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.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.