Veterans for Britain welcomes contributions to the debate from our members. In the first of such contributions, Adrian Hill, a former soldier and diplomat outlines his views on the effect of Brexit on Britain’s Defence and Diplomacy. Disclaimer: This article is not an official Veterans for Britain paper, and so does not necessarily reflect the official view of Veterans for Britain.
DIPLOMACY AND DEFENCE AFTER BREXIT
We are island people. For all our financial industries, we live by trading goods. Ninety-five per cent of our trade comes and goes by sea. Open and safe sea and air lanes are our life blood. Our diplomacy and defence posture ignore these fundamentals at our peril.
These are early days for our negotiations. A phoney war is fought in the media because it’s still easy for the EU Commission and the other twenty-seven to wind themselves up, puff out their feathers and squawk threats. Their demands are absurd, deliberately impossible for any British government to accept, not if they want to win further elections. EU tactics are decided by Germany with France and Poland – the largest payer and two greatest takers – though with Belgium and Luxembourg as willing court jesters. Yet despite taking back seats, the other twenty-two countries risk an equal backlash from our population, who may simply cease buying from Europe. After all, we make good cars and down under they make fine wine. Drawn into this row about money are three and a half million people from the EU who are resident in Britain and almost a million Britons living on the Continent; all of whom are being used as pawns by the EU negotiators. As the two year deadline approaches, my gut feeling is that large holes will be shot through the EU fortress wall.
I’m already convinced that we’ll leave without any agreement with the other twenty-seven countries, simply because they won’t come to any final agreement among themselves within the two years allowed for negotiations. Our government appears to recognise this risk although must prepare as much as possible to limit trade and travel disruption, if through no fault of our own, we end up leaving without reaching an agreement. My impression of the EU tactics is that they just want our money, lots of it, convinced they can get away with promises in return. Haggling over money is reasonable so long as we don’t pay anything, we don’t want to pay. I doubt we’ll get anything in return for any further money paid to the EU coffers. Free of the EC’s meddling in our affairs and economy, Britain becomes a very different country. The long retreat from empire with a defeatist elite ‘managing decline ’ soon forgotten whereas the three ladies who presided over the watershed moments that set the country back on the road to recovery, secure their place in history: Margaret Thatcher, Theresa May and last though perhaps the key player, our Queen, who kept her ties to the Commonwealth alive through widespread and deeply personal friendships. Her Majesty is the real victor from this almost fifty year struggle. We all owe her our future.
Britain may have ever more people but if immigration is managed, the standard of education could become significantly higher. After rejoining the world economy Britain can buy and sell at world prices. This lowers prices of manufactures by as much as twenty per cent and could stimulate a domestic boom, resulting in manufacturing doubling while employing the latest high technology and drawing on a flourishing components industry. Our infrastructure needs modernising; roads, railways, electric power, communications with the kind of cyber service enjoyed by the Swiss and South Koreans. A thriving space industry should be matched by rediscovered gift for invention and high technology industries.
We need to protect the seas around all our territories. Once EU and other foreign vessels can no longer fish in our exclusive economic zones, globally, fish stocks will recover. Our fishing fleets will also recover. Agriculture and fishing equally will benefit from a twenty per cent price drop after leaving the EU and serve the native population rather than export to Europe. Food imports should come largely from the Commonwealth and developing countries. There is also a great increase in financial trade and investment throughout the Commonwealth. Britain’s trade will closely reflect the global economy with less and less with Europe, perhaps only twenty per cent, the remainder with the rest of the world. Our largest market will remain North America followed by the Far East, India, Africa and the Gulf. There will be a recovery of the British shipping industry and merchant fleet as traditional trading patterns resume after a gap of forty years. This may happen quite quickly. The government needs a plan to go after a share of this new sea trade for our merchant navy. A much stronger Royal Navy in a more unsettled world makes the Red Ensign a very comforting sight on your stern.
BACK TO THE FUTURE
Within a decade after Brexit quite possibly the British Isles will overtake Germany as the fourth largest economy on the planet. This country will become much closer to the United States and our Commonwealth Allies. We should focus less on the EU who will accommodate Russia and more on the security of our Commonwealth and other trading partners. Moreover, the centrist EU will become ever more protectionist and regulate against new ideas and technologies such gm crops and global internet commerce within the EEA. The real problems are found in the wider world. Commonwealth countries in Africa are exploited by China, for example, and we could help protect their seas and land. This is much better than development aid and we will gain much greater respect and influence on the World’s future. The price for our government is more money for much greater emphasis on diplomacy and defence, promoting global free trade, sustainable development backed by dramatic strengthening of our naval and air power.
Ignore the doom watchers. Forget all the threats. No member state has quit the EU – until now – we can decide the rules. The people voted to end our membership of the EC. Parliament has passed a simple act repealing the original act that allowed us to join. The remaining EU members can do whatever they wish, holding votes all over the place, including so one hears, referendums in regional assemblies in Belgium! I have no doubt that during the two years transition period the continentals will do their utmost to dream up all sorts of unpaid bills and financial claims backed by EU courts. The UK should not hand over a penny unless we regard it as a legitimate financial obligation. So we need a tough Chancellor.
For the last forty years we have run a trade deficit with the EC. This worsened until the financial crisis left us carrying the EU by running a £ 90 billions deficit in goods. The UK has become the largest export market for the rest of the EC, larger than the USA and Japan combined. Our taxes feed a million dependents in Poland. Over three million EU citizens have national insurance numbers, most numbers issued during the last five years. This simply is not sustainable.
We have a large home market, freed from EU restrictions creative people will be able to design and manufacture new products under a new regime of UK standards. Let’s sell to the wider world but substitute EU imports with home manufactured products. Shoppers will provide significant help towards removing the trade deficit in goods. The doom watchers claim that the pound will sink further. A lower value pound will help exports but keep in mind that it’s already 40% lower against the Swiss franc and nearly 30% lower against the US dollar than before the banking crisis. Most of our export business in goods takes place in US dollars. Not simply with the USA but throughout the Far East where the US dollar is the trading currency. The balance of payments problem is not high prices but the wrong markets suffering low levels of demand. This applies particularly within the Euro zone where the German economy with its structural surplus has very effectively devalued its currency and now undermines the weaker Euro zone economies and undercuts the UK economy. This will not change if we remain part of the Single Market and EEA but rather become more hobbling. Go east, young man, the sun is rising over the whole region.
UK exports of goods – manufactures and so forth – vastly exceed exports of financial services. A modest percentage increase of goods exports, mostly manufactured exports would bring about a trade surplus. Back in the 1950s the UK had a trade surplus from manufactured goods of 10% of GNP. Manufacturing exports have never lured the country to the brink of bankruptcy. Today our exports to Germany are far less than our trade deficit with the Germans. The same story applies to almost all the EU member states. Trade with the UK generates a quarter of Germany’s global trade surplus. The sectors are equally important, motor vehicles and industrial machine tools to name only two. Every fifth car made in Germany is bought by somebody in the British Isles. This trade pattern will grow more distorted unless we summon the courage to rip up the EU treaties and take bold strategic action, drastically improve the terms of trade.
Leaving the EU will dramatically lower the cost of everything in the UK. Our economy freed of a significant layer of costs imposed by EU membership calculated to cost £ 35-40 billions a year. Mass migration from Eastern Europe would drop overnight and thereby stems the claim that Brexit would cost a million jobs. Yes, it would, because a million immigrants from the EU would no longer arrive at Dover seeking low paid jobs in the retail and food sectors. Without any devaluation the real cost of German cars and machine tools, French agricultural products, Dutch HP Sauce and pills, Polish televisions and York labelled chocolates, would compete against much less expensive alternatives from the UK economy and from beyond Europe.
UK exporters must look for new markets outside Europe as a matter of urgent strategy. Small and medium sized companies, most of which don’t export but should, desperately need help from diplomats and local commercial staff to break into emerging markets with UK products and technology. At present our trade in goods with the EU is a mess that’s out of control. A deficit in goods of £ 13 billions before the financial crash hit over £ 100 billions last year. This is not sustainable, not even in the short term. Europe will doubtless survive without us – we won’t survive unless we break free from the EU which resembles an economic octopus sucking the life out of a still healthy economy.
Most of the British have the courage to break free. Apart from trade, what does that involve for diplomacy and defence?
Further chapters will follow…
About the author
Adrian Hill, former Royal Engineers officer, skydiving instructor, diplomat and CBI Council Member.
Served in Pakistan during the 1965 battle for Lahore, Cyprus troubles and the June 1967 War, the Vietnam War from 1969 -1971, Ireland until 1974, Switzerland and Canada . Member of the Channel Tunnel team at the Foreign and Commonwealth Office and the COBRA Committee of the Cabinet Office, followed by South Korea and Jamaica.
Adrian is working on his next novel set in Vietnam and Laos during the battle on the Ho Chi Minh Trail early in spring 1971.