The Cyprus cash airdrop is just another military contingency plan

RAF air-lifted in one million Euros in cash.

A drop in salary took on a whole new meaning for members of the British Armed Forces deployed in Cyprus, when the RAF air-lifted in a million Euros in cash.

The emergency measures were designed to ensure troops don’t run out of cash if cash machines empty, as banks are closed until Thursday in the aftermath of a controversial plan for a one-off levy on savings, which has since been rejected by the Cypriot government.

Is it usual for British service personnel deployed abroad to be paid in local currency, and does the Ministry of Defence (MoD) regularly have to deal with the dramatic local effects of an increasingly destabilised global economy?

An MoD spokesperson said that the way soldiers are paid is up to them. Generally, for European deployments to permanent bases such as in Cyprus or Germany, personnel choose to have the majority of their wages paid into their regular UK bank account, with some “spending money” paid into local accounts in Euros.

In the case of mid-term operating bases, a unique local micro economy can spring up. At Camp Bastion, the pound can be exchanged at a favourable rate with the local currency the afghani, and Bastion shops and food outlets deal seamlessly with Euros, US dollars and pounds.

Locals are encouraged to set up shops and stalls in the camp to sell local craft mementoes and gifts, and are very keen to get their hands on dollars, the de facto universal currency. However, with the Danish military working closely with Afghanis to deliver training, the Euro is catching up in desirability.

For short-term operations like Libya with no in-country base, the MoD makes no local financial arrangements.

With the global economy struggling and the banking system of some countries teetering on the verge of collapse, does the MoD have a regular plan in place to ensure at least the military economy continues to thrive?

“Not really,” says the MoD spokesperson. “It’s the job of the MoD to react to a rapid change in any situation with a contingency plan, and the potential shortage of cash in Cyprus is just another example.”

This blog first appeared here.

Photograph: Getty Images

Berenice Baker is Defence Editor at Strategic Defence Intelligence.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.