I admit that the supposed 'once in a lifetime' decision taken by Keir Starmer to increase UK defence spending by something approximating to the square root of diddly squat has irritated me considerably. I have noted some reasons already, but let me add another. Cutting the aid budget massively reduces the UK's soft power in the world.
I do not have time to write about what soft power is this morning, so for once, I am going to use ChatGPT for this purpose because this is a perfectly good summary:
Soft power in the context of overseas aid refers to a country's ability to influence other nations through attraction and persuasion rather than coercion or force. It is the use of cultural, economic, and diplomatic means to shape international relations, promote goodwill, and advance strategic interests.
When applied to overseas aid, soft power operates in several ways:
-
-
Humanitarian Assistance as a Diplomatic Tool – Providing foreign aid in response to natural disasters, conflicts, or poverty can enhance a country's reputation, making it seen as compassionate and responsible on the world stage.
-
Building Long-term Alliances – By helping developing nations through aid programs (e.g., infrastructure projects, healthcare initiatives, or education support), donor countries can strengthen diplomatic ties and create favourable relations that may benefit them politically and economically in the future.
-
Promoting Values and Ideology – Aid can be used to promote certain political or economic models, such as democracy, human rights, or free-market policies, aligning recipient nations with the donor country's worldview.
-
Economic Influence and Trade Benefits – Aid programs often encourage economic ties by fostering trade relationships and opening markets for businesses from the donor country.
-
Enhancing Global Leadership and Reputation – Countries that actively provide aid often gain international prestige, increasing their influence in global institutions like the United Nations or the World Bank.
-
Example:
China's Belt and Road Initiative (BRI) involves large infrastructure aid and investment in developing countries, strengthening its global influence. Similarly, the United States and European nations use foreign aid to support democratic governance and align other countries with their strategic interests.
In summary, soft power in overseas aid is about using generosity as a means of influence—building alliances, spreading values, and shaping global perceptions in favour of the donor country.
Starmer gave up massive amounts of the UK's soft power yesterday to boost his supposed physical capacity to resist Putin's advances. We may need to do that, of course. But the point I am making is that the two are not mutually exclusive. It would, as I have explained, be quite possible to maintain our soft power and finance additional defence spending by simply taxing the wealthy more. By doing so, we would not only defend ourselves against Putin and his friends allies in the USA, we could also defend ourselves against China, which is at least as important. Somehow, someone in the Foreign Office has forgotten that issue, as well as the vital importance of soft power.
It takes staggering stupidity to have such limited awareness of these issues.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
There is a lot we can do under the heading of ‘defence’ which would bring other benefits.
As a ‘for example’ improving the resilience of our utilities.
Something which if we are faced with both more extreme weather events and moving over to mobile rather than conventional landline phones, and electric heating would be well worth doing anyway.
Agree with almost all of what you say, however I suspect the FO got overpowered by the idiots in accounts who still think a nation with a Fiat Currency is like a school boy in the tuck shop.
If we accept that we must devote more resources to defence (and I do) then this was a major missed opportunity. It was (maybe still is?) a chance to say “Events, dear boy, events” and dump election pledges on tax and deficits.
That would allow a genuine reappraisal of our priorities that is so lacking.
I completely agree
Why not just ‘raid’ the Treasury for the funds needed?
It’s the false choice between the two that angers me.
It is just so stupid. I cannot take Labour seriously at all – sorry.
It is all well banging on about how the Tories left the country but I’m still waiting for Labour to do something about it.
Thank you, Richard.
I don’t disagree, overall, and wish to add the following:
Much of China and even Russia’s aid is practical, e.g. focused on power generation (especially in South Africa), prevention of desertification (especially in the Sahel and Horn of Africa), transport (East Africa and Mauritius) and prevention of terrorism*. *The Clintons were, ahem, lobbied by the Lebanese oligarchs in Nigeria to not add Boko Haram to the US list of terrorists.
What does the UK do? It has envoys promoting listings on the London Stock Exchange, tertiary education in the UK (and greater private sector involvement in local education), greater private sector involvement in public transport and greater private sector involvement in local healthcare.
So Colonel – Sir – the UK is just a corporate lackey state – that is what Thatcher has brought us to in the end?
Yes…
I do hope what follows is not a discordant note.
Berlin +/- 2011. PV & storage conference. Lady from a Bavaraian outfit called Kito gave a presentation.
Sub-Saharan Africa (forgot which country – does not matter) – ultra poor people – no elec, kerosene lamps etc.
The offer: Village PV (couple of panels), LED lanterns recharged from the PV, local maintains the system. Lantern sold for Euro50 and elec to recharge it @ circa 29eurocents/kWh. To the poorest people on the planet. Obvs head man involved. Kito also did PV+water pumps. It was a business, no subsidies & no gov involvement.
Couple of observations: villages valued the lamps (cos they paid for em), no more fumes & better light. Argument from Kito: we respected them cos we treated them as economic players – not receipients of aid (half arsed justitifcation or..??).
Difficult call isn’t it? If you have paid a big amount of money I guess you take of stuff.??
Other soft power – the BBC World Service, and university education for foreign students. Both hacked at.
Agreed….
Does extra Defence spending really require the Government to tax more or spend less? I fear that on this issue I may be in the nit-picker camp. Surely it depends on where the money goes? If the money is spent on employing soldiers and buying British weapons, then it is like any other Government spending (=investment). It should gradually come back to the Government as additional tax revenue without the need to raise taxes. Similarly, if it avoids much higher expenditure in the future. In both cases, the future Government’s books will balance no worse or even better. However, if the money is used, say, to buy American weapons, then it will add to inflation by competing against other imports for Foreign currency and pushing up the cost of imports. Also, it will not yield a tax dividend. But I agree entirely on the idiocy and nastiness of cutting the aid budget. A question for Labour is how many other people’s children should be left to starve and die in order to keep to the Fiscal Rules? With the 2-child cap and winter fuel in this country, the acceptable level of misery and death may be fairly high.
No one says there is no multiplier, but you miss the point: there is no output and that is a major reason why it performs so badly.
Ironic that two Quakers should be arguing about the economics of weapon production. In pure economic terms, I don’t see how manufacturing a weapon is any different to manufacturing a smartphone. The weapon sits in a silo. After a period of use, the smartphone just sits in a drawer. Surely the money continues on a separate path? Some goes as company profit, some as wages, both taxable. More goes to purchase materials and components. While these come from the UK, they continue to generate profits and wages, again taxable. The issue is when the £s are used to buy another currency.
Sorry, but that’s wrong.
The phone adds value elsewhere.
What value does defence add to any other process?
Money is not the only issue in economics.
I agree: if we’re just talking about ‘multipliers’ in a monetary economics sense, it’s a question about where the money goes.
The multiplier comes from the repeated circulation of the additional money (initiated by the expenditure by government) in the rest of the economy; so, yes, the weapons manufacture has ‘some’ multiplier, mostly from the wages paid and the purchases from other companies (in the UK – not imported) which then get spent into other businesses/workers and so on (tax being taken at most stages, at various levels). So the smartphone manufacture also has ‘some’ multiplier; and which is larger will depend on how often the injected money ‘repeats’ itself.
The problem with the monetary aspect of defence procurement expenditure is, I suggest, more related to its value/cost content: much of it is capital – physical material – not labour; so tracing back up the supply chain of that leads to some additional labour elsewhere, but ultimately to imports, especially raw materials, and energy for manufacturing. (Hence also comments elsewhere on ‘will we import US weaponry?’ Even worse for the multiplier if the imports already have a lot of value added and are finished or near-finished goods.) Whether that supply chain results in a smaller multiplier than for a smartphone manufacture, will be case-specific: the smartphone could also be very import-based.
I read that the bigger multipliers come from government spending on, eg, more care-workers’ pay – since that goes directly into other consumption. (Their propensity to save will be low, being low-paid and not wealthy.) – or infrastructure spending, if it also stays ‘inside the UK economy’ – the workers (re)building a school or hospital, the concrete supply company, the glass manufacturer.. and their workers…
To pick up Richard’s response, however, the intangible aspects of the multiplier (not directly related to the additional money put into circulation) may be significant: the expenditure on care work or medical or educational facilities may very likely result in a better-educated, more productive/effective and healthier population, with savings in health service and other costs (which releases money for something else). The use of an asset – even a humble (?) smartphone, may augment personal or business efficiency, productivity or creativity in some way. Of course, a smartphone may do the opposite, by distracting with entertainment (and extracting fees, for foreign platform operators; ie another import!) A cruise missile or a drone sitting in a hangar cannot do that.
A related point which I haven’t seen elsewhere. Pension funds are being urged to repatriate some of their overseas investments. But when overseas investments are used to pay pensions, they will be converting other currencies to £s, thus reducing pressure on the exchange rate
But that is true of repatriation too.
So if I had a lot of extra cash to spend on defence
1. Whats a major problem the Armed Forces have that can be addressed with extra cash? Retention
2. Why? Accommodation, in particular married quarters
So why not have a major push on improving accommodation including its energy efficiency? We are likley to either be maintaining armed forces for the foreseeable future OR able to reuse the accommodation for civilian use. So thats both a ‘Military’ ‘Climate Change’ and ‘Housing’ win
3. Name another problem, how about ‘post service life’ so
4. Offer training/University grants similar to the US GI bill on completion of/during service
So it might help retention, ease transition into Civilian life, provide a better educated more capable military -and of course provide a skilled educated workforce for the civilian economy
Is not very cruel to take money from the poor of this world rather than to stop a few tax loopholes use by the wealthy?
Couldn’t agree more Richard. This brain-dead, balanced-budget worshipping government can be completely trusted to always come up with the worst possible solution. In this case, a useless increase in defence spending ‘funded’ by gutting a super-important ‘soft’ power.
The Starmer doctrine: Speak too softly and carry a small stick