Report written by Mark Curtis for Global Justice Now. To read the PDF version go here.
Since the EU referendum on 23 June, many people have theorised on what the consequences for British foreign policy might be. Some have stressed the dangers, others the opportunities. Nearly six months on, a picture is gradually emerging of what kind of policies the current government is likely to pursue in a post-Brexit world. This picture can be gleaned from what government officials are doing and saying, and it is not pretty. There are four key trends when it comes to policies towards developing countries. The signs so far are that Britain’s post-Brexit policy will:
- Embed an extreme version of free trade that pushes developing countries to open their markets
- Increasingly privatise development aid to the benefit of big corporate interests
- Develop closer ties with authoritarian regimes, including expanding arms sales
- Use its military power to secure its financial and economic interests
‘The UK will remain the most passionate, consistent and convincing global advocate of free trade. We will seize the opportunities of our departure from the EU to forge a new role for the UK in the world’.[i]
Similarly, Trade Minister Mark Garnier says that policy is to ‘ensure that Britain becomes the global leader in free trade once we leave the EU’.[ii]
It is clear that the UK’s championing of free trade refers not only to other developed countries but also to the poorest and developing countries as well. For example, the government will ‘drive even greater openness with international partners’ including the Commonwealth, Trade Minister Greg Hands has said.[iii]
While free trade can be beneficial between countries of high and similar levels of development, pressing for free trade as a route for developing countries to work their way out of poverty takes us back three decades. In the 1980s, ideologues in Washington and London began pushing neo-liberal economic policies on the poor, arguing that opening up their markets would increase their competitiveness. The result has largely been a disaster, with cheap imports undermining local industry and agriculture, putting fledgling companies out of business and undermining the prospects for local economic development. Robert Pollin, an economist at the University of Massachusetts, estimates that developing countries lost roughly $480 billion in potential GDP as a result of so-called ‘structural adjustment’.[iv]
The idea that developing countries should simply open up their economies through free trade is now rejected, often ridiculed, around the world. Yet this appears to be precisely what Britain’s current International Trade Secretary, Liam Fox, still clings to. Fox has given two extraordinary speeches, both in September, extolling the wonders of free trade. At a speech to the World Trade Organisation in Geneva, Fox outlined the free trade as a panacea for the poor, saying that Britain would ‘carry the banner’ for it, and that:
‘Just look at the effect on the populations of developing countries that have started down the path of opening up their markets, and ask yourself whether there has been a greater emancipator of the world’s poor than free trade. The glorious thing about free trade is that if the conditions are in place to allow it to flourish, no-one needs to lose out.’[v]
A few days earlier, he told an audience in Manchester that the recent success of countries such as China and Vietnam was all down to free trade.[vi]
These views are completely at odds with the historical record. There is a legion of literature and experience showing how East Asian countries have spectacularly reduced poverty in recent decades – and it was not by free trade. The first reason was by pursuing land reform, which in China’s case involved reintroducing household farming alongside government policies to maintain prices and provide guaranteed markets for farmers’ produce[vii] – policies that are largely opposed by neoliberals like Fox for interfering in markets. The second main reason for Asian success has been policies of state intervention to nurture and develop domestic industries. These policies often involved imposing protectionist trade policies to keep out foreign competitors, at least until the point when those industries were strong enough to compete in world markets.[viii] Again, these policies of state intervention are largely heretical to neoliberals.
The British government has in recent months said that it is committed to ensuring that developing countries can reduce poverty through trade and that the possible impacts on poverty will be ‘taken into account’ in UK trade policy.[ix] But it has provided no detail on this, and in fact the only real way to genuinely take poverty concerns ‘into account’ would be to learn the lessons of history and abandon support for free trade as a model. Yet the government is beginning to embark on negotiating a series of trade deals with countries, preparing for the UK’s exit from the EU, which are likely going to press for this simple free trade model.
The UK government has long supported the now-defeated Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US, the Canada Europe Trade Agreement (CETA) and the EU’s free trade agreements with various developing countries. All these deals prioritise corporate interests over those of people by promoting privatisation and deregulation and which empower corporations to take legal action against governments when their interests are threatened. There are also clear signs that the same model will be used to construct a trade deal between the UK and the US, boosted by Donald Trump’s election.[x]
Aid for corporations?
International Development Secretary Priti Patel has called for ‘reform of the global aid system’[xi] and suggested that this should be based on ‘core Conservative principles’[xii], suggesting that this means focusing on wealth creation. It is not yet clear what this means but the high likelihood is that aid will continue to be reconfigured to support corporate interests and the government’s neo-liberal foreign economic policies outlined by Liam Fox.
For example, Britain is already leading the world in using aid to push for the increasing privatisation of health and education in developing countries.[xiii] The Department for International Development (DFID) is currently spending £38 million in promoting private schools in Nigeria, Kenya and Pakistan.[xiv] Promoting private education is controversial and is widely criticised for undermining public education. DFID support for private education appears to be part of a strategy to make the privatisation of public services more ‘normal’ in developing countries, opening up new markets for private education providers, in which UK companies are world leaders.[xv] DFID has made clear that it will continue providing support to schools ‘regardless of whether the school is public or private’.[xvi]
Priti Patel is also promoting a major overhaul that would allow billions of pounds of aid to be channelled into the government’s controversial private equity arm, CDC Group. DFID is proposing to increase the limit on support the government can give to CDC from £1.5 billion to £6 billion. CDC invests in corporations overseas and has been widely criticised for its executives’ expense claims on luxury hotels and restaurants and for its use of companies established in tax havens in order to make investments.[xvii]
DFID is also likely to continue to support the interests of corporations in global and African agriculture through its extensive funding of the New Alliance for Food Security and Nutrition.[xviii] And it is almost certain to continue its opposition to establishing legally binding commitments on companies to respect human rights globally in favour of inadequate, voluntary mechanisms by companies themselves.[xix]
Patel has also made the suggestion that aid might be used to promote post-Brexit trade deals with developing countries.[xx] Indeed, she has indicated that she sees UK aid as part of the country’s ‘soft power’, implying that aid is a tool in Britain’s wider policy agenda – rather than simply a means for helping to reduce poverty:
‘British soft power is exactly where DfID and our aid and other relationships around the world, come together to deliver in our national interest and deliver for Britain when it comes to free trade agreements but also life post-Brexit’.[xxi]
On the current trajectory, more than a quarter of Britain’s overseas aid will be spent by ministries other than DFID by 2019/20. The aid budget is being eyed up by officials in other overstretched departments, including the Ministry of Defence, which has suggested that its budget be used to pay for flights on military aircraft, some navy patrols and body armour. Mark Lowcock, DfID’s permanent secretary, has said that activities such as peacekeeping could be counted as aid under international rules.[xxii]
Deeper relations with authoritarian regimes
A clear priority in recent government policy-making is cementing new relations with non-EU countries, and the set of states the UK has seized on as offering major opportunities are the regimes of the Arabian Gulf. The past few months have seen a striking rise in the tempo with which British ministers are seeking to sell arms and do trade deals with these unelected, authoritarian regimes.
In September, Theresa May hosted the Emir of Qatar, Sheikh Al Thani, saying that his country was a ‘natural partner’ of the UK which was seeking to promote investment, science and ‘defence’ (i.e., arms exports).[xxiii] The meeting followed Defence Secretary Michael Fallon hosting Qatar’s Defence Minister to discuss joint military training in which Fallon also announced the creation of a new Deputy Defence Attaché role in Qatar ‘which will ensure strong and continued defence engagement’.[xxiv] A few weeks ago, UK companies were in Qatar at the ‘Milipol 2016’ exhibition, selling military and ‘security’ equipment.[xxv]
Last month, Theresa May also hosted the King of Bahrain, Hamad bin Isa al Khalifa, notorious for his country’s brutal crackdown on dissidents and the Shia community. May reiterated the UK’s ‘firm commitment to the security of the Gulf’ – government code for continuing support for the regime – and even praised ‘the King’s ongoing domestic reform programme’ which continues to repress a large part of the population.[xxvi] Royal visits have recently been made to Oman[xxvii] and the United Arab Emirates[xxviii] and the government has reaffirmed its commitment to building two new military bases in Bahrain and Oman which will house the two 65,000-tonne aircraft carriers being built for the Royal Navy.[xxix]
Meanwhile, Britain has struck an extraordinary new special relationship with the military rulers of Egypt, who overthrow a democratically-elected government in 2013. In August, Theresa May spoke with Egyptian military ruler General Abdel Fattah el-Sisi and ‘discussed a new chapter in bilateral relations between the UK and Egypt’, according to the government press release.[xxx] This is no under-statement since it follows a series of extraordinary meetings and extreme British apologias for the nature of the repressive Egyptian regime. Since late 2015 numerous ministerial meetings have been held to promote military cooperation, a memorandum of understanding has been signed and arms exports agreed.[xxxi] In July 2016, a UK trade envoy to Egypt, the MP Jeffrey Donaldson, and the head of UK Export Finance, Louis Taylor, visited Cairo to discuss expanding trade and investment ties.[xxxii]
These repressive states do what Whitehall wants in the post-Brexit world: they buy our arms, house our weapons, support our power projection, and invest in the UK, all unencumbered by any democratic distractions at home.
It is not just the Arab states in the Gulf that British elites are cultivating afresh. So too Israel. Brexit ‘creates a real opportunity for Israel and the UK to work even more closely together’, the UK’s ambassador, David Quarrey, said in Tel Aviv last month [October] ‘With Israel I see the opportunity for closer cooperation on trade, investment, technology, science and security’, Quarrey said. He also noted that once Article 50 is activated by the government, Israel will be one the countries with whom Whitehall will renegotiate a trade deal.[xxxiii] Very notable is that in the three months from April-June this year, the UK exported a massive £65 million in military equipment to Israel[xxxiv] compared to $9.5 million in the whole of 2015[xxxv].
The indication is Britain will promote arms exports post-Brexit even more vigorously than in the recent past, which is no small matter give that Britain is already the world’s second largest exporter. The reason is that Ministers appear to regard arms exports as part of the UK’s newly-found ‘engaging with the world’.[xxxvi] Equally worrying is that the government has not clearly indicated that, after leaving the EU, it will remain bound by the (already very weak) EU Code of Conduct on Arms Exports.[xxxvii]
Truly scary – the use of military power
Since June, the government has been constantly highlighting its plan to increase the military budget every year until the end of the decade. It is also engaged in a massive £178 billion military re-equipment programme, and is constructing two large aircraft carriers, the largest ships ever in the Royal Navy, to increase Britain’s ability to project force around the world.[xxxviii] All these factors are now seen by Ministers as further evidence of Britain’s re-engagement with the world.
Britain’s increased power projection capability is concerning in itself, notably in light of the disaster of Iraq and Britain’s wider policy in the Middle East, where it is fighting seven covert wars.[xxxix] But this capability looks even more worrying in light of two remarkable speeches recently given by the head of the Royal Navy, the First Sea Lord, Admiral Sir Philip Jones. In a speech to an audience in Washington last month, Jones said, in reference to the Gulf region in particular:
‘Now that our Government seeks to extend the UK’s economic partnerships post-Brexit, the Royal Navy stands ready once again to be melded and aligned for best effect with our nation’s growing global ambition’.[xl]
Jones went on to infer that Britain’s possession of Trident nuclear weapons, which are of course housed by the Navy, is a signal of Britain’s new role in the world. He said:
‘This continued investment [in the Navy] is a powerful sign that far from being a diminished nation, withdrawing from the world, the United Kingdom has both the intent and the means to protect our interests, shoulder our commitment and support our partners across the globe’.
In July, Jones delivered an equally remarkable speech to representatives from the City of London at the Mansion House in London. Jones noted ‘Britain’s continuing, and indeed growing, position of global maritime leadership’ and the government’s commitment in the previous year’s Strategic Defence Review ‘for the work of the armed forces to more closely support the UK’s own prosperity’.[xli] Jones went on to say that the Navy, ‘at the height of Empire and beyond…has always been the guardian of maritime trade’. He even noted that ‘it was naval power that opened China and Japan to Western markets’ – referring to the brutal British conquest of China. Then Jones added:
‘Now, as the government looks to extend the UK’s economic partnerships, as signified by the creation of a new Department for International Trade in the last two weeks, the Royal Navy’s role in supporting prosperity rises to the fore once more.’
At the same time Jones highlighted Britain’s new ‘carrier strike’ capability: ‘The introduction of the first of two new aircraft carriers into the Royal Navy next year is a huge opportunity for the UK to signal its continuing ambition in the world’.
The meaning of this from the rest of Jones’s speech is clear – the head of the Royal Navy is seriously saying that British sea power and military force will protect and enhance British financial and commercial interests, including those of the City of London, especially in Asia. This is a clear exposition of the return of imperial gunboat diplomacy that Britain envisages in the post-Brexit world.
While the picture is still emerging, some lines of likely government policy post-Brexit are becoming clearer and raise major concerns about the UK’s role in the world. Britain is set to increasingly promote a failed model of international trade that will impoverish developing countries still further. It will likely pursue an aid strategy that supports corporations, neo-liberal economic objectives and wider British foreign policy. Britain is also on course to ignore human rights in its foreign policy even more than in the recent past. And it is even threatening to increasingly use its military power to secure its financial and economic interests.