental Europe and particularly in Germany the concern is about immigration from outside of the EU not about freedom of movement in other words EU citizens moving from one country to another and I think that’s an interesting way in which Britain’s quite exceptional. What’s behind that I think is another question we can debate. But I think tis quite interesting that actually one way of thinking about this is that actually Brits tend to distinguish less between EU immigrants and non-EU immigrants and another way of thinking about that is white immigrants and non-white immigrants because in practice that’s what it means than other EU member states do. So if you take Germany again, or most of continental Europe they’re perfectly happy for white EU citizens to come and live in Germany in fact they don’t even think of them as immigrants often. They’re very unhappy about Afghans and Syrians and so on coming to Germany that’s the issue that’s really driving the anger about the immigration there. So I think there’s an interesting question there about British exceptionalism and why that is.

BOB SEELY MP:

Funny to hear you say that, you make me feel a bit more Eurosceptic because we’ve sort of slightly forgotten why we either want to stay in the European Union or why we want to leave it because I think the debates become so insular and almost an emotional reaction. You make me think actually this is not a bad time to be leaving. I’m not making that point for a purpose, I know we’re not here to talk about this. Would you like to carry on now? I’m going to sneak out as I just got a text I need to be back in the chamber. You were fascinating so thank you so much.

RT HON GISELA STUART:

And I can very neatly follow on from that. When I said to Bob that he wasn’t perfect because he was only half German I followed this on by saying I’m completely German. But half my family comes from Bavaria which in 1815 were fighting on the side of Napoleon with the French against the Protestants. So I’m also in possession of a geography book copy write 1965 in German which says the British are undoubtedly part of Europe because they’re part of the European continental shelf and that’s kind of part of my problem when we talk about Europe and what administers the European Union and I would quite like to regain the word Europe not just to mean those countries which are part of the European Unions, the Swiss are just as European as any French is so that’s already the confusion. And I think if you want to read a really interesting book it’s called Berlin Rules, publishers always have to find a catchy title. But it’s by a guy called Paul Lever who was our ambassador in Berlin at the time when we were probably at our most outreaching pro-European after the Blair government. And when I got the draft of the book and the publishers said would I like to write a comment I was like oh god another diplomat feeding me, and I read it and there’s not a single word I disagree with. And he kind of explains the question of why the German rulemaking was so much ahead of them and there was a final paragraph in the book is in thirty years’ time we’ll wonder about the decision to leave what all the fuss was about. And I would add to that, in fifty years’ time we will find the decision that we joined in 1973 more remarkable than the decision that we leave in 2016. And the real challenge for Germany now, and that is a serious question, is once you have a single currency you require a sovereign to underwrite the currency. And again if you want a good read, Marvin King’s alchemy. And alchemy is about the power to make money. And the power to create money requires the sovereign nation state to underwrite this. And at some stage the euro countries have to design and either Germany continues to act as though it is sovereign by underwriting all the debts or whether they create a structure so the combination of European Union countries will act as a sovereign but that will also require certain things a great deepening which of course the Brits ever since Maastricht are not going to be part of the single currency. So there’s always been kind of the Brits stepping out and as said the other thing that has changed and it’s important to remember that is that Helmot Core was the last German Chancellor who fully understood the German dominance came at the price that it would be disproportionately generous to small countries. So the presidency, the commission, all those kind of things would be occupied by member states of small countries – why did you give Luxembourg 4 MEPs? And a commissioner? Given the disproportion of size. You’re looking at one commissioner for Germany now and I think 70 MEPs. That imbalance was seen at a price and all those bits are kind of moving and I think the challenges which we are facing. This Euroscepticism it’s not just that it’s the same with the Euro, if you want to address the difficulties of the euro you would have a southern and a northern euro. Except that France would be in the Southern Euro and Germany would be in the Northern Euro and quite frankly if you had France in one currency and Germany in another you just defeated the whole purpose of the project in the first place. And to me, if David Cameron in 2015 had come back and said the European Union recognises that it’s not a two destination that there are some countries that require single currency and you have other countries which won’t have a single currency and they require a different structure and we come up with a framework which accommodates both I would’ve said yeah let’s give this is a try. And I think it is that tension that were seeing played out. On top of that I would argue that all the world war two organisations are absolutely creaking. So we’re just beginning to get to the point where the gap was replaced by (inaudible) which was in a pretty bad state but people are beginning to realise we need to address it. Finance? So for me its flows of goods and services and money and people. Money I think post-2008 they’re beginning to come to terms of actually keeping a global frowns of people. We are just failing left right and centre. You know? The EU responded by outsourcing it to Turkey and saying you know we give you huge amounts of money and you try and control our borders. And that isn’t working and I have a strange suspicion about why A) you’re quite right there is a different attitude towards white and non-white but I also think it’s because we don’t have Identification Cards. And we don’t register. There’s an underlying sense of we’re not quite sure who’s here. And I find the debate at the moment about having to supply for settle status people complaining about that who come from countries where every time you move house you have to go to the town hall to register really kind of weird.

Now where do we go from here? I think there’s another piece of work which James has done about capabilities of countries. And you look at that and this is where I think Britain is so much more at ease of talking to the rest of the world. I remember saying to the German boss of the equivalent of the CBI I said what is it the Brits can do which the Germans can’t? The Brits speak to the world at ease as those it is theirs, and the Brits do think the world is theirs remember we talk about immigrants but when the Brits go abroad you know we’re expats. We need to make this a strength and one of our challenges is the world historically always had to understand the Brits, and the Brits really haven’t quire made enough effort to understand the rest of the world and I think at this stage we have to go out and respond more and genuinely understand the dynamics then that will be good and our real future is a global. This is something which we’ll be good at negotiating how you agree on these rules. Now we’re going this in a climate where you have a President of United States who just takes the light and tears it up and there’s huge challenges and we challenge the Chinese president quire openly now and he says we are committed to one party state and Russia no longer even pretends to wish to be a democracy. And I do think if you believe in democratic structures we’ve got a huge job out there and we also still have serious military capabilities and that we have to use much more wisely with our allies and that’s why nature is under threat the intelligence capability, the data capability is really immense and we have to build on that. Can I hand over to you?

IAN BOND:

Okay thank you very much. Well I’m quite surprised actually, nobody has yet quoted Churchill so I’m going to do it. I thought by now I’d be the third to be quoting him. There is this famous comment he made saying ‘If Britain must choose between Europe and the open sea, she must always choose the open sea.’ And it seems to me that is the guide to a lot of thinking about where Britain should be headed after Brexit on the world stage. I think there are two big problems with using that as a guide to foreign policy strategy in 2019. The first of them is that Churchill said a lot of things in his long life which were not compatible with each other and he said in 1948 speaking at the congress of Europe ‘we cannot aim at anything less than the Union of Europe as a whole and we look forward with confidence to the day when that Union will be achieved.’ So he said a lot of things. He was also negative about some developments in wat ultimately became the (inaudible). The second most important information is that Churchill was talking at a point in 1940 when first of all he was engaged in a row with (inaudible) which shaped both his language and his thinking but also at a time when most of the continent of Europe was occupied by Hitler and his allies and the British Empire and our allies in North America were on the far side of the seas. So it made a certain amount of sense for choosing the open sea. Now the strategic position that we find ourselves in today is extremely different. First of all, pretty obviously, we no longer have an empire. We have a commonwealth but even the populous countries within the commonwealth like India and Nigeria are not necessarily looking towards us for leadership and they have in many cases a different experience and a different mind-set when it comes to looking back to that period of our history. Second, Europe while they may not be whole free and at peace like we have been trying to make it since the end of the Cold War is nonetheless closer to that longstanding EU and NATO aim than it has been in most of its history. We have 26 NATO allies in Europe, to whom we will be bound by treaty obligations after Brexit regardless of what happens. And we have important defence and security relationships with anther European countries outside NATO and assuming that Bob and his colleagues don’t do too much damage to the future relationship, I would expect that the EU would continue to be our largest single economic partner for quite a long time to come.

The third factor in the strategic position of the UK is, here I do agree with Gisella, is Donald Trump. And the presidency of Trump. Trump is no fan of alliances, and he has shown that he can pivot from loving you to hating you and back again faster than the time it takes to say Robert Muller. And I don’t think that reliance on the relationship we have had for many years with the US is at the moment a good base for our future approach to the world and our foreign policy. I also think we need to be much more attentive to our neighbourhood I mean I’ve heard the argument that in affect we can now go out and go onto the open seas and we can – as Bob was suggesting – we don’t need to be a continental European power any longer we can sub-contract that. I’m not quite sure who’s going to do that job if we are not involved. It doesn’t seem to me self-evident that Germany wants the job even if we wanted Germany to take the job I’m not sure that even France and Germany together in the current state of affairs, military would be capable would be taking on that job. And I have just come back from a trip to Eastern Europe and even staunchly officials are seriously concerned that they can no longer rely on the US to turn up in a crisis. In those circumstances, it seems to me to be folly to think that the UK can withdraw itself from the continent of Europe and its strategic affairs. I think the Russian threat is growing and that’s something that we have to take very seriously, and I think that we face the problems indeed of migration driven by various crises in the Middle East and North Africa. And these crises are not going to stay away from our shoreline just because we decide we’re not going to do anything on the continent of Europe. The dinghy’s that came across the English Channel around Christmas time were a bit of a phoney crisis but I’m not sure they are the end of the problems that we face. I think there are good reasons for us to be engaged also on European southern frontiers.

Now I am not against going out into the wider world I think its an excellent thing for the UK and indeed other European countries ideally on a rotational basis to carry out freedom of navigation operations in the South China Sea to underline importance that we attach to the law of the sea and to freedom of navigation. I think it’s important that we continue to engage in the gold of Aiden and the horn of Africa. And to work on issues in the Sahil again, the French and other allies. But I don’t think that most of these things should be our top priority. It does seem to me that there’s a time when our resources are quite constrained. We have to prioritise sending out our aircraft carrier is good gesture politics. But the real question for me is do we have the navy we need to defend the green of Iceland and the UK gap as we had to in the Cold War? Do we have the forces to be able to provide a convincing deterrent in central and Eastern Europe if we need it? And if the answers to those questions are no – and I think they are no – then I don’t think we should be fiddling around in the South China Sea as a priority. And I think I’ll leave it there.

RT HON GISEL STUART:

Thank you. James over to you.

JAMES ROGERS:

Well perhaps I may offer the alternative perspective, but I would argue that the UK is not going to cease to be a European power nor is it going to cease to be committed to its own neighbourhood. After all, that neighbourhood is our neighbourhood and personally I had a vested interest because my partner is Estonian and I have a house in Estonia and a family. So I have lived in Estonia for a while, I have my own personal interest there which I would like to see upheld. And I don’t necessarily think that Brexit is about leaving Europe. I think what it is about is embroidering our horizons and engaging more forcefully in the wider world and also coming to terms with some illusions and fantasies that we have told ourselves over the last twenty to thirty, if not longer, years. The point I want to make is Brexit comes at an extremely volatile time. The research in Russia and China means that Europe is more challenged than in many, many years and this is casting away some of the illusions that we’ve been harbouring for the past twenty years. Because whereas we’ve had a number of security threats in the past in the 1990s and 2000s in particular, we’re beginning to face again profound strategic challenges and we don’t necessarily have the means to address them. And I would argue we don’t have the culture to address them. Now the argument that’s been had recently, particularly in the context of Brexit and the UK, is that the European Union is somehow uniquely responsible for European peace. And I think this is a fantasy. And I think this is a fantasy for the following reasons. And to some extent it was alluded to earlier but to understand the role that the Europeans play you also have to understand the role that NATO has played and in order to understand the role that NATO has plated you’ve got to understand the role that both Britain and the United States have played. And the way in which the changing dynamics on the mainland and the rise of Germany and the rise of Russia in the last century altered Britain’s strategic orientation and drew it away from the wider world and drew it into Europe and it became a content in European power in the way that to an extent that Germany, France or Russia too. This profound contraption of Britain’s global orientation and a focusing on the European mainland. So in a way NATO and the UK provided the shell with the United States and inside was the yolk that’s not to stay that the European Union has stopped European yolk and European integration didn’t play a role in helping to promote democracy in Europe after the Cold War and also to improve the economic foundation that allowed European countries to invest in their armed forces particularly in Western Europe. But overall it was ultimately by actions that were beyond the European continent and provided the strategic security that was required for European integration to prosper. Now this didn’t seem to be an alien idea even in the 1990s if you look at some of the books that were written at the time by many different people this was a commonly held view, but it seems that in recent years particularly since Brexit we’ve lost the understanding of this idea and the European Union had been constructed as some kind of great peace force across the European continent. And to some extent its take to a bizarre direction where people say that Europe is now at peace forgetting of course that there is still a war being fought in parts of Ukraine and a broader stabilisation is enforced by Russia and increasingly by China which is reaching across the Eurasian land mass and around it. Coming closer to our back yard.

So what does this mean? Well, in so far as we are now undergoing this profound strategic shift and we can already see how it is emerging because the centre of economic gravity has moved over the North Atlantic and it is now hovering somewhere over Central Asia and in another twenty to thirty years its likely to hover over the Pacific Ocean, because China, India are growing very rapidly. So the centre of economic gravity is moving into the Indo-Pacific region and the centre of strategic gravity is beginning to follow it. So what does that mean? It means that the United States is going to become increasingly invested and involved in the Pacific region and it’s going to mean that its role in NATO and its role in Europe is going to become supplemental to its broader strategic interest in the context of China’s rise and all the changes that’s going to produce in the Pacific and indeed the Indo-Pacific region. So you might say, and I think that’s the argument that Ian is perhaps making, that the UK should become increasingly a European power on the right European defence while the US draws increasingly in the Indo-Pacific region. And to most extent I agree with that but I would say what we have to do it more selectively. Not become involved in the strategic in the conventional European security because we have a number of allies in NATO that can do a lot more and its becoming increasingly aware that countries who are very wealthy and have very large budget surpluses – particularly Germany, Mr Trump is not wrong to highlight that problem. Italy, Germany, Spain, the Netherlands, Belgium, Denmark, Norway – all of these countries are extremely wealthy and they can invest a lot more of their money into their armed forces and into their own defence. Now one of the interesting things that has occurred over the last two years is since the commitment in 2015 that all the NATO members had to move their defence spending closer to the centre of GDP and to the improve the efficiency of spending. Now the countries that have actually succeeded in doing that are the Baltic states which have a level of income which is about the level of Germany. Poland, Romania, countries in Eastern Europe. Now you might say that those countries are more exposed to the threat from Russia and therefore they should take the Lion’s share of the burden. But we know that’s not necessarily the case because there is also a challenge coming from the underbelly of Europe – from Italy, Greece and to Spain which also draws on NATO’s and European countries’ resources. And yet those countries and Germany in particular which is also to some extent under threat from Russia particularly if something were to go wrong in Eastern Europe. These countries are not existing adequately in their own defence. So the UK, if its going to play a role in Europe it has to spend more on its armed forces so it can provide the strategic results to undergo the defence of Europe by nuclear resources and to some extent conventional resources to deploy that nuclear threat. But at the same time it can also play a role in places like France in upholding the security of Europe more broadly overseas in the Indo-Pacific region where it also has interest and overseas territories and also supporting its other broader allies within Australia, New Zealand, Canada, the United States in future generations in Japan and increasingly perhaps in India. So what we need to see is an understanding that the Pacific increasing is not mutually exclusive and actually our interests are going to be drawn in both simultaneously but in slightly different ways.

So that means we need to come to terms with that and inform put European allies of that fact and inform them that they have to do more to ensure their own defence because if they don’t do it we won’t be able to at all. So if Global Britain is to mean anything at all its going to mean a country which upholds the rules they order when it’s under increasing threat which also manifests the ability to do that and to ensure that it truly understands the world and what is happening in the world and how to address the different components.

So to sum up, if I were the leader of a European country on the European mainland, I’d be very careful of my actions over the coming months because if you alienate the British people they may become increasingly willing to look elsewhere. So it’s a very delicate time and I think we need to handle it much more carefully. And I think that applies to Britain as much as it applies to our friends on the European mainland and of course to some extent Mr Trump in the United States.

RT HON GISELA STUART:

Well thank you very much, James. And I just want to add three very quick observations. One was the post-world war settlement was that the common market would provide economic stability and NATO would provide the military stability and we tend to forget that the two were always meant to be closely linked. The second one was British policy always has been it wasn’t too much continental power it was that it wasn’t British policy that should dominate the continent of Europe. That was the thing that the Brits has never written up. And most recently, the one thing I found absolutely staggering that we could have defence reviews which did not start with a sentence ‘We are an island’ I mean I would have thought that any defence reviews would have started well the navy is existential, the air force is one do we think there is a threat from there and the army is on the British Isles and that to what extent do we want to intervene. And the challenge that’s coming our way now is there’s some things that we’ve got to focus which really are important. And what has happened over the last ten, fifteen years is everybody has been able to hide behind everyone else. So every European defence thing was smarter procurement, we’re not going to increase spending but we’ll be much more coordinated. We’re going to have a rapid reaction force. 50,000 rapid reaction forces have existed since 2003. So I think this is kind of forcing us and I remember going to the states years ago when the Brits were going on about the 2% NATO spending and at that stage even the Americans were saying oh we’re not too fussed about 2% of GDP it was a condition of joining. So I think there’s a bit of waking up happening everywhere which is good.

So can we take some questions? And if you want to pick on a particular member of the panel say so and I start on my right, young man if you tell us who you are

AUDIENCE MAN:

Gary Thomas. Britain has fought a number of conflicts in the region. These conflicts while being justified in the wake of the 9/11 attacks have been disastrous but not been successful strategically. They have degraded Britain’s armed forces and made it very difficult for people to understand conflict. Difficult to understand what defence is. It also made it very difficult for the British armed force to be rolled into what I think I’ll probably have to be territorial defence of the continent with capabilities which will probably never really involved major land, large-scale operations overseas not suggesting that there could be some land operation which would probably involve support and special forces maybe something by the UN.

RT HON GISELA STUART:

And what’s your question?

AUDIENCE MAN:

Should British armed forces give up on expedition conflict and focus more on defending Europe to make up for the fact that Britain has left the EU and is devoid of let’s say soft political influence? Of course given problems Europeans have politically with their currency you might regard it as a good thing.

RT HON GISELA STUART:

Okay let’s take two more and then take them in three. Gentleman in the front.

AUDIENCE MAN:

(inaudible)

RT HON GISELA STUART:

Okay thank you, gentleman in the blue shirt.

AUDIENCE MAN:

A lot of talk about NATO. When NATO was formed it had a common enemy which was Russia. Russia is not the power it was before. In fact, it has had major financial problems, a dropping birth rate. The European is always talking about forming its own army at some point in time all of these thing is going to have to come together, but there’s no wool in Europe to defend themselves. Maybe just comment on how you feel about that European army and a lack of an enemy in a way.

RT HON GISELA STUART:

Okay, James shall I start with you and then we’ll work our way through not least because I’m sure you’ve got something to say about Russia and its capabilities.

JAMES ROGERS:

Yeah. Should we continue with expeditionary warfare? Well whether or not we should continue tight it is a question that’s more political. There will always be problems that we might feel we want to address. But I think we need to maintain the need to understand the warfare. We are as Gisela said, an island, and almost anything we do will be expeditionary to get away from our shores even to fight a war on the Eastern flank of NATO or anywhere really would be an expeditionary conflict. Now what we should be doing is harden our points around the worlds surface and use those as points from which we can dissuade so we don’t actually need to go to war. But in order to do that you do obviously need to keep a expeditionary strength in network and reach specific points and that’s what we’re trying to do I think increasingly in the Indo-Pacific region and you’ve probably heard recently that there’s the idea we should build or increase our military presence in the South East Asian region even in Singapore where we already have a small logistical facility and also in Brunei. But also increasingly along the East flank of NATO we have troops deployed in Estonia, in a town called Tapa and periodically in Romania in Lithuania as well for jets. So we have to maintain the ability to do that. The other point I would like to address is the issue of does NATO have a common enemy? Well I think it was set up in the late 1940s and last year was the 70th anniversary of the founding of its predecessor the Western Union Defence Organisation that sort of merged into NATO and that was set up primarily by the British in conjunction with the French and the other countries and it then drew in the US and the Canadians and it became a much broader North Atlantic thing. It was NATO’s responsibility to keep the Germans down, the Americans in and the Russians out. So NATO wasn’t founded only to keep the Russians out, but it also had an internal dissuasion context to stop and prevent another country within the alliance from actually causing further trouble so NATO doesn’t necessarily need a common enemy to remain important.

Now the threat from Russia, I don’t think its necessarily huge. Russia doesn’t necessarily have a lot of resources than the Soviet Union, and that’s something we also forget. Remember that Russia’s economy is about half the size of our own. So that’s far removed from the Soviet Union which loomed together. So I think we need to put that into perspective and understand that actually if anything the reason that Russia is so strong is because we’ve allowed ourselves to become so weak. And also because we’ve failed to manifest the strategic culture necessary to prevent Russia from becoming the threat that it is. And finally the issue of the European army, I think that is largely a distraction. I don’t think anyone is planning to build a European army anytime soon because in order to build a European army you would need to increase your defence spending somewhat above 2% of GDP.

RT HON GISELA STUART:

Ian, and can you also address the question of does it have to be Europe or global?

IAN BOND:

I mean I think if you’ve been in business you do have to make choices if you’ve got limited resources. We cannot aim for anything less than the Union of Europe as a whole and we look forward with confidence to the day when that Union will be achieved. So he said a lot of things. He was also negative about some developments about what ultimately became the EUC. The second and more important problem is that Churchill was talking at a point in 1940 when he was engaged in a row with Charles Dego which shaped both his language and his thinking but also at a time when most of the continent of Europe was occupied by Hitler and his allies. And the British Empire and our allies in North America were on the far side of the seas. So it made a certain amount of sense to think in terms of choosing the open sea. Now the strategic position we find ourselves in today is extremely different. First of all pretty obviously we no longer have an empire, we have a commonwealth but even the populous countries within the commonwealth like India and Nigeria are not necessarily looking towards us for leadership and they have in many cases a different experience and a different mind set when it comes to looking back to that period of our history.
Second, Europe while they might not quite be whole free and at peace as we make it since the end of the war is not closer to that long standing EU and NATO aim than it has been in most of its history. We have 26 NATO allies in Europe to whom we will still be bound by treaty obligations after Brexit regardless of what happens and we have defence and security relationships with a number of other European countries outside NATO and assuming that Bob and his colleagues don’t do too damage I would expect that the EU will continue to be our largest single economically.

RT HON GISELA STUART:

I would really to ask some women to ask a question please! Have we got any? No takers. Gentleman at the back, grey hair. Yes, you, and then we get to the gentleman at the front.

AUDIENCE MAN:

Thank you very much, Euan Grant, Institute for Statecraft. I’ve worked in European commissions (bell rings / inaudible)

RT HON GISELA STUART:

Okay thank you, gentleman there.

AUDIENCE MAN:

(bell rings / inaudible) the increasing dominance of Germany within the EU. Has that left less of a role for Britain to play in Europe? A leadership role that it would like to play. And I’m going to point particularly to the financial crisis since 2010 not coincidentally the German banks are the largest holders of Greek bonds so they intervened and then secondly Angela Markel’s invitation to bring undocumented migrants into Europe without consulting any of the bodies of the EU, not the council, not the commission, not the Parliament, not even her own Parliament. So in a way, the second act in particular they bare an act of what the EU really is. It is not a club of equals. And when a very important decision like that had to be made the big player could do it and then turn around to those who had no say in the decision and force quotas on them and impose fines if they didn’t accept the quotas. So I mean it is pulling its weight more and more and using coercion as you said. And does this really leave a role for Britain that we would want to play within the EU?

RT HON GISELA STUART:

Okay, gentleman there.

AUDIENCE MAN:

Yes if you talk to people in the EU they can’t understand why we’re actually leaving. They think it’s absolutely crazy you know it’s a bit like being a trade union and you do far better than trying to negotiate with your employer on a one to one basis. But there seems to be incredible hostility talking to people against the EU. I talk to people after yesterday, what in my Brexiteer friends and I asked them would you still vote the same way as you did in a referendum? And I say yes. It’s a complete mess but if we’d had someone like Boris Johnson or Jacob Reesemorg –

RT HON GISELA STUART:

I really don’t think we should read round the referendum, I mean can we sort of focus on Global Britain is there a particular question you’ve got sir?

AUDIENCE MAN:

Yes, is Britain going to be weakened after we leave the EU? Is Russia going to be –

RT HON GISELA STUART:

Let’s just not go there, we’re not rerunning the referendum please! Hans would you like to start?

HANS KUNDNANI:

Yes, so I guess I’ll take question on Germany’s role in Europe that you asked Douglas. It’s a great question but it’s quite difficult to answer in a short way and I don’t think there’s a definitive answer to this sort of question of how the shifting dynamics of the EU and how Britain fits into that and so on. My take on it is the following, that essentially part of the reason the EU worked in the past is because there was a certain type of balance in EU member states. In particular, between France and Germany. It’s quite interesting when you look back at the history between European integration the moment at which the French attitude towards Britain joining the European Economic Community changes seems to me is when the balance of power between France and Germany shifts actually. Germany’s becoming economically more powerful, it’s also coming out of this immediate post-war period where it’s been rehabilitated and so on. And so one theory about why the French attitude basically shifts is basically from De Gal to Pompidou is that France actually needs the UK to balance against Germany. So then you have this kind of balance against the three which works quite well. One of the ways is the questions around strategic culture because you know France and the UK are actually closer in that respect than Germany and France are even though Germany and France are closer in many other ways. So it’s this kind of complicated dynamic that works quite well. What I think has happened is that essentially at some point during the 30-year period, 25-year period since the end of the Cold War is that that balance has all gone. And I think the thing that triggers it is German unification which then leads to the creation of the Euro which on the one hand amplifies German power relative to France but the other thing is because Britain can’t join it actually Britain becomes quite marginalised already within the EU. It’s not so much Brexit, its these earlier choices which I would actually defend and now you can see the problems within those European problems creates. But the fact that Britain chose to opt out meant it was already marginalised.

I’m not sure what the solution is to that, but I think that’s really the story.

RT HON GISELA STUART:

Ian.

IAN BOND:

The question of a military security culture Euan is an interesting one. I don’t think that there is a Pan-European military security culture developing yet. There are I think some regional ones. What’s interesting for me is that if you look at what the EU is doing in terms of increased defence cooperation the parts that look most promising are in the defence industrial area. And what I found quite interesting talking to people at NATO is that they find it quite easy to talk to the commission about some of these things. So there is a common culture there in a way in terms of trying to find more efficient ways of procuring and building capabilities across European countries. But in terms of the general strategic culture I think there’s still a big gap between Portugal and Poland. On the question of whether we’re going to be weakened, I’m afraid we are. I mean on any projection even if we get a very close trade relationship our economy is going to be smaller in ten years’ time than it would otherwise be and that means we will have fewer resources to invest in our foreign and defence policy. I have yet to meet a representative of any country who thinks they will take the UK more seriously because we are outside the EU. The question they all ask including the other side of the Atlantic is what the hell do you think you’re playing at? So I’m afraid it’s not good news and it’s probably no coincidence that there are only two world leaders that have spoken up in favour of Brexit and that’s Putin and Trump. And I would not like to speculate on who gave Trump his speaking notes.

JAMES ROGERS:

I’m going to have to respond to that. And I think that’s an interesting comment you make at the end. Because in some ways I think Putin and Trump are normal. And you might look at me and you might think how on earth can you possibly think that? I actually think it’s us that have become abnormal in a way. Because we’ve become mesmerised by these fantasies that the old traditional geopolitics that has defined the world and has done for the past 2000, 3000 years is suddenly just sort of going to be wiped away by globalisation. The world has become flat. We’re at the end of history in an ideological sense not a sense of all countries becoming democratic and liberal. Actually I think that Trump and Putin represent the future, and that’s the problem that the EU’s going to have to confront and I know that sounds terrible but if you actually look at the state of the world and you look at how it was in let’s say 1999. Even with 9/11 and all the terrible things that occurred after that, the level of democracy and the number of democracies in the world has been steadily declining for the past ten to fifteen years. In some respects, the world has become less globalised, there is strategic competition breaking out in the South China Sea and in parts of Eastern Europe and Southern Europe. I think they’re only getting off the ground, the seeds are being planted.

So, there was an article written about ten years ago I think in 2008 and it was called the Hapsburg. And the idea was the European Union has roughly ten years to get its act together. It will become a federal state and it will be able to react to China, Russia as a n equal. Or it will become a very flabby ineffective empire with all sorts of internal competing problems being pulled apart by external powers. It won’t have the means to protect itself. That’s the kind of world we’re moving in to, and I don’t like it. I think it’s much better to be a strong cohesive nation state that is able to act with the world as an equal. The UK despite being a small island is a very resourceful island and historically this hasn’t been the case in power when it needs to and that creates a culture of self-dependence. I think the UK in ten years’ time will actually be in a better economic position than most European countries.

RT HON GISELA STUART:

I mean something very interesting has happened that the progressive has become incredibly nostalgic and the so called reactionaries are looking ahead towards the future which is a kind of weird thing. But can I must add also something because I don’t think any of us have really addressed this question about Statecraft. I said the most interesting in the Joe Johnson resignation letter was that he said that it was an abysmal failure of Statecraft and I know Chris Donnelly’s been going on about it. Statecraft really is lacking.

Okay three more, gentleman in the almost very back. And after that I get the gentleman I thought I meant. Okay.

AUDIENCE MAN:

(inaudible)

RT HON GISELA STUART:

The government has just survived a majority of 19! Sorry continue.

 AUDIENCE MAN:

(inaudible)

RT HON GISELA STUART:

Thank you. Gentleman.

AUDIENCE MAN:

Thanks. There’s some very interesting ideas (inaudible) you have to be very careful of reinventing those imperial fantasies of the past. Are we sure we have that capacity? (inaudible) Do you have some concrete ideas for who may run the country?

RT HON GISELA STUART:

I think we have time for one more. Gentleman yes.

AUDIENCE MAN:

(inaudible) former conservative party candidate. My question is you’ve talked about NATO, you’ve talked about reason of Brexit but you haven’t touched upon the (inaudible) both in Estonia and in India. The next generation are not learning Russian as a second language, they’re learning English. DO you think our global soft power has a role to play?

RT HON GISELA STUART:

Shall we just take two more questions and then we take five together in the last round. Gentleman there, yes.

AUDIENCE MAN:

Thank you very much, (inaudible) Japanese Journalist. My question to Hans, what do you think America end game in Brexit? (inaudible)

RT HON GISELA STUART:

Last question, who’s having the last question? Gentleman in the blue jumper.

AUDIENCE MAN:

I just wanted to ask what the panel thought of the relationship between Germany and Russia and their impending stream dependence for gas.

RT HON GISELA STUART:

Right, that’s a good final set and I start with Ian this time.

IAN BOND:

Great, I’m not sure I’m going to be able to answer all of them but I’ll have a go. I agree that the 2% target is not supposed to be a floor in effect but yes it does not work that way. Many countries particularly in central and eastern Europe are getting closer to it but I think it would be unfair to Poland in particular to say they are not pulling their weight on defence although they did not go expeditionary like the others. Czech Republic and Hungary are somewhat rather weaker but it’s a mixed picture. In terms of the specific question to me of how does a post-Brexit government deal with this weakness I mean I think we have to put quite a lot of our chips on NATO to the extent that NATO is in trouble because of Trump. I think in a way those countries within NATO that take collected defence seriously including the UK are going to have to resign themselves for the next couple of years at least to trying to do more to demonstrate to Trump that they are pulling their weight. Within the EU this is all still to play for, we’re arguing about the withdrawal agreement but we haven’t even started the negotiations on the future relationship. And I think in the defence and security area most of the capabilities of other European countries, and indeed if you look in the justice and home affairs areas most of the other countries haven’t really started to get engaged in thinking about what value the UK brings in the defence and counter-terrorism law enforcement co-operation areas. It’s important for us to keep selling. I don’t think there’s much to be done with the OSC. I mean I served at the OSC, I think the principles are excellent but they’re not enforceable in a consensus based organisation and it was bad enough dealing with the Russians in the early 2000s when I was there its two times worse now and the OSC is effectively I’m sorry to say paralysed and I just don’t see the council of Europe has the political security function that would enable us to shape the European environment in any way through our membership of it. I worry more that a conservative government might in fact decide to withdraw from it.

RT HON GISELA STUART:

James

JAMES ROGERS:

Yeah I agree on the 2% of GDP thing as well, and I think it’s important to point out we agreed this informally in 2006 I think after NATO summit in Uighur and it was considered to be a peacetime defence the minimum required and allow some modernisation towards expeditionary operations. Now in the Cold War, the normal level of spending was between 4-5% of GDP. That was considered normal. And yet we considered that to be almost impossible. Well I’m afraid we’re going to have to change because the world is going to become bleaker and more unpleasant and we’re going to have to adapt to it. And if we look at that amount of spending in the European context. I mean if you take the 2% of underspending there is, I think it was between 2012 and 2016 450billion USD, nearly half a trillion dollars of money that was not invested into the armed forces. Now that’s probably not having an effect yet but it will have an effect five years down the line or ten years down the line unless additional funding isn’t put in now. So we need to become much more robust with our European allies in order to get them to increase their spending so we don’t have to do it ourselves. Particularly when there are other threats and challenges emerging elsewhere in the world we need to deal with.

Now that brings me to the issue of global projection. I don’t think there’s anything at all imperial about Brexit. I think this is a profound slur and a mistake. From my personal perspective, the British Empire was largely disruptive in the long run of the UK itself. It turned from a nation of innovators and economists and wheeler dealers into a nation of militarists. It had some very positive sides and it had some very negative sides of course like anything. But I don’t think this has anything to do with empire or imperialism. I think this is much more about what it feels compatible with and also connected albeit indirectly with the changing strategic issues in the world which always filter down into the political space. So I think this is something we will either succeed in or something we will fail in. And if we fail we’ll probably fail as a country. That’s quite negative I know but I think its nevertheless the truth.

RT HON GISELA STUART:

Not to talk about the cuts to the world service. Last one is with you Hans and could you address, we want you to overrun we let you overrun, could you address the gas pipeline.

HANS KUNDNANI:

I’ll take the question from the back there, I didn’t catch the gentleman’s name. Maybe very quickly on this point about Brexit as a kind of expression of Imperialism nostalgia, I mean I have to say I do agree with James that this idea that somehow Brexit, Global Britain expressed this neo-global aspiration I think is really simplistic. There’s a really good piece on the Prospect website at the moment by an academic who explores the role that the collective memory plays in British debate and he kind of shows that its everywhere and nowhere at the same time. If you’re going to make the argument that it’s on the Leave side of the campaign you can equally make the argument that it’s on the Remain side. So particularly this sort of idea that pro-Europeans constantly make which is that the EU is an influence amplifier. It helps us to punch above our weight and to shake the world of the 21st century. I mean there’s an imperial sort of idea at the back of that somewhere too. The idea that we must continue to play this outsized role for a country our size. In fact, John Redwood accused me precisely of this sort of essentially not having gotten over the loss of Empire because I wanted Britain to stay in the EU. So I think this is a lot more complex than a lot of Remainers want to suggest, just associating this with the Leave side of the campaign. Anyway, that’s not the discussion. The whole question of this struggle within the EU between integrationists and non-integrationists, I think it’s even more complicated than that. I said yes because what I thought you were saying is there’s actually a conflict between the integrationists which I think is the reality too. There was a battle between those who want to integrate further and those who don’t and potentially who want to disintegrate. But there’s also a battle in a way between Markel and Macron between two different visions of integration. The argument about the euro crisis is not really about do we integrate or not it’s about how do we integrate. Is further integration just a matter of strengthening the enforcement of German rules? Or is it creating a policy space at the EU level? So you could actually be much more creative in terms of policy. So I think it’s even more complicated than that. And one wat of thinking about this is that in the run up to the European parliament elections in May I think there’s a three-way battle going on. Its often thought there’s a battle between the pro-Europeans and the euro sceptics embodied by Markel stroke Macron on one hand and Victor Aubin on the other hand but as I say there is also this battle between Markel’s vision of the euro and Macron’s vision of the euro. I think a three-way battle going on its very complicated geometry there.

That brings me to your question about what Markel’s end game is in Brexit and I think essentially it is the status quo I don’t think there’s anything mysterious nor a huge amount of strategy behind it either. It’s simply that the EU as it currently stands works for Germany and it doesn’t want it to change. So I think actually the historic shift since the German reunification is simply Germany was once a country that wanted to go much further. So there are some areas in which Germany wants to integrate further, in particular on refugee policy and security policy because there Germany needs solidarity from other EU countries asking for something on these economic policies. So I think actually Germany it talks a very good game but I think it does what every EU member state has always done which is to essentially pursue its own national interests. And what that means in terms of European integration is to pursue integration in areas where you stand to gain something and to maintain national sovereignty in areas where you don’t gain anything and where you potentially have to give something. I mean it’s a fairly standard, what pro-Europeans would call cherry picking, you can have your cake and eat.

RT HON GISELA STUART:

The gas pipeline!

HANS KUNDNANI:

Oh, Nordstream! Yes, what was the question?

RT HON GISELA STUART:

Yes, well in these Germany press cuttings because I still get them, there’s this outrage because the American ambassador to Berlin essentially spelt out some very uncomfortable home truths about the dependency in Russia and they were saying well we may not like that the American ambassador said it but you know but he has a point.

IAN BOND:

Do you want me to say something as well? Okay, I mean first all one shouldn’t overdo it. Germany has many other sources of energy if it needs them. For me the question is always ‘is Russia going to be a monopoly supplier?’ and the answer is still no. And to a certain extent the size of the German market also gives Germany a certain amount of leverage in the other direction and the Russian budget depends so heavily on hydrocarbons and the taxes on hydrocarbons. That you know it would be quite a problem if they lost the German market. But I think the key thing is that both at the German level and at the European level the competitive market. Now the USA LNG is a very good thing, but at the moment the Americans cannot produce and ship it to Europe for the price the Russians can put in their pipeline wherever and turn it on in Germany. So I mean I do see Nordstream as a largely political project I would rather it not going to be built but if it is built I don’t see it as the end of the world.

RT HON GISELA STUART:

Okay thank you to the panel and to Bob, well done!

HJS



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