We cannot go on like this: British Grand Strategy 2012

James Cameron

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Britain is in the midst of one of its periodic bouts of self-doubt regarding its role on the world stage. It may not seem that way: our leadership postures in Europe and it dispatches warships to distant shores in order to fly the ensign in the world's trouble spots. But in the background there is the anaemic economy, urban unrest and a sense that Britain is not quite the country it was a few years ago. As many editorials gloomily informed their readers as the New Year dawned and the National Archives released a new stash of materials under the thirty-year rule, it feels a lot like 1981. The parallels are particularly resonant when it comes to British grand strategy.

Grand strategy, in the words of historian John Lewis Gaddis, 'is the calculated relationship of means to large ends. It’s about how one uses whatever one has to get to wherever it is one wants to go'. It is more capacious and holistic than mere foreign policy, encompassing domestic factors such as economic prosperity as well as traditional metrics such as relations between governments and military strength. Summing up on this basis, our situation is probably as bad as it was thirty years ago, if not worse. In the 1970s and early eighties it was the economic powerhouses of West Germany and Japan that left Britain for dust; now Germany is joined by China and Brazil in making UK plc look like an underperformer. Our former assets now appear liabilities: just as British industry was stuttering under the weight of exorbitant union pay demands, so now bankers threaten to move to Switzerland at the slightest sign of regulation. We are locked in another interminable counter-insurgency campaign with intractable politics – not in Northern Ireland this time, but Afghanistan. One hears Defence Secretary John Nott's words to the House of Commons echoing down through the decades: 'We cannot go on like this'.

Firstly, we have to recognise our failings. The Thatcher government identified key weaknesses in Britain's position: a slow-growth economy based on an uncompetitive manufacturing base and a foreign policy that had vacillated between Europe and the United States, trying to please both but satisfying neither. We have been operating within the Thatcherite solution to these problems for the last three decades: the deregulation of finance with the proceeds redistributed through government spending, whilst hugging the US close in its drive to spread the Washington consensus beyond North America and Western Europe. There was the sense that this combination could allow us to 'punch above our weight' and 'remain at the top table' despite the diminution of our great-power status. This strategy has run its course. As Nott went on to say, 'We have no choice, in the longer term, but to move towards a better balance between the various components of our effort'.

Rebalancing the economy has to be a priority. Since the 1980s, we allowed it to become dangerously dependent on London, the financial sector and its attendant services. As a result, we suffered more than any other large developed economy after the financial crisis. One lesson from this experience is that we should not throw the baby out with the bathwater: we moved too fast towards services and finance at the cost of our manufacturing base. Today we cannot afford to gut our strength in this area. But at the same time, we cannot allow bankers to behave – in Nick Clegg's resonant terms – like 'Arthur Scargill in pinstripes'. To allow special interests from a sector that has so obviously failed to dictate government strategy as a whole would be as foolish now as it was then. A rebalancing towards high-end manufacturing may not produce the stellar growth that characterised British performance after Thatcher and will take longer to achieve, but hopefully it will not bring the huge systemic risks that made us so vulnerable to the economic headwinds of 2008.

Has the UK been overly influenced by the US on its foreign policy? Eric Draper/ The White House / AP Time Magazine

We have a lot to be grateful to America for – particularly its commitment to European security since the Second World War. The ties in language, culture, political values and interests run deep.  But in the past decade our priorities became dangerously skewed. At best, the British government allowed its desire for a hearing in Washington to lead it towards an overly optimistic view of the outcome for success in both Iraq and Afghanistan; at worst, the messianic tendencies of some of our leaders led them to spin the available evidence to the detriment of parliamentary democracy. In either case, we blundered badly in both conflicts in a way that diminished our standing with emerging powers – and ultimately, in promising too much and delivering too little, within the U.S. government. This can never happen again. We must be a critical friend to the United States, be honest about our limitations, and realise that Europe's diminishing importance in America's grand design cannot be wholly compensated for by ever greater British tribute in blood and treasure.

There are no easy options for a middling power like the United Kingdom. The road ahead is more difficult than it has been since 1981: we will have to forego a quick buck of the next Big Bang, as well as the cheap thrill of the odd Oval Office meeting. We may, however, emerge a more balanced country as a result.