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The New Depression

The business and political elite are flying blind. This is the mother of all economic crises. It has

We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.

Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.

The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.

In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.

In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.

The Grim Reaper has finally spoken:

a boom pumped up by credit steroids and a bust that takes us back to the 1930s

Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' econo­mics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.

But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.

Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.

Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.

But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.

There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.

Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.

Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".

Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.

This is the sad story of the New Labour era.

The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.

There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.

The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.

Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.

So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.

The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.

This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.

This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.

Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.

The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.

One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.

Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)

the global downturn in numbers


    IMF prediction for global growth in 2009 - worst since WWII

    Up to 40 million

    Number of people who will lose their jobs this year, according to the International Labour Organisation


    Total pledged by the US alone towards solving the crisis


    Proportion of GDP pledged by the G7 and BRICs countries towards fixing the crisis (1.5% this year)


    Number of US properties that received a default notice or were repossessed in 2008. In the UK, 45,000 homes were repossessed - another 75,000 are expected to be taken in 2009


    Number of major global banks which collapsed, were sold or were nationalised during 2008


    Number of European companies expected to fail this year; an additional 62,000 are expected to fail in the United States. These figures represent record levels of insolvency


    Increase in UK company failures between late 2007 and late 2008


    Drop in level of Chinese exports during January


    Current UK interest rates (down from 5% in October 2008). In the US, rates have fallen to between 0 and 0.25%

How the crisis unfolded

13 September 2007 Run on Northern Rock begins when it is revealed that the bank has requested emergency support from the Bank of England

21 January 2008 FTSE suffers worst falls since 11 September 2001

February 2008 Northern Rock nationalised

17 March 2008 JP Morgan Chase takes over the US investment bank Bear Stearns

12 July Mortgage lender IndyMac collapses - second biggest US bank in history to fail

9 August 2007 European Central Bank pumps ?95bn into banking market

7 September Financial authorities step in to rescue Fannie Mae and Freddie Mac

9 September Bradford & Bingley becomes second British bank to be nationalised

15 September Lehman Brothers files for bankruptcy

16 September AIG, biggest insurance firm in the US, receives $85bn rescue package

3 October 2008 US government announces $700bn Troubled Assets Relief Programme

8 October UK launches its first bank bailout plan, making £50bn available

October 2008 Iceland's banks collapse. IMF extends £1.4bn ($2.1bn) loan a month later

24 November Alistair Darling announces a temporary cut in VAT from 17.5 to 15 per cent

23 January 2009 UK enters recession

28 January US Congress passes Barack Obama's $819bn stimulus package

5 February UK Monetary Policy Committee votes to cut interest rates to 1 per cent - the lowest in over three centuries

Michael Harvey

Martin Jacques is a journalist and academic. He is currently a visiting fellow at the London School of Economics Asia Research Centre and at the National University of Singapore. Jacques previously edited Marxism Today and co-founded the think-tank Demos in 1993. He writes the World Citizen column for the New Statesman. His new book on the rise of China, When China Rules the World, will be published in June.

This article first appeared in the 16 February 2009 issue of the New Statesman, The New Depression

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When it comes to responding to Islamic State, there is no middle ground

If Britain has a declared interest in curtailing Islamic State and stabilising Syria, it is neither honourable nor viable to let others intervene on our behalf.

Even before the brutal terrorist attacks in Paris, British foreign policy was approaching a crossroads. Now it is time, in the words of Barack Obama, addressing his fellow leaders at the G20 Summit in Turkey on 16 November, “to step up with the resources that this fight demands”, or stand down.

The jihadist threat metastasises, and international order continues to unravel at an alarming rate. A Russian civilian charter plane is blown out of the sky over the Sinai Peninsula in Egypt, killing 224 people, most of them returning from holiday, and the various offshoots of Islamic State bare their teeth in a succession of brutal attacks in France, Lebanon, Tunisia, Turkey and further afield. Our enemies are emboldened and our friends want to know to what extent we stand with them. The UK can no longer afford to postpone decisions that it has evaded since the Commons vote of August 2013, in which the government was defeated over the question of joining US-led air strikes against President Bashar al-Assad’s regime following a chemical weapons attack on Syrian civilians. MPs’ continued introspection is on the verge of becoming both irresponsible and morally questionable. There is no fence left to sit on.

On Sunday night, two days after the Paris attacks, the French – with US support – launched a series of bombing raids against Islamic State targets in Raqqa. With much more to come, the choice facing this country may not be easier but it is certainly clearer. Britain must determine whether it wants to be a viable and genuine partner in the fight against Islamic State, and in the long-term efforts to bring an end to the assorted evils of the Syrian civil war; or whether we are content to sit on the sidelines and cheer on former team-mates without getting our knees dirty. We can join our two most important allies – France and the United States, at the head of a coalition involving a number of Arab and other European states – in confronting a threat that potentially is as grave to us as it is to France, and certainly more dangerous than it is to the US. Alternatively, we can gamble that others will do the work for us, keep our borders tighter than ever, double down on surveillance (because that will certainly be one of the prices to pay) and hope that the Channel and the security services keep us comparatively safe. There is no fantasy middle ground, where we can shirk our share of the burden on the security front while leading the rest of the world in some sort of diplomatic breakthrough in Syria; or win a reprieve from the jihadists for staying out of Syria (yet hit them in Iraq), through our benevolence in opening the door to tens of thousands of refugees, or by distancing ourselves from the ills of Western foreign policy.

That the international community – or what is left of it – has not got its act together on Syria over the past three years has afforded Britain some space to indulge its scruples. Nonetheless, even before the Paris attacks, the matter was coming to the boil again. A vote on the expansion of air operations against Islamic State has been mooted since the start of this year, but was put on the back burner because of the May general election. The government has treated parliament with caution since its much-discussed defeat in the House in summer 2013. The existing policy – of supporting coalition air strikes against Islamic State in Iraq but not Syria – is itself an outgrowth of an awkward compromise between David Cameron and Ed Miliband, an attempt to reverse some of the damage done by the 2013 vote in parliament.

The Conservatives have waited to see where the ground lies in a Jeremy Corbyn-led Labour Party before attempting to take the issue back before the Commons. Labour pleaded for more time when Corbyn was elected, but there is no sign that the Labour leader is willing to shift in his hostility to any form of intervention. More significantly, he has now ruled out Labour holding a free vote on the matter.

If anything, the coalition of Little Englanders, anti-interventionists and anti-Americans in the House of Commons seems to have dug its trenches deeper. This leaves the Prime Minister with few options. One is to use the Royal Prerogative to announce that an ally has been attacked, and that we will stand with her in joining attacks against Islamic State in Syria. The moment for this has probably already passed, though the prerogative might still be invoked if Isis scores a direct hit against the UK. Yet even then, there would be problems with this line. A striking aspect of the killing of 30 Britons in the June attacks in Sousse, Tunisia, is just how little domestic political impact it seems to have made.

Another option for Cameron is to try to make one final effort to win a parliamentary majority, but this is something that Tory whips are not confident of achieving. The most likely scenario is that he will be forced to accept a further loss of the UK’s leverage and its standing among allies. Co-operation will certainly come on the intelligence front but this is nothing new. Meanwhile, the government will be forced to dress up its position in as much grand diplomatic verbiage as possible, to obfuscate the reality of the UK’s diminishing influence.

Already, speaking at the G20 Summit, the Prime Minister emphasised the need to show MPs a “whole plan for the future of Syria, the future of the region, because it is perfectly right to say that a few extra bombs and missiles won’t transform the situation”. In principle, it is hard to argue with this. But no such plan will emerge in the short term. The insistence that Assad must go may be right but it is the equivalent of ordering the bill at a restaurant before you have taken your seat. In practice, it means subcontracting out British national security to allies (such as the US, France and Australia) who are growing tired of our inability to pull our weight, and false friends or enemies (such as Russia and Iran), who have their own interests in Syria which do not necessarily converge with our own.

One feature of the 2013 Syria vote was the government’s failure to do the required groundwork in building a parliamentary consensus. Whips have spent the summer scouting the ground but to no avail. “The Labour Party is a different organisation to that which we faced before the summer,” Philip Hammond, the Foreign Secretary, has said. It is ironic, then, that the Prime Minister has faced strongest criticism from the Labour benches. “Everyone wants to see nations planning for increased stability in the region beyond the military defeat of the extremists,” says John Woodcock, the chairman of the Parliamentary Labour Party defence committee, “but after two years of pussy-footing around, this just smacks of David Cameron playing for time when he should be showing leadership.”

The real story is not the distance between the two front benches but the divisions within both parties. There are as many as 30 Conservative MPs said to be willing to rebel if parliament is asked to vote for joining the coalition against Islamic State in Syria. It seems that the scale of the Paris attacks has not changed their position. A larger split in the Labour ranks also seems likely. Even before Paris, there were rumoured to be roughly 50 MPs ready to defy their leader on this question.


At first, in the wake of last week’s attacks, it seemed as if the Prime Minister might force the issue. To this end, he began the G20 in Turkey with a bilateral meeting with President Putin. His carefully chosen words before and after that discussion, in which he was much more emollient about Moscow’s role, showed the extent to which he was prepared to adapt to the changing situation. Cameron hoped that if he could show progress in building an international coalition on the diplomatic front, that might just give him enough to get over the line in a parliamentary vote.

This new approach has not had the desired effect. At the time of writing, the government believes it is too risky to call another vote in the short term. It calculates another defeat would hugely diminish Britain’s standing in the world. In truth, the government was already swimming upstream. On 29 October, the Conservative-
dominated Commons foreign affairs select committee, chaired by Crispin Blunt, released a report on the extension of British military operations into Syria, in anticipation of government bringing forward a parliamentary vote on the question. The report recommended that Britain should avoid further involvement unless a series of questions could be answered about exit strategy and long-term goals. The bar was set deliberately high, to guard against any further involvement (even the limited option of joining the existing coalition undertaking air strikes against IS in Syria).

The most flimsy of the five objections to further intervention in the report was that it will somehow diminish the UK’s leverage as an impartial arbiter and potential peacemaker. This is based on an absurd overestimation of the UK as some sort of soft-power saviour, valued by all parties for its impartiality in Middle Eastern affairs. Britain cannot hope to have any influence on policy if it is always last to sign up while others put their lives on the line. As so often in the past, what masquerades as tough-minded “realpolitik” is nothing of the sort. It is just another post-facto rationale for inaction.

Although it is sometimes said that Britain has yet to recover from the consequences of the invasion of Iraq, the committee report had a retro, 1990s feel. Many of the objections raised to burden-sharing in Syria were the same as those raised against humanitarian intervention in the Balkans two decades ago, when Blunt was working as special adviser to Michael Rifkind as defence and foreign secretary, and the UK was at the forefront of non-intervention. Likewise, two of the committee’s Labour members, Ann Clwyd and Mike Gapes, were veterans of the other side of that debate, and strong supporters of the Nato intervention in Kosovo in 1999. They expressed their dissent from the report’s conclusions but were voted down by their Conservative and SNP fellow committee members. “Non-intervention also has consequences,” said Gapes when he broke rank. “We should not be washing our hands and saying, ‘It’s too difficult.’”

Polling figures have shown majority public support for air strikes against IS since the spate of gruesome public executions that began last year, but nothing seems to change the calculus of the rump of anti-interventionist MPs.

All this promises an uncertain future for British foreign policy. On 6 November, the Defence Secretary, Michael Fallon, suggested that the UK’s existing position, of joining the coalition in Iraq but stopping at the borders of Syria, is “morally indefensible”. The killing of Mohammed Emwazi, aka “Jihadi John”, by a US predator drone on 12 November demonstrates what he meant. Emwazi was a Briton who was responsible for the beheading of British and American citizens, as well as countless Syrians. While the UK government was closely involved in that operation – and has previously used the justification of “self-defence” to “take out” targets in Syria – such are the restrictions placed upon it that we are forced to ask our allies to conduct potentially lethal operations (which are in our core national interests) on our behalf. The very act of “self-defence” is subcontracted out once again.

How long can this last when Islamic State poses a much greater threat to the UK than it does to the US? There is an issue of responsibility, too, with hundreds of British citizens fighting for and with Islamic State who clearly pose a grave danger to other states.


The very notion that Britain should play an expansive international role is under attack from a pincer movement from both the left and the right. There are two forms of “Little Englanderism” that have made a resurgence in recent years. On the left, this is apparent in the outgrowth of a world-view that sees no role for the military, and holds that the UK is more often than not on the wrong side in matters of international security, whether its opponent is Russia, Iran, the IRA or Islamic State. The second, and arguably just as influential, is the Little Englanderism of the right, which encompasses a rump of Tory backbenchers and Ukip. This is a form of neo-mercantilism, a foreign policy based on trade deals and the free movement of goods that regards multilateralism, international institutions and any foreign military intervention with great suspicion, as a costly distraction from the business of filling our pockets.

The time is ripe for long-term, hard-headed and unsentimental thinking about Britain’s global role. The country is not served well by the impression of British “decline” and “retreat” that has gained ground in recent times; and it is no safer for it, either. Given how quickly the security and foreign policy environment is changing, the publication of the Strategic Defence and Security Review in the coming week, alongside an update of the National Security Strategy, is likely to raise more questions than it answers. The officials responsible for its drafting do not have an easy brief, and news forecasting is a thankless task. Strategic vision and leadership must come from our elected politicians.

For all the talk of British decline, we are still one of the five wealthiest nations in the world. What we do matters, particularly at moments when our friends are under attack. However, until a new broad consensus emerges between the mainstream Labour and Conservative positions on foreign policy, the Little England coalition will continue to have the casting vote.

Syria continues to bleed profusely and the blood seeps deeper into different countries. There will be no political solution to the civil war there for the foreseeable future; to pretend that there is a hidden diplomatic solution is to wish to turn the clock back to 2011, when that might have been possible. Nor is the security situation any easier to deal with. A few hours before the attacks in Paris began, President Obama gave an interview in which he argued that he had successfully “contained” Islamic State. For the wider Middle East and Europe, that is simply not the case. Now, France will escalate its campaign, and the US will do more. Russia already has troops on the ground and will most likely send reinforcements.

The war in Syria is becoming more complicated and even more dangerous. The best that can be hoped for is that the Syrian ulcer can be cauterised. This will be achieved through the blunting of Islamic State, simultaneous pressure on Assad, and the creation of more safe places for Syrians. All roads are littered with difficulties and dangers. Yet, in the face of this ugly reality, is Britain to signal its intention to do less as every other major actor – friend and foe alike – does more? If we have a declared national interest in curtailing Islamic State and stabilising Syria – both because of the growing terrorist threat and because of the huge flow of refugees – then it is neither honourable nor viable to let others take care of it on our behalf.

John Bew is an NS contributing writer. His new book, “Realpolitik: a History”, is newly published by Oxford University Press

This article first appeared in the 19 November 2015 issue of the New Statesman, The age of terror