Monday 24 May 2010

HM Treasury announces UK government cut-backs - implications for defence ?

HM Treasury announces UK government cut-backs - implications for defence ?
May 24, 2010

More years ago than I care to remember one of my University Professors issued an essay list from which I chose the subject of 'are defence reviews solely driven by financial concerns'. I remember making a spirited defence of the importance of coherence in defence and foreign policy.

As the years have progressed and my work in the defence industry evolved I see a somewhat different picture. Following the May 2010 General Election in the UK the new Chancellor of the Exchequer announced today ('Government announces £6.2bn of savings in 2010-11') immediate Government spending adjustments ahead of the June budget. In the statement available from the HM Treasury website the new Chancellor, George Osborne made the following comments,

"Today the Government has taken the decisive action necessary to start tackling the UK deficit and secure the recovery only 10 days after taking office.

Savings will be taken out of budgets, without affecting the quality of key frontline services, as set out in the coalition agreement. In addition to £6.2bn of savings in non-protected departments, savings in health, defence and international aid will be reinvested in front line services in those departments."

What can we infer from the statement for Defence - a touchy subject for a fresh government with major commitments overseas ?

Firstly, this financially driven imperative cuts across the SDSR started under the Labour government and halted during the election by the MOD. It would appear than a Departmental effort to re-run the 1997 process is being hi-jacked by a political and Treasury driven effort to re-run the mid 1990s 'Front Line First' review under the Conservatives and Malcolm Rifkind aimed at exactly what is being pitched now, transferring resources from the tail to the teeth of Britain's armed forces.

This instead of new resources.

What outcomes can we expect to see ? I think the most worried part of the MOD must be the Royal Navy. Given the directives to MOD officials to evaluate all recent contracts for get-out clauses, plus the lack of enthusiasm for the Conservative in Scotland leads to a lack of desire to award ship building contracts to Scottish, Labour and Union driven yards.

Plus the new Ministerial team is principally Army sympathetic - Junior Ministers representing Aldershot and having served with the Special Forces are unlikely to listen to the Admiralty - especially if there is a way out of naval shipbuilding projects.

This could be highly deleterious to the long term national interest. Having written a Doctoral thesis on the collapse of the CVA-01 aircraft carrier program in the mid 1960s one can see how vulnerable the program is. That said, the RN prevaricated for a few years over specification and industry configuration to deliver the program when resources were relatively plentiful.

In addition the challenge of maintaining a 'drumbeat' in construction of nuclear submarines has also been a constant pressure which the new ministerial team may be less sympathetic towards.

The Royal Air Force one could suspect will downsize their stations further and one could see a strong effort to redirect or else cancel Eurofighter Tranche 3. This would be a good move from the perspective of making back-bench Eurosceptic Conservative MP's happy IF the financial penalties can be in someway mitigated.

Tuesday 18 May 2010

Iranian Nuclear program gathers pace - and divides its opponents

Israel must Be today feeling somewhat reticent about the Iranian deal backed by temporary United Nations Security Council members Turkey and Brazil. Iran has agreed to deposit some half of its current stockpile of processed uranium with Turkey, though has given no assurances about freezing or dismantling its nuclear program. The United states is dismayed its foreign policy agenda is foundering over the one thing guaranteed to upset domestic popular opinion - being seen as weak on the issue of the spread of WMD's.

However, it is surprising the State Department did not see this coming - Iran is a master-class in playing foreign policy games to protect its national interests. Turkey felt sufficiently neglected by its NATO partners and the US in particular that it closed its borders to the use of force against Iraq in 2003 and additionally has had the US President acknowledging the Armenian massacres of the early 20th century which are still are a sore point for the Turks. These issues combined with EU dithering over admitting Turkey left the Iranian issue as a clear one for the Turks to become engaged with - especially as they are neighbours.

For Brazil the issue is one where as a BRIC the nation can show it has some clought in foreign policy with the beautiful benefit that Iran is literally on the other side of the world. Likely mutual trade interests abound between the two nations.

It is probably fair to say, on reflection that the USA and Israel probably share some of the responsibility for this outcome. Iraqi Weapons of Mass Destruction in the 1980s and 1990s should have provided the opportunity for Israel to declare its stockpiles - or even eliminate them or have them transferred to the US for safe-keeping. Then joining the Nuclear Non-Proliferation Treaty would have left the nation with a superiority in conventional weapons and a strong moral position against anyone in the region developing them. There is a precedent by the way for unilateral nuclear disarmament and it was South Africa in the early 1990s - Israel's closest partner during the previous decade.

The position of the State Department under successive administrations resulted de facto in no substantial pressure on Israel to think through its possession of a nuclear deterrent which takes us to the situation we have no - any country seeking to become a regional player or hegemon knows that they have to develop the nuclear bomb. Lesson from Iraq: if you dither over development - or develop the capability above-ground, it is highly vulnerable to air strike.

These factors combine in a country which wishes to acquire a nuclear deterrent and possesses the 'will & skill' to simply get on with it. Israel defence planners has feared the development of an islamic bomb and now they seem close to having to realise this fear.
Choices are few, trying a re-run of the osirak reactor strike on Iraq in 1980 are not straight-forward, plus the aircraft have to fly across the middle east to reach the target.
The real way to catch the Iranian fox is to have had them spend billions on trying to acquire the weapons and then change the rules of the game;

One way is to develop an effective missile defence (though the cold war showed that MIRV'ing warheads and having lots of missiles could overcome a defence) or,

Second to declare or get rid of your own capability so as to paint Iran as the bad guy should they pursue development further. Not a pretty story.

Saturday 15 May 2010

And now for something completely different... Wall Street sequel Money Never Sleeps in Cannes

The Cannes Film Festival 2010 is set against a backdrop of economic troubles, ash clouds affecting flight schedules and dull, overcast skies.

I keep imagining the film festival as a setting for a zombie movie given the pallid stares of film critics on their 20th film in a few days, Z list celebrities touting their wares and a raft of unwashed, unkept photographers jostling for snaps in a foreign land.

Last night I was able to watch a screening of the upcoming release Wall Street 2: Money never sleeps - one of the two big Hollywood movies here at Cannes alongside Robin Hood. Wall Street 2 stars Michael Douglas, reprising his role of Gordon Gecko from the 1980s original. Shia LeBoeuf plays the new kid on the block learning of the travails of high finance being used as a tool to recpaitalise Gordon as well as make money for 'the barracuda' who indirectly caused the suicide of LeBoeuf's mentor via the take out of the mentors brokerage firm.

The plot of the film draws on the backdrop of federal bail-outs of the investment banks like Citibank and the death of others such as Bear-Sterns. There are also a number of cameo appearances and insider type jokes such as Charlie Sheen turning up briefly to talk about taking over the Blue Star jet firm of the original film and turning into a world leading private jet brokerage firm (which, by the way actually exists in real life).

The film feels different to the original as it lacks the father-son relationship between Martin and Charlie Sheen, plus the film feels less like an introduction to how wall street really works which made the original an enduring film. On the plus side it is visually very well done capturing the stock market collapse of 2009. The film feels more emotionally driven tan the cold, hard film of the 1980s and I would have like to have seen more of the Gecko and the Barracuda going head-to-head the limit being one scene where Douglas's character makes one of the more memorable lines, "If you stop talking lies about me, I will stop telling the truth about you".

Brolin and Douglas are very strong actors in the film as is the brief role at the start of Frank Langella who I felt delivered the strongest performance of all having seen some of the shock first hand and fall-out in Wall Street over the past couple of years. I think there was some mis-casting though I hope the film does well as one of the best (and first) efforts to capture recent events by Oliver Stone (who of course appears in this film).

UK Machinery of Government: Establishment of a National Security Council

Establishment of a National Security Council
May 12, 2010

One of the lesser-reported activities of the new Government in the United Kingdom this wednesday was the formation of a National Security Council (NSC).

This would seem to replace the DOPC or MISC Cabinet Committee on Defence and Overseas Policy which morphed in July 2009 into the NSID (OD) Committee (or Ministerial Committee on National Security, International Relations and Development, Sub-Committee on Overseas and Defence.)

NSID (OD) had the following composition (5);
* Prime Minister (Chair)
* Secretary of State for Foreign and Commonwealth Affairs (alternate Chair)
* Chancellor of the Exchequer
* Secretary of State for International Development
* Secretary of State for Defence

Other Ministers, the Chief of the Defence Staff, the Chairman of Joint Intelligence Committee and the Heads of the Intelligence Agencies may be invited to attend as required.

NSC has the following composition (8);
* Prime Minister (Chair)
* Deputy Prime Minister
* Chancellor of the Exchequer
* Secretary of State for Foreign and Commonwealth Affairs
* Home Secretary
* Secretary of State for Defence
* Secretary of State for International Development
* Security Minister.

Other Cabinet Ministers, including the Secretary of State for Energy and Climate Change, will attend as required. The Chief of the Defence Staff, Heads of Intelligence Agencies and other Senior Officials will also attend as required.

The NSC appears an effort to better integrate foreign policy and homeland security into a one-stop Cabinet Committee at the price of near doubling the standing representation - risking a slower reaction in a crisis situation.

Establishment of a National Security Council
May 12, 2010

The Prime Minister is to establish a National Security Council (NSC), which will oversee all aspects of Britain’s security.

The Prime Minister has appointed Sir Peter Ricketts (Permanent Undersecretary at the Foreign and Commonwealth Office) as his National Security Adviser, a new role based in the Cabinet Office. Sir Peter will establish the new National Security Council structures, and coordinate and deliver the Government’s international security agenda.

The Council will coordinate responses to the dangers we face, integrating at the highest level the work of the foreign, defence, home, energy and international development departments, and all other arms of government contributing to national security.

The Council will be chaired by the Prime Minister. Permanent members will be the Deputy Prime Minister, the Chancellor of the Exchequer, the Secretary of State for Foreign and Commonwealth Affairs, the Home Secretary, the Secretary of State for Defence, the Secretary of State for International Development and the Security Minister.

Other Cabinet Ministers, including the Secretary of State for Energy and Climate Change, will attend as required. The Chief of the Defence Staff, Heads of Intelligence Agencies and other Senior Officials will also attend as required.

The inaugural meeting of the NSC will be chaired by the Prime Minister this afternoon. The Council will discuss the situation in Afghanistan and Pakistan, and review the terrorist threat to the UK.

Friday 14 May 2010

Daily Telegraph newspaper in early effort to court the Cameron's missing shady financing

May 14, 2010

The Daily Telegraph newspaper wins the early award for seeking to ingratiate itself with the Prime Minister and his wife today. Journalist Becky Pugh writes as to "Which Smythson notebook would you give to which Cabinet minister ?" and seems to have a memory lapse as to informing readers that Samantha Cameron, "about to redefine the notion of having it all" was paid as Creative Director to Smythson over the past few years.

When you delve into the Smythson story it becomes somewhat more interesting - after all a salary of 400,000 pounds to design a diary collection which only changes colour season to season raises the 'cui bono' question ? Given Smythson's private ownership were people paying Samantha to buy access to opposition Leader David Cameron and keep his annual earnings declared to Parliament clean and sleaze-free ?

Kelso Place Asset Management and Venrex Investment Management became involved in 2005 and the Smythson business was sold to Greenwill SA (part of an Italian Group) last December - six months before the Election. Whilst Kelso Place is quite transparent online Venrex by contrast is rather opaque.

The really interesting fact is that Venrex Investment Management is led by Mark Esiri, like David an Old Etonian and as described by the Daily Telegraph October 12, 2007 as "an old Etonian, friend of the Cameron's and lives nearby in Notting Hill".

Time will tell as no doubt will David Cameron's first honours list. Will Any of the leadership team of Kelso and in particular Mark Esiri pick up an honour for funding Samantha and David during the opposition period ? Well done Becky.

No Blackberry's please, we're British...

May 14, 2010

Big news in UK politics today - mobile and smartphones are banned from the Cabinet by the new Prime Minister (perhaps apeing the 2007 decision of the French Cabinet) and the new Foreign Secretary is off to Washington to try to educate America as to what a Coalition Government looks like whilst pledging undying loyalty to the Special Relationship. Clear evidence of change of which Sir Humphrey would be very proud, with the new Government sticking to what Appleby suggest as "masterly inactivity Prime Minister ?"

In any event the major posts seem settled between the Conservative Party and the Liberal Democrats with the junior positions and House of Commons Committees yet to be staffed.

One would expect Cameron to take a 'death by kindness' approach to the Lib Dems - employ them all in Committees over his own party in order to a) keep the Lib Dems busy and cozy avoiding a Lib Dem back-bench revolt and b) keep his own back-benchers hungry for office of any kind blaming the need to keep his partners on board.

The Conservatives seem to be busy acting akin to the alien race known as the Borg in Star Trek - absorbing the Liberal Democrats into the Tory Party and tying them in to a long-term coalition - minus any interest in Europe, the Euro and electoral reform.

On proposition making the rounds whilst UK PLC is fatigued following the election is to create fixed terms of Parliament and preventing votes of no-confidence forcing a General Election. A very sharp practice recognising the real threat that Labour can turn itself around over the next few years and come back strong seeking a fresh chance to govern. BBC quoted British expert Professor Peter Hennessy, of Queen Mary University of London University, who told the BBC it looked like "very very iffy politics indeed"

Whilst readers in the united States may see fixed terms as logical - akin to the US Presidential system just think of the weaknesses inherent in such a move. By clearly marking out the end of a term, the ability to make decisions becomes highly constrained as people adopt a 'wait-and-see' strategy.

One suspects an intriguing autumn political season with the key issues being how long before the Lib Dems start to want to see any kind of policy executed and the Labour Party's leadership reposte.

Tuesday 11 May 2010

24 hours being a long time in politics...

Unlike many pundits I believe one should acknowledge when the judgement call does not work out. The Labour-Liberal Democrat pact to win the General election appears to have come to nowt and following meetings tonight one suspects the Conservatives and Liberal Democrats will take over the task of running the UK political system.

This could be a big opportunity for Labour. The negotiations likely failed to overcome the enthusiam of many newly-minted MPs being prepared to share power versus having no power as a dominant opposition.

One of the interesting issues is how many ministerial and committee positions the new administration will share between the Parties.

For Labour one can only assume a flurry of calls into number 10 by those seeking to be placed on the outgoing Prime Ministers honours list. Sir Alistair Campbell anyone ???

Former PM's memoirs - Yes, Prime Minister - BBC comedy

A classic piece of Yes Prime Minister and one for Gordon Brown's colleagues to think about...

Gordon Brown resigns as a precursor to Lab-Lib coalition government

Gordon Brown resigns as a precursor to Lab-Lib coalition government
May 10, 2010

I wrote a week ago in this column that it was likely that Gordon Brown's departure would be a likely consequence or pre-cursor to a Labour-Liberal Democrat party link-up to govern Britain as a coalition following the indecisive 2010 General election.

I would forecast firstly, that the Labour leadership election will be fought between David milliband and Ed Balls with Peter Mandelson as kingmaker (Again). May Shakespeare in general and MacBeth in particular be assimilated by all candidates in the Party ahead of the summer campaigning. Perhaps Machiavelli would be best though one suspects Mandelson has bought up all the available copies at bookseller Waterstones.

In terms of Gordon Brown, I remember well his love of Cape Cod and summers in the East Coast of America. I think he will enjoy the anonymity of America where press interest in the UK election has been scant and more focused on what America dislikes or is rather confused with about Britain - "how can an election or a sport end in a draw ?"

With regard to him seeking a finance post abroad - the current head of the World Bank was appointed in July 1, 2007 for a 5-year term. If Gordon can position himself well he will have ample time to write his memoirs and campaign for the role (especially should Ed Balls win the leadership contest - giving GB help and support). Given that Robert McNamara was head I think there is a natural fit for Gordon Brown.

The International Monetary Fund Managing Director was appointed November 1, 2007 though the term of service has varied much and little is offered as to a guide to the length which is served. Suffice it to say the current head is a Frenchman who stood against Sarkozy, the current President and is a healthy socialist economist with a reputed appetite for engaging with young economists in an unconventional manner.

One could not imagine Gordon Brown as heading up the European Central Bank or the EBRD given his distinct lack of enthusiasm for Europe on a day-to-day basis. The ECB appoints for a non-renewal term of eight years, the current President was appointed in 2003 so could be up for renewal as early as next year, so who knows ?

I shall leave for another entry my vies on the likely impact of a Labour-Liberal coalition on the Conservative Party leadership but suffice it to say that we continue to live in interesting times....

Monday 10 May 2010

Conservative quandry 2010

David Cameron must have a headache today.

Over the weekend it became public news that the Liberal Democrats have been holding parallel discussions with the Labour Party following the indecisive outcome of the UK's 2010 General Election.

Strategy A: In David's mind must be to stand back from forming a coalition and alienating a section of his own Party (former leaders like Iain Duncan Smith who are bitterly opposed to Liberal Democrat support for the Euro). With the largest number of seats in the House of Commons the Conservatives could block any policy created by the coalition, ensuring a repeat of the early 1970s which translated into a near two decade run for the Conservatives.

However, if you pursue strategy A what chances are there of surviving as leader for upto 5 more years ? There must be a real temptation for someone to challenge him having done the ground work to become the next Tory Prime Minister.

Strategy B: Do a deal with the Liberal Democrats. Somewhat fraught, despite the record of cooperation at local council level given Lib Dem enthusiasm for Europe, the Euro and a referendum on the voting system. Lib Dems must be ultimately suspicious of Conservative support for electoral reform.

Strategy C: The high-risk one of declaring the Lib Dems and Labour as having no mandate to govern let them fail to agree and forcing a second election. Labour coffers are likely empty at this point to rally for a second round of campaigning and despite a number of new MPs not wanting to re-run for office this could deliver the outright majority and avoid a lot of poltical heartache downstream.

Given Mervyn Kings comment that the victor of this election will likely be out for a generation this does not seem to be the prize to win (unless you can feel the heat of the pack of prospective Conservative Leaders breathing down your neck).

President Obama in social media memory loss incident

A weekend speech by the President to students talking of the evils of social media and information as entertainment was widely reported in the US press today (example).

Should it seem somewhat strange that it was the same social media leveraged by the 2008 campaign team seeking an edge in the election against John McCain and the Republican Party..?

On of the risks of electoral hubris is clearly believing that your platform now lies beyond anything which a conventional election strategy can deliver. Personally, I believe that access to information plus a style of education which enables young students to be focused in its use is one of the wonders of the modern age.

Stand by for 2012 apple users to campaign against the President's new found social media illiteracy...

Wednesday 5 May 2010

Who reads the papers? - Yes, Prime Minister - BBC comedy

Yes Minister: Gallup opinion polls

Did IQ's drop Part II... Peter Cook in Whoops Apocalypse.

UK Election: Latest polls before the real poll

Courtesy of ParliamentWatch blog
May 5, 2010

There's been a glut of opinion polls tonight, as everyone attempts to have the last word. All the eight organisations who have been regularly polling have the Conservatives in the lead - but no-one is forecasting an overall majority. The Liberal Democrats and Labour could be neck and neck in the popular vote, but as we have previously reported, the Liberal Democrat seat count will be lagging well behind.

The averages of the 8 polls are : Conservative 35.5%; Liberal Democrats 27.5%; Labour 27.4%. Using our previous model, this would translate into Conservatives 287 (39 short of that elusive overall majority); Labour 243 and Liberal Democrats 88.

There are some big BUTS however. No-one is assessing turnout, and therefore the propensity of those sampled actually to put their crosses on ballot papers. Secondly, there is no information about the postal vote. Many of the ballot papers appeared in letter boxes when the Liberal Democrat tidal wave was at its greatest. Most of those papers are already sitting in town halls waiting to be counted.

And there may well be regional variations. One poll in the north east puts Liberal Democrats ahead of the overall trend. The latest poll in Scotland shows little change except an increase in Conservative support, but this would only result in two seats changing hands. The extra Liberal Democrat support may therefore be concentrated in England. Some seats are vulnerable to very small swings at this general level of support, so local campaigning and a tactical squeeze (including the last minute Labour plea for tactical voting) might have a greater impact on a handful of seats. There's little information about UKIP tactical voting, if any.

One interesting aside was in an ITV poll that said that 81% of people supported the proposition that the party getting the most votes (as
distinct from seats) should lead the new Government. Which means there may be an undercurrent of support for fairness (proportional representation) in the allocation of seats, an issue which will simmer through and beyond the savage economic measures that whoever wins is likely to introduce.

Like the Terminator, we will return with further comment when real results replace speculation.

UK Election 2010 Forecast: 654 Politicians will likely decide who forms the next Government of the United Kingdom

The BBC website has made available a visual means of viewing how the various opinion polls will translate into seats in parliament and therefore the likely winners in tomorrows election.

The Three polls included are all from today -
Labour Conservative (Tory) Liberal Democrat
Poll of Polls: 272 270 79

ComRes: 258 289 75

YouGov: 288 261 72

The outcomes therefore would be a hung parliament in all three scenarios. The question becomes who will yield the most to the Liberal Democrats in terms of ministerial positions to form the next (coalition) government.

My own money is on the incumbent being most desperate to hold to power ie. Labour-Lib Dem (which does have a preceedent in the early 1970s). I suspect also the price of this coalition will be a Labour party leadership election within 12 months to end Gordon Browns Premiership.

Whilst obviously dissapointing for the Conservatives I think the election will, as Mervyn King as suggested be a poison chalice for the victors - the last coalition Lab-Lib pact led to near 20 years of Conservative rule under Margaret Thatcher then John Major. Perhaps this is the best outcome for the UK.

Possibly a style-over-substance issue however David Cameron and his Notting Hill public school set do not seem to have broken down the barriers to making the UK people feel entirely comfortable with them.

"Did IQ's drop whilst I was away ..?"

I noticed the BBC running an item on a presentation concerning jobs and employment conducted by Conservative Party leader David Cameron recently.

Did nobody think about the political satire "Whoops Apocalypse" from the 1980s with Peter Cook as the Prime Minister having people jump off the white cliffs of Dover as a means of dealing with unemployment ?



Obviously 'Denzel's had a haircut"...

UK Political System implodes... Iron Man 2 released tomorrow !!!

I received via email an invitation to a one-day conference entitled, "The implication of the UK General Election for the Obama Administration". Sad, but true.

The UK election has barely registered a blip in the United States and amongst the New York media. The story of the Labour candidate who played his likely crushing constituency loss into a "worst ever Prime Minister" comment appeared in a small piece on page 28 of the New York Post newspaper this morning.

For the average US citizen the UK seems a long way away and a sort of living historical theme park which provides a crop of good villians for the cinema as well as [positively] distorted views of British influence and power via James Bond.

The British military contribution in Iraq is not mentioned since the decision to withdraw and the effect in Afghanistan go basically unmentioned. Whilst our Armed Forces presence has some acknowledgment in Washington circles - outside of the appreciative Pentagon it goes largely unknown and one suspects unrewarded.

In the USA the British election is seen is much simpler terms as a Conservative victory bolstering spirits of Republicans for the mid-term elections this autumn and an eye on 2012. Unfortunately few across the Atlantic appreciate the nuance of British political ideologies and find confusion that Tony Blair is widely seen as the successor to Thatcher - not a Conservative !

Whilst the quality of oratory and debate in British politics is widely admired across the Atlantic few American politicians would wish to trade the raw power of the United States... Meanwhile the release of the sequel to Iron Man dominates the airwaves.