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If Britain Is to Leave the EU, London Must Double-Down on NATO

british_marines

The National Interest, 5 October, 2017,

In his first interview since being elected chairman of the NATO military committee, the UK’s Air Chief Marshal Sir Stuart Peach attempted to promotethe centrality of the military alliance to European defense, stating the European powers should not attempt to duplicate NATO efforts. His comments come at a time of deep geopolitical uncertainty, with threats from within and threats from without rocking the once-solid Western alliance. Domestically, they also come as the UK MOD attempts a review of the 2015 Strategic Defence and Security Review. Inside the Western alliance, a number of rifts have opened up between those states moved by 2016 populism (i.e., post-referendum London and post-Trump Washington), and those continentalists who wish to double-down on the European Union project (i.e., French president Emmanuel Macron and German chancellor Angela Merkel). Inevitably, this raises a number of critical questions about Britain’s role as a military power, the future of its influence inside NATO, and the overall effect its leadership will have for the Western alliance.

The Western alliance has long been cushioned from external threats by its strong economic leadership, its liberal-democratic philosophical foundations, and its formidable military technological advantages. One by one, these three pillars of Western strength have been weakened or seriously undermined. In the first instance, the Financial Crisis of 2007–08 came about because of poor regulations, hubris and large amounts of Chinese liquidity in the international markets. In the second instance, the very success of globalization—the internationalization of capital and labor—came with a hidden barb. In the wake of two decades of the offshoring of manufacturing and the import of cheap labor, Western working classes have run to elect populist leaders and far-left parties in order to punish the “Davos set.” The final pillar of military technological advantages has fallen prey to complacency and the inability of political leadership—notably in the European part of the West—to argue for a defense spending proportional to the declining security environment.

This declining threat environment is no longer a matter of debate as it was a decade ago. No longer concerned with “failed states,” the West has other, more pressing concerns on its western and southern borders, including Russian revanchism, refugee flows and ISIS-organized attacks within the West. The recent decision by Sweden to conduct joint military exercises with American and French armed forces earlier this month—in the wake of a large Russian exercise—signals the return to a Russia seemingly hungry for prestige and for a sphere of influence. Given its willingness to attack Western democracies at the ballot box, it has become clear that Russia poses a unique and singular threat to Europe. Despite these very real threats, the West continues to suffer from a lack of internal cohesion. Expressing a sense of European disenchantment with both the United States and the United Kingdom, Chancellor Merkel recently proclaimed, “The times in which we [Europeans] can fully count on others are somewhat over, as I have experienced in the past few days.” While Germany’s frustrations are somewhat unfair—given its shoddy record on the 2 percent rule—it does mark a dangerous trend toward fragmentation in one of the world’s most long-lasting and successful alliances.

Assuming that British policymakers understand the worth of our influence inside NATO, it is therefore incumbent that future governments stop the cutting of the armed forces. Media reports indicate that the Royal Marines face the prospect of a one thousand service-personnel reduction in order to save £3 billion per year over the following ten years; the decision is due to be made by the 2015 Strategic Defence and Security Review in late November this year. According to a series of publications commissioned by the Ministry of Defence, the total strength of the British forces service personnel has decreased by 0.4 percent; full-time trained strength and trade trained strength [Royal Navy/Marines, the Royal Air Force, and the Army, respectively] have experienced a fall of 1.4 percent since August 1, 2016. Although the total number of trained and untrained strength of the Tri-Service Future Reserves 2020 rose by 3.6 percent to 36,580 personnel, total intake (in sum) has collapsed: Whilst outflow from the regulars has fallen by 6.2 percent, subscription intake for the Future Reserves 2020 dropped by an astonishing 16.6 percent, whereas outflow increased to 4.4 percent. Equipment and formations also experienced steady quantitative decreases: totalling 4,098 key land platforms—consisting of 1,763 armoured personnel carriers, 1,907 protected mobility vehicles, and 428 armoured fighting vehicles—thirty-one reductions of platforms took place over the last twelve-month period, due to a deterioration in the number of Mastiff protected mobility vehicles (from 421 to 396); most saliently, there occurred a drastic 37 percent reduction following the withdrawal of the Black Hornet spy plane from service, with a reported 281 unmanned aircraft systems.

It should be noted that decline is not preordained; it’s a political choice, and one that we don’t have to make. Yes, it is true that United States—and Western power—is declining, but this is for the moment relative, not absolute. Given its strong assets, its unique geographical advantages, a network of far-flung bases, and a strong defense industrial base, British power remains formidable. In a recent report conducted by the Henry Jackson Society, James Rogers created a power index, using seven key indices, including: economic clout, diplomatic leverage and military strength. His findings show that Western powers “still stand tall in the world, and the US still towers over everyone, goes against the grain of both popular perception and media narratives. Therefore, talk [of the eclipse of the West] is still premature from the perspective of geopolitical capability.” As Professor Yukon Huang notes in his recent book on China, Americans and Europeans are most likely to believe that China has surpassed the United States as the world’s greatest economic power. Asians—and the Chinese themselves—recognize that China has some way to go before it approaches U.S. levels of total power.

If Britain is to succeed in the post-Brexit world, it will have to do so with a strong sense of its position in the global community. Its national power also stems from three pillars, which girded the West: a strong economy, a belief in liberal democratic values, and a strong military-technological base. With its permanent seat on the United Nations Security Council, its strategic submarine force, a robust diplomat service, and an influential role inside NATO, London can continue to play a major leadership role inside the West. However, it must develop strategies that strengthen these pillars and not rest on its laurels. If defense spending continues to drop, how long can the UK lead? If its artificial intelligence and telecommunications firms continue to be bought by China, then how will the MOD craft its future war-fighting plans? The UK has stepped back from the European project, but it should be noted that the project has always been just one aspect of a Western alliance that has maintained peace and security for its members—and a large part of the global community—for nearly seventy years.

 

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Daily Mail: Chinese technology firm takeover ‘could put UK security at risk’

The Daily Mail, James Burton, 25 September, 2017

“John Hemmings, of The Henry Jackson Society think-tank, said the deal has ‘all sorts of implications in the military sphere’.

‘If the military suddenly has to start buying semiconductors from China, there are very serious concerns,’ he said. Chinese firms might build ‘back doors’ into their chips which allow devices to be hacked into by the state. Consumer electronics could also be at risk, he added.”

To read the full article, please click here.


The Interpreter, 26 July, 2017

The recent exposure of Chinese influence-peddling inside the Australian political system is just one example of China’s growing influence and willingness to act in Western states. In these days of austerity for many Western nations, money speaks loudly and in recent years Chinese investment into Western liberal democracies has surged.

Chinese foreign direct investment is shifting from commodities in the developing world to high-tech acquisitions, equity stakes and mergers in advanced economies. In Europe alone, Chinese investment increased 44% between 2014 and 2015, when it reached €20 billion. For the most part, these funds have been welcomed by cash-strapped Western states seeking to reinvigorate their economies. However, there are also risks associated with Chinese investment in telecommunications and other mainstays of modern commerce.

Research carried out by the Henry Jackson Society suggests that Chinese investment in national infrastructure is taking on critical proportions, and Western states – particularly the five countries involved in the Five Eyes intelligence alliance – are responding in piecemeal fashion with each screening investments in different ways. A number of incidents in recent years have underlined the need for better co-ordination between nations, particularly those that share intelligence, and improved understanding of China’s investment strategy into the West.

In 2016, for example, a Chinese consortium that included a subsidiary of the Chinese defence industrial giant AVIC, bought a large stake in the UK’s largest data centre operator, Global Switch. Whitehall approved the deal, only to see the Australian Department of Defence pull out of future business with Global Switch, citing the AVIC buy-in. Then came the Canadian government’s approval of a Chinese takeover of the Canadian satellite communications company, Norsat.  After the Trudeau administration confirmed that change in ownership, the Pentagon announced it would have to re-examine its contracts with the Vancouver firm.

MERICS research suggests China’s state owned enterprises (SOEs) accounted for more than 60% of China FDI in Europe in 2015. While this is not as high as it has been, the trend is upward which adds to the argument that much of the investment surge is strategic in nature. Beijing has also recently announced its intention to become the global leader in artificial intelligence (AI), a cutting-edge technology upon which the defence of the West will depend. One can see China’s intentions in its Made in China: 2025 strategy that was announced in 2014. The strategy involves subsidising Chinese firms targeting acquisitions and mergers of Western AI, IT, and telecoms firms and using non-tariff barriers to provide a sanctuary for Chinese firms inside China so they can advance safely away from the harsh glare of competition. The goal is to give China strategic dominance in the technologies of future warfare.

Such goals are alarming, and it’s not just policy analysts who think so.The Trump administration, for example, demanded an investigation in Chinese investment into Silicon Valley start-ups and the resulting report indicates that many of the Chinese firms operating in this field have state support and direction.

The recent decision by Berlin to restrict Chinese investment into parts of its digital economy and infrastructure is another indicator of how critical this issue has become. As one of the West’s most open economies, this action demonstrates Berlin is taking the situation very seriously indeed. While London mulls over a body similar to the Committee for Foreign Investment in the United States or Australia’s Foreign Investment Review Board to supplement its current ad hoc system, it is imperative that the Five Eyes alliance members systemically overhaul the range of sectors open to Chinese investment. Some practices that could assist include:

  • Instituting a regular Five Eyes meeting between the heads of their investment review boards.
  • Use this process to build a ‘common operating picture’ of Chinese investment practices and targets.
  • Sharing more information on what Chinese firms are doing in each of the Five Eyes economies, their ownership structures, and any past instances of serving Chinese national security objectives.
  • Considering an overhaul of the Five Eyes working groups in telecoms and AI, giving them greater prominence than they now have, and creating stronger links between private sector actors and security agencies.
  • Developing better monitoring by Ministries of Economy; presently, governments capture statistics without giving much background. They can and should provide more information to regulatory bodies.

The surge of Chinese SOE-led interest into Western infrastructure and high-tech can help bridge the gap between supply and demand for investment dollars. However, we need to be realistic about Beijing’s own industrial goals and objectives and the nature of its investment strategy. A common assessment system for the Five Eyes allies would assist in safeguarding our interlinked telecommunications and high-tech sectors.


Pushback: Why the Five Eyes Intelligence Alliance Should Keep Chinese Investors at Bay

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The National Interest, 25 July, 2017

There has been a dramatic shift of investment into the West, which may have a deep impact on U.S. security and the country’s future way of life. According to a report recently published by the Henry Jackson Society, China is making massive investments into Western digital and critical national infrastructure, and Western states are not reacting in a coordinated or rational way. This article argues that those states can and should coordinate a collective reaction through the Five Eyes intelligence alliance. The Five Eyes—arguably one of the strongest and long-lasting intelligence coalitions in history—consists of five of the most robust liberal democracies in the West: the United Kingdom, Canada, Australia, New Zealand and the United States.

Bound by strong cultural links, these five states have seen off authoritarian communist dictatorships and global conspiracy theories from a range of directions. Following the collapse of the Soviet Empire and its satellites, the men and women who worked in the shadows to keep us safe during that time turned their attention toward failed and failing states. They also began defending us from corporate espionage and, now, the rise of domestic-based Islamist terrorism. While the members of this shadow group still work on those issues, a new one has presented itself, and from an unusual and unlikely direction—Chinese malicious investment.

To finish this article, click here.


The Financial Times: UK to tighten foreign investment reviews

The Financial Times, Charles Clover, Jim Pickard, 24 July, 2017.

“Several former Tory ministers have backed a new report by the Henry Jackson Society, a think-tank, calling for the creation of a body along the lines of CFIUS. ‘Right now the problem is we don’t have a review process that sits down and sensibly goes through the security implications [of foreign deals] or at least in a way that is well resourced,’ said John Hemmings, author of the report.”

To read the full article, please click here.


HJS Report: Safeguarding our System: Chinese Investment into the UK’s Digital and Critical National Infrastructure

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Henry Jackson Society, 18 July, 2017

China’s investment into Western advanced economies – including that of the UK
– is increasing and changing in scope surging from EUR 14 billion in 2015 to EUR
20 billion in 2016, a 44% jump since 2014. More than 60% of the value of deals has been by state-owned enterprises, indicating this push is led by state strategy than commercial
interests.
• In 2016, China invested $11.15 billion into the UK. More than double the amount in
2015 and the most in any one year going back to 2005.
• China’s economic strategy, Made in China: 2025, might threaten the long-term
survival of UK businesses unless some sort of government protection is afforded to
them or unless China affords British businesses more access to China’s home market.
• Because of cyber vulnerabilities, critical national infrastructure will be at the forefront
of any future war.
• The current review system could be improved and rationalised:
– It has allowed access to the UK’s digital and critical infrastructure with elements
of China’s defence industrial concerns
– It has allowed deals that have affected the UK’s closest military allies
– It allows for domestic and foreign pressure on the government of the day
• A formal investment screening regime is both necessary and desirable to protect the
UK’s economic interests and its national security.
• A new regime should be built, which is adequately resourced to carry out the difficult
task of tracking foreign direct investment (FDI) into the sensitive parts of the UK’s
economy.
• The new regime should begin to coordinate more closely with the UK’s closet military
and intelligence-sharing allies, including the Five Eyes partners and NATO member
states.
• Any new regime should carry out its review process in a judicious but swift manner so
that foreign investment in the UK is not hampered or harmed. This report suggests
that the regime should be sufficiently able to pass its decisions within 30 days of
receiving an inquiry.
• Ideally, any regime should be overseen by a special committee in Parliament to ensure
that it is sufficiently funded and resourced to carry out its activities, and that it is
carrying them out in a legal, expedient and sufficient manner

To read the full report, please click here.


The Times: China’s expanding economy beats all targets

The Times, Jamie Fullerton, 18 July, 2017

“Amid concern surrounding Chinese investment in UK nuclear power and parts of the telecoms network, the government should “urgently consider” a new screening office to investigate future deals, the Henry Jackson Society said in a new report.

The think tank, a critic of Chinese foreign policy, also claimed that Britain’s welcoming stance towards China’s $44 billion investment in the country since 2005 had not been reciprocated.

“The UK should, of course, welcome inward investment to feed the economy, but not at all costs,” John Hemmings, director of the Asia Studies Centre at the Henry Jackson Society, said.

“We have to ensure that foreign state-owned enterprises are not compromising our most critical infrastructure or key future technologies.”

To read the full article, please click here.

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