The Limits of Budget Diplomacy

Hot takes on Foreign Office funding in the budget suggested spending had fallen by 40% – from £2 Billion to £1.2 Billion as we leave the European Union. Such an eventuality would have been catastrophic for the UK’s standing in the world at a time when the consensus outside government is that the UK’s once Rolls Royce diplomatic capability is already struggling to resource some basic functions.

In fact, it is unclear that there will be any cuts immediately, as the gap is explained in the small print as being because ‘figures for 2018-19 and beyond do not reflect all transfers which will be made from DFID to other government departments’. This allocation will take place at a later time.

Indeed a look at earlier budgets suggests that the allocation from DFID is likely to take the total FCO budget to anywhere from £1.7 -£2 Billion in coming years, with the caveat that DFID’s own budget looks set to fall after 2019 as downwards revisions to GNI mean that the statutory 0.7% spending figure for ODA will imply a drop from £8.7-8.2 Billion in 2019/20.

The only definite change for the FCO spending plans is the drop from £1.3 Billion to £1.2 Billion in 2019/20. This loss of £100 million – a rounding error for bigger spending departments, will hit the FCO very hard because it is almost 8% of their baseline budget. After 20 years of cuts, the credibility gap between expectations placed on British diplomats to project a ‘Global Britain’ and the meagre resources allocated, is widening into a chasm that is increasingly obvious to allies and adversaries alike.

The most recent report from the British Foreign Policy Group makes clear that the world is becoming ever more complex and fraught with risk to the UK. Emerging powers and various non-state interests are increasingly questioning the UK’s position. Some are even challenging the rules based international system the UK established, relies on, and has guaranteed for the best part of 70 years. The loss this week, for the first time in 46 years, of a UK place on the International Court of Justice- a key UN body –  is but the most recent sign of successful assaults on the UK’s standing. The recent defeat for the UK in the UN over the Chagos islands where key allies, including in Europe, abandoned the UK, offered another warning of things to come.

Those who understand the importance of diplomacy to the future of everyone in the UK need to make our voices louder in explaining the returns that flow to every aspect of our lives from investing in our ability to shape the world. Similarly perhaps we need to make it far clearer what the costs will be to taxpayers of a UK retreat from the world in circumstances where doing more with less has long ago stopped being a viable strategy.

Because without greater investment in all aspects of our international engagements, but particularly our diplomacy, the UK will almost certainly begin losing more allies, support and credibility at time, as we leave the European Union, when we need to be winning more of all three. There will be economic and security costs. Capacity built up over decades  –  even centuries – will not be easily restored once lost.

The UK is at an inflection point in terms of the path it wishes to pursue. It is clear that with the right investment, imagination and focus the UK has the opportunity to seize the 21st century international agenda for global, but most importantly, for UK benefit. Yet the worrying sign is that there is a complacency about the alternative to this path. In an increasingly dangerous world a slow glide to the margins can quickly become a tailspin, particularly as our traditional allies suffer their own distractions. This budget may not be the immediate horror story for diplomacy that some have trailed, but the underlying message is still deeply concerning, and a clear sign that the need for a strong, non-governmental platform for discussion of the UK’s international interests is more important than ever.

The views expressed in this article are those of the author and do not reflect the views of the BFPG. The BFPG is an independent not for profit organisation that encourages constructive, informed and considered opinions without taking an institutional position on any issue.
Tom Cargill

Tom Cargill is Executive Director of the British Foreign Policy Group. He has worked in various roles in the public, private and NGO sectors, including at the charity for children in care Believe, as well as 10 years at Chatham House (The Royal Institute of International Affairs) followed by 4 years at the engineering, procurement and construction multinational Bechtel. He is the author of numerous reports, chapters and articles on international and foreign policy issues.