The sinews of peace in the 21st century

Remarks to Chatham House, Thursday 8 June 2023 It's an honour to join your panel this evening on whether the UK can afford 'global Britain' and let me commend Chatham House for bringing us together.

A long-term consensus on British foreign policy

You have a key role to play in forging something we've lost in British politics which we must urgently rediscover: a long-term consensus on British foreign policy after a decade of trashing our relationships with our closest allies.

Largely - but not exclusively - from the right, the Brexiteers were hell-bent on harming relations with Europe. But on the left, the Corbyn years sought to rubbish our relations with America.

We now have to move beyond this decade of division, and as David Lammy set out in his superb Fabian pamphlet, Reconnect Britain.

So, what I thought I'd offer tonight are some reflections from 120,000 miles on the road over the last year, from colleagues I admire and opponents I respect, to set down what I think could be the beginnings of a new centre-ground in foreign policy.

The starting point for this debate must be Lord Patten's summary last week: “The truth is' he told Question Time, we’re in one hell of a mess”

The worst hit living standards since records began. The highest peacetime tax burden. The worst growth in the G7. Two trillion pounds of national debt.

These are gigantic problems. But for a small open economy, a better foreign policy is 100% part of the answer.

So, what’s needed now is not some post-colonial comfort blanket that we somehow punch above our weight.

What’s needed is a foreign policy that will genuinely transform our prosperity and security at home by transforming our influence abroad - and that starts not with the ‘rules based order’ - but the ‘rights based’ order.

The Rights-Based Order

It is a truism that we can't be strong abroad unless we're strong at home.

But the inconvenient truth is that around the world, in the decade before Covid, economic and productivity growth was on average faster in countries that were politically less free than the West.

So, if we and our allies want to lead the Rules-based Order, we have to make sure that the rights-based order is a strong as it can be.

And that means we must transform what Churchill called the 'sinews of peace', for these new times - the sinews between those nations that share a tradition we can trace from the Magna Carta to the Bill of Rights to the American Declaration of Independence, to the European Convention on Human Rights. These are traditions which we see enshrined in the constitutions of our allies like Japan, Australia and India. Traditions which we must show are the surest safest route to a better life.

It seems to me there are three ways where we need to urgently deepen our alliances with both the EU and the United States – and that means joining the new consensus set out clearly by Jake Sullivan last month and recognise that we now live in a world where non-market economies like Russia, but crucially like China, are now integrated into the global economy in a way that is very, very hard to reverse.

Over the last thirty years, we've driven out inefficiencies from supply chains - but we've also driven out the resilience from supply chains. And the market alone will not fix this.

Now we could ‘decouple’ - but let's be clear that the IMF warns full technological decoupling would knock 8-12% off global growth just at the time that global growth rates are set to fall to the lowest level since the fall of the Berlin Wall.

So rather than decouple we should recapitalise the commanding heights of the 21st century economy - in energy, rocks and tech - safe in the knowledge that in the long run it's innovation that accounts for 85% of economic growth and as Eric Schmidt once put it technology is always the 'power in superpower'.

If we then combine this investment with the business of building a genuine ‘friend-shore’ amongst the economies of the AUKUS, NATO, NAFTA, the EU, and the Quad (or Quint if we include Korea) - the ANNEQ if you like - we connect economies worth almost two-thirds of global GDP - around $61 trillion (the size of the world economy in 2012).

Right now, Britain is both caught between and shut out of America's Inflation Reduction Act and the EU's Green Deal Industrial Plan which together withe the respective CHIPS Acts, pours almost $1.5 trillion into new industries.

We are shut out of the EU-US Trade and Technology Council, the Horizon Programme, and the US-EU dialogue on economic and national security.

This is a very, very perilous economic position and we won't escape this narrow ledge above the economic abyss until we recognise that abandoning the new industrial policy commenced by Gordon Brown and cemented by Theresa May was a critical error.

Yet, if we follow our allies' lead - and adopt what Rachel Reeves has christened ‘Securonomics’ - we could create an economic powerhouse at the core of the ‘rights based’ order around:

1. Defence procurement

2. Critical supply chains

3. Critical minerals

Now, in defence, we have some important new foundations with AUKUS and the Tempest fighter deal with Japan and Italy. But global defence spending is rising by $2-700 billion a year. Better coordination could deepen our connections and deal with absurd inefficiencies - like Europe’s 15 different types of tank or the 20 different types of fighter jets.We should work together to fix this with new partnerships to rearm for a more dangerous world together.

Second, we must find a way into the EU-US dialogue on economic and national security announced by Presidents von der Leyen and Biden in March. We should use this to coordinate de-risking supply chains and negative lists on investment from companies - and countries - that are a strategic risk. Last year, the Carnegie Institute recently produced a superb framework for doing exactly this.

Third, this task will not be complete without radically deepening our cooperation in critical minerals, for the simple reason that over 3 billion tons of minerals and metals will be needed to deploy the wind, solar and geothermal power, as well as energy storage, required for achieving a below 2°C future - and mining this will take an incredible $1.7 trillion in global mining investment.

Yet, today it’s impossible for the UK to define a critical minerals strategy because we haven't yet defined our critical supply chains.

So: defence procurement, critical supply chains and critical minerals are vital fields of collaboration if we want a strong rights-based order.

Soft Power in the Rules Based Order

The next piece of the puzzle then is the world beyond the rights-based family who of course we hope will follow the power of our example.

Ultimately a world of trade is built on a world of trust - so we cannot expect to make progress with merely the narrow mercantilism that characterises so much of UK foreign policy today.

If we want to maxmise that trust, we have to maximise our soft power amongst those nations who simply will not pick a side in the decade ahead. Here too, there are three things we can do.

First, there is development assistance.

The reckless and rash cuts to the aid budget of recent years have deeply damaged our reputation around the world - just at the moment when, [as I've spelt out elsewhere], the developing world's now faces seven giants blocking the road to the SDG's and the Paris climate change agreement: Extreme Poverty, Hunger, Disease, Lost Learning, Conflict, Debt, and Climate Change.

We have to lean into the Bridgetown Initiative hard and deliver a transformation in the scale of development assistance from billions to the trillions of dollars.

The UK could transform its leadership of these debates by matching Japan's agreement to share 40% of our new IMF Special Drawing Rights's, by recycling the 3.5 billion Euros we get back from the European Investment Bank into helping build a bigger World Bank, better equipped to transform climate finance and start coordinating the world of the bilateral development agencies.

Ultimately every $20 billion we deploy through the World Bank unlocks $200 billion in concessional lending over the course of a decade. It's the best form of leverage we've ever invented.

But, we could boost this work still further by creating a new council of allies to coordinate the development work of our national development finance institutions (DFI’s) - which together invest $78 billion in some of the poorest countries on earth.

Second, there is concerted effort now needed to help lead a global fight against kleptocracy and impunity. As one of the world's great financial centres we have for too long been a global hub of money laundering, enabling bad people to steal billions from some of the poorest nations in the world.

Just as we led the charge against slavery and piracy in the 19th century so should we need set our sights on helping lead the global war on kleptocrats but that does mean transforming the enforcement resources of both the National Crime Agency, Companies House and the Office of Financial Sanctions Implementation.

Finally, when I listen to foreign office staff around the world a clear agenda for soft power becomes very clear.

And it isn’t rocket science:

• A radical step up in high level visits and a radical step up in a faster visa service - I think all of us on the Foreign Affairs Committee are surprised by the sheer number of ambassadors who welcome us abroad with an analysis of how infrequent ministerial visits have become compared to our competitors. That has to change, and, in fairness, I think James Cleverly gets that.
  

• Second, as one ambassador put it to me, we need to see 'English as a strategic enabler'. Demand for English amongst the younger generation in particular remains extraordinary. Backpacking through Uzbekistan last year I was stunned at the number of teenagers who wanted to chat to practise their English and discuss the best English universities. And so English is a gateway to British culture, humour, arts, sports - and yes, influence. And so, for the long-term, expanding investment in the British Council is moment well spent.

• Third, is the BBC World service. In a world riddled with disinformation where opponents like Russia ruthlessly invest, we should be radically expanding one of the most trusted news sources on the planet, radically expanding the numbers of journalists the BBC can engage on the ground and the languages they broadcast,

• Fourth, is Education: everything from Chevening scholarships - which we could easily double, higher education partnerships and technical training for key civil servants in ministries of finance, or central banks or justice systems remains highly prized. We should expand it.

• Fifth, is military to military links and in trusted cases, advice on cyber protection. The truth is our military attaches around the world are some of the most ingenious and enterprising individuals in his majesty's service. Their ability to leverage the immense prestige and skills of our armed forces to broker new and deeper relationships is extraordinary: but here again we need to resource them.

The Key Theatres: the 3 As

My final point is that we need to rethink our priority theatres for action and refocus on three domains – ‘the 3As’. And this is where the Government’s rhetoric on the ‘Indo-Pacific Tilt’ is so risky. Because it ignores the need for a strategic balance with three domains closer to home:

• The Arctic - where there will be new risks as the ice caps melts, where Russia is refortifying old Cold War bases on the Kola Peninsular, and working together with China to build the Polar Silk Road through the ice melt.

• Central Asia, with its booming population, is effectively a one-stop shop for trillions of dollars in critical minerals and its nations are desperately seeking to end their dependence on [and vulnerabilities to] Russia and China, and build new routes across the Caspian, and south through Afghanistan to the port of Gwadar Port.

• But perhaps most important of all is Africa.

This year, one out of every three children born in the entire world will be born in Africa. That means that by 2040 one of every three young people (aged between 15 and 24) will be an African and by 2050, the prime age working population of Africa will be five times as large as that of Europe, and larger than India and China combined.

Unlocking this 'demographic dividend' is fundamental not only to Africa’s freedom, prosperity and security - but to replacing the global growth which China no longer supplies.

If, over the next 40 years, even half of African states achieve the productivity gains that China delivered, Africa could add $52 trillion to global GDP - a 60 percent increase over the world’s output in 2021.

Conclusion

After the decade of division it is now clearer than ever that global Britain is mission critical to the success of Britain. It has after all, been that way since the Elizabethan Age.

But if we’re to prosper in a multi-polar world, the ‘sinews of peace’ will need to be stronger, the rights-based order more confident - and the ‘soft power’ we wield better capitalised.

All of this starts, as I did this evening, with an ambition to build a long-term consensus on foreign policy. And that is our first and quite possibly, our most significant challenge.

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Speech - Chatham House - June 2023

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