Where now for the west's mission in Afghanistan?

Cameron meets Obama for talks after US soldier massacres civilians in Kandahar.

David Cameron could not be travelling to Washington in grimmer circumstances. The shocking news that a lone US soldier killed at least 16 civilians, nine of them children, in a shooting spree on Sunday means that US-Afghan relations have reached a new low.

The more one hears about the story the worse it gets. According to the New York Times, "The man gathered 11 bodies, including those of 4 girls younger than 6, and set fire to them". He may have been acting alone but that will not reduce the risk of reprisal attacks. For many, the massacre will confirm their view that the occupation is irredeemably brutal. It was only three weeks ago that US troops were found to have burned copies of the Qur'an at the main Nato base, an act that led to protests in which six American soldiers were killed.

The dry commitment by General John Allen, the commander of US and Nato forces in Afghanistan, to ensure "that anyone who is found to have committed wrongdoing is held fully accountable" is unlikely to dampen tensions. In a statement on its website, the Taliban has vowed to "take revenge from the invaders and the savage murderers for every single martyr".

It declared:

A large number from amongst the victims are innocent children, women and the elderly, martyred by the American barbarians who mercilessly robbed them of their precious lives and drenched their hands with their innocent blood.

The American terrorists want to come up with an excuse for the perpetrator of this inhumane crime by claiming that this immoral culprit was mentally ill.

If the perpetrators of this massacre were in fact mentally ill, then this testifies to yet another moral transgression by the American military because they are arming lunatics in Afghanistan who turn their weapons against the defenceless Afghans without giving a second thought.

Coming so soon after the deaths of six British soldiers last week, there is understandable concern that UK troops may be caught in the fall-out. All of which means that the onus is on Cameron to restate the case for Britain's continued presence. As the shadow foreign secretary, Douglas Alexander, notes in today's Guardian, the PM came to office promising that Afghanistan would be his "number one priority", but it is now eight months since he made a parliamentary statement about it. He writes: "As the prime minister heads to Washington my concern is that he has an end date, but still no end state: no realistic vision of what will be left behind. And in these critical months the scale of military sacrifice does not appear to be being matched by diplomatic effort."

With the fighting likely to intensify in the run-up to the 2014 withdrawal date, the question confronting western leaders is what sort of country they will leave behind. For now, it is likely to be one even more blighted by violence, corruption and the drugs trade. Consequently, a growing number of voices on the left and the right contend that the benefits of remaining are outweighed by the costs. It is up to Cameron to persuade them otherwise.

George Eaton is political editor of the New Statesman.

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR