Britain: Sobering up the morning after
By Marwan Bishara
As Britons sober up the morning after Thursday's elections, they will come to realise that the challenges facing the country are more historic than political.
Regardless of which party governs next, the gloomy economic and strategic forecast will broadly limit the next prime minister's tenure to cleaning up the country's mess.
Away from the bombastic campaign rhetoric, the next leader needs to share the bad news about Britain's shrinking economy and diminishing influence beyond its borders.
Between its toxic finances and draining (and unpopular) military interventions, the UK's overall balance sheet looks pretty dim, if not disastrous.
Even the most optimistic forecasts don't predict a return to the pre-2008 economic performance for several more years. With its reliance on banks and property, it was bound to be hard hit.
The fall in national output in 2009 was the biggest since 1945, and the budget deficit as a share of GDP both in 2009 and 2010 will be the largest since the second world war.
In 2008-2009, Britain had gross debt amounting to 55 per cent of GDP; by 2010-11, it will hit 82 per cent. Today, Britain's budget deficit is almost as big as Greece’s in proportion to its economy.
The government now accounts for over half the economy. And with the highest budget deficit in the EU at more than 12% of GDP, London risks going down the path of Greece if it doesn't put its house in order sooner rather than later.
Much of the UK's foreign policy continues to be driven by the pretence of world prominence, decades after it lost its empire. It insists on "leading" various efforts in the Middle East (Yemen, Afghanistan, Gulf region etc) as well as in world economic forums.
Britain remains the world's sixth largest economy, the fifth military/nuclear power, and a permanent member of the UN security council.
However, even before the crisis, there wasn't enough money to satisfy the armed forces military budget, which is one of the world's highest. The next prime minister will be forced to cut the defence budget substantially.
As emerging economies and global powers take centre stage, the UK is on a continuous decline from its past grandeur. Even its old colonies, from the US to Australia, through India and the Gulf region, have surpassed the old influential centre in either size, military power, per capita income, or all those combined.
Likewise, the BRIC countries (Brazil, Russia, India, and China) which I covered last week, have or will soon surpass Britain economically or in terms of their weight and influence around the world.
While most of the world's existing and emerging powers have central regional roles and influences that render them world pillars, the British Island has been isolated or sandwiched between continental Europe (with France and Germany at its centre) and the United States.
Transatlantic relations in flux
Over the last few decades, and as Britain was forced to decolonise and downsize its empire, it opted for a "special relationship" with the US to maintain a global role. With the US accounting for 50 per cent of the world's economy after WWII, it was a safe bet for its Cold War ally.
So special was the relationship that London maintained a certain distance and at times a total indifference, towards its European neighbours.
The US-UK strategic relationship deepened during the 1980s when the Reagan-Thatcher era culminated in the Thatcher and Bush Sr 1991 Gulf war.
This continued to be the case in the post-Cold War era, with Blair and Clinton coordinating military intervention in the Balkans.
Their special relationship reached new heights after 9/11, when Prime Minister Blair fully adopted President George W Bush's "war on terror" and spearheaded, along with Washington, the wars in Afghanistan and Iraq.
The negative public perception that their country was short-changed by the Bush administration has further alienated most Britons from their transatlantic ally.
Furthermore, the military fiascos in Iraq and Afghanistan have further widened the gap between the British public and the United States.
The advent of the Obama administration was welcomed by most Britons, but the pragmatic US president doesn't seem to value their special relationship in the same way.
Prime Minister Brown's repeated attempts to underline his special rapport with the popular US president were turned down, at times embarrassingly, by the White House.
Most recently, the UK was furious when the US proposed mediation between the UK and Argentina over the Falklands, as it does not think there is anything to mediate about.
The collapse of the Soviet Union and shifting global power is prompting a more pragmatic US government to build bridges with the world's emerging economies, away from its traditional Cold War allies.
End of an era
The recent financial crisis and the failure of the Anglo-Saxon neoliberal economic model are putting further pressures on Britain to change course.
With London functioning as the extension of America's banking economy in Europe and beyond, it was hit hardest as the bubble burst,not only financially, but in terms of economic credibility and reliability as a financial centre.
The same is expected for its housing bubble. If it weren't for the surplus cash in the hands of certain Russians, Arabs and others who continue to invest in the London real estate market, this could be the next big crash facing the country.
And with changes in the investment laws in Britain, many of the world's rich who make London their home, could migrate sooner rather than later to new tax havens.
This was echoed by the outbursts of the likes of Nicolas Sarkozy, the French president, who blamed the American-British model for the world economic slump.
As London, and by extension Britain, continues to count its losses and lick its wounds, it's not clear how far and how deep the recent crisis will end up hurting the United Kingdom.
With BAE leading the world's arms exporters, and BP facing one of the greatest oil spill disasters in recent years, British contribution to world well-being hasn't been exactly ideal!
As the US and Europe face up to their own economic and strategic challenges, the UK could be left high and dry.
As one British novelist put it:
"In plain English, we’ve gone into debt at a speed never before achieved, and have built up debts never before seen in peacetime. The foot is on the floor and the needle is in the red. There’s no choice except to slow down – but nobody knows quite how to do it, because it’s never been done before."
Beyond raising taxes and cutting spending, the next prime minister will need to do much sobering up. He will need to delicately balance raising the spirits of Britons while doing away with Britain's illusion of grandeur.
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