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A lecture by Dr Liam Fox MP, Shadow Secretary of State for Defence and Conservative Member of Parliament for Woodspring.
In his lecture, Dr Fox addressed the challenges the next government is likely to confront while attempting to carry out a Strategic Defence and Security Review (SDSR). He discussed the strategic thinking on which the foundation of a future Conservative government review will be based, the structure of the review and specifically how the Ministry of Defence (MoD) will carry out its role in the SDSR process to best prepare the MoD for the challenges of the Twenty-first Century.
Listen to speech:
Thank RUSI for hosting this event this morning and the huge contribution they make to the 'defence debate'. It is a pleasure to speak to such a distinguished and knowledgeable audience.
In many ways there is no ideal time in which to conduct a Strategic Defence and Security Review (SDSR). Twelve years have passed since the last review. The MoD notes in the recent Green Paper that 'the international context has changed radically'. It certainly has- and the review is scandalously overdue.
Of course, reviews of this nature always bring an element of instability which can be particularly unwelcome at periods where there is a high tempo of activity.
Today our Armed Forces are currently participating in sixteen operations around the globe and have a military presence in the form of 41,000 troops in thirty-three countries and overseas territories.
They are performing gallantly on remote battlefields in southern Afghanistan, on the high seas combating piracy, and in the Gulf capacity building and protecting Iraqi Oil Platforms.
With the conflict in Afghanistan and Pakistan, the threat of terrorism at home, nuclear proliferation, and our contingent maritime operations in the Gulf and the Horn of Africa, conducting the next SDSR will be like building a ship while out at sea.
But it will bring new opportunities.
The Conservative Party's National Security Green Paper made clear that the next review-a Strategic Defence and Security Review under a Conservative Government- will look beyond defence in the traditional sense.
It will be a cross- departmental review that brings together all the levers of national and domestic security policy with our overseas interests and our defence priorities.
It will be a chance to have a clean break from the legacy and mindset of the Cold War and should be viewed as an opportunity for fresh thinking and change. Make no mistake; we need a step change not tinkering.
The next Government will have a unique opportunity to provide a new direction and renewed leadership inside the Ministry of Defence.
It is worth noting that if the Conservative Party wins the next General Election neither the Prime Minister nor the Foreign or Defence Secretaries nor the Chancellor will have been in the House of Commons at the time of the fall of the Berlin Wall. It will be our first post- Cold War government, better attuned to the new realities of globalisation.
Today, I am here to talk about the specific aspects of the SDSR which will fall into the remit of defence so my focus will be on the Armed Forces and how the Ministry of Defence will support them.
Let me be clear about two essential points at the outset.
First, we know from bitter historical experience the difficulty of predicting future conflict- either its nature or its location. We cannot base our future security on the assumption that future wars will be like the current ones. That is why we must maintain generic capability able to adapt to any changing threats.
Second, we cannot accept the assumption in the Green Paper that Britain will always operate as part of an alliance. We have unique national interests and have to maintain the capability to act on our own if required.
It is of course imperative that we win in Afghanistan - and we wish our forces well in their forthcoming operation. There is no doubt that in Afghanistan the government have been too slow to give the army, in particular, the agility and flexibility it needs to maximise its effectiveness. The Army and the Marines have carried the greatest cost of that failure and we must learn from our mistakes.
But we must also remember that we are a maritime nation dependent on the sea lanes for 92 per cent of our trade. A time when the threat of disruption on the high seas is increasing is no time for Britain to become sea blind.
As for the review itself, it must have a logical sequence. It must begin with our foreign policy priorities, outlining our national interests. We must then consider the threats which may affect our interests so that we can determine the defence strategy needed to respond to them. Only then can we determine the military capabilities we need to protect those interests in this threat environment.
Only then can we come to the equipment programmes that will make these capabilities a reality.
Finally, we will have to confront the harsh facts of the economic climate in which we will have to operate given the catastrophic economic management of the current Labour Government.
Of course, we could carry out the process the other way round- begin with the budget and see what we can get for it. But we would end up with unintended consequences in foreign policy and we would have missed the opportunity to return some empiricism to policy making.
Foreign Policy Assumptions
So let us begin by setting out what a defence strategy would have to do to deliver the sort of foreign policy we will want to have.
First, and obviously, we must be able to defend the UK against the threats posed to our interests within reasonably predictable limits. These interests are broad and deep in a globalised world. There are an estimated 12m British citizens living overseas.
We are an international hub for financial activity, a permanent member of the UN Security Council, the G8 and G20, the Commonwealth, the European Union and a leading member inside NATO.
These interests are also found closer to home. When required the Armed Forces must be able to augment and support civil emergency organisations during a time of crisis. Defending the UK also means maintaining key strategic tasks like a continuous at sea submarine based minimum credible nuclear deterrent.
Secondly we must be able to defend our fourteen overseas territories and, of course, the main focus is on the Falklands. The recent legislation passed in Argentina attempting to exert Argentine sovereignty over the Falklands, South Georgia, the South Sandwich Islands and the British Antarctic Territory is completely unacceptable. The Falkland Islands are and will remain British.
Thirdly, when required, we must be able to come to the aid of NATO allies in a significant way under our Article V obligations-like we did immediately after 9/11 with Operation Eagle Assist and Operation Active Endeavour.
Fourthly, we will need to be able to project power on a strategic level alongside the United States and France. Without doubt the United States and France are our two most important defence and security partners. A future Conservative Government will continue to build on these relationships.
Fifthly, we will have to have the capacity to conduct extended stabilisation and nation building exercises in order to provide stability and security albeit as part of an international coalition. This will also include working closely with the FCO and DFID on conflict prevention.
Sixthly, we must be able to extend meaningful military co-operation within elevated bilateral relations. We will continue to work closely with countries with shared mutual interests and geo-strategic importance, like Norway and Turkey or Saudi Arabia and the other Gulf States.
We will invite these key partners to make submissions to our defence review and will welcome contributions from those who see Britain as a key strategic partner.
And finally, we must be able to enhance UK influence by leveraging our natural national advantages - like intelligence and Special Forces. We must understand the diplomatic and economic value of maximising defence exports and the goodwill generated by joint training exercises or expanded training capacity for overseas officers.
For the foreseeable future the UK will primarily operate alongside our allies, most notably the US. It is therefore crucial that ongoing work within the MoD- to understand better the importance of influence on our coalition allies- is given the priority it deserves at both the tactical and strategic level.
Threats-maintaining a balance
It is impossible to predict the exact shape and nature of the threats we will face but we can make some educated guesses.
Since the last Strategic Defence Review in 1998 the world has become a more dangerous place. Trans-national terrorism, nuclear proliferation, the battle for cyberspace and the effects of climate change are all playing a part in destabilising the equilibrium of global security.
The terrorists attacks of 9/11 completely altered the Western view of global security. An attack that cost only $250,000 to stage ended up costing the U.S. economy $80bn.
International terrorism continues to pose a real threat-as most recently experienced by the attempted airline bombing during the Christmas holiday period.
Although largely defeated in Iraq, Al-Qa'ida is threatening the stability of Pakistan, the Arabian Peninsula-notably Yemen and the Horn of Africa and Southeast Asia.
While some countries like Libya have seemingly given up their WMD ambitions, North Korea has successfully tested two nuclear bombs.
Iran is on the verge of acquiring a nuclear weapon and continues to be a net exporter of terrorism. The nature and behaviour of the regime and the risk of triggering a nuclear arms race in the Middle East makes this a cause of growing anxiety.
Climate Change is forcing us to address new threats. For example, with Polar ice caps melting and piracy rife in some of the world's busiest and warmest shipping lanes; maritime transport in the High North is not only becoming a reality but is also looking attractive for commerce. It is also a potential source of political and military tension.
The possibility of state-on-state warfare, most recently demonstrated by the Russian invasion of Georgia and the subsequent occupation of 20 per cent of its territory, cannot be ruled out. Especially as the competition for scarce resources heats up in some of the world's most unstable regions.
All of these need strategies to deal with them.
Like it or not, Cyber Warfare is a modern-day reality-not something that 'might' occur in the future as some commentators suggest. They are increasing in both frequency and seriousness- from the mass attack on Estonia to the targeted attacks on British companies and Institutions.
And these threats are occurring on top of our contingent overseas operations like Afghanistan, maritime security in the Gulf, or reacting to natural disasters like the recent earthquake in Haiti.
The multi polarity of the post Cold War era and the speed of globalisation mean that Britain's economic and security interests are increasingly interlinked to others with an unavoidable shared set of interests and the shared importation of strategic risk.
As recent events have shown with the economic crisis, instability in one corner of the globe can quickly affect everyone.
Britain's national interests no longer stop at the White Cliffs of Dover, Gibraltar or the Falklands.
This global interdependence has major implications on how we organise our national (and international) security structures and identify our threats. It goes without saying that the challenges this presents to our Armed Forces are numerous and complex.
The Twenty-first Century strategic environment demands that Western militaries are able to simultaneously conduct war fighting, peacekeeping, continuous deterrence-both conventional and nuclear, and humanitarian operations.
Furthermore, it requires Western Governments to supplement these military operations through an array of soft power tools, such as international aid, defence diplomacy, and the spread of information and ideas.
But if the nature of the Twenty-first century forces us- the West- to re-evaluate current war fighting we should assume that our enemies are forced to do the same. It is in this context that we can understand the types of threats we are likely to face in the future.
There is an on-going debate in the UK on what form the future of warfare will take and how this will impact upon the SDSR.
Usually there are two schools of thought. On one side we are told that future conflicts will be asymmetric and irregular in nature-similar to what we commonly experience in Afghanistan today.
On the other side we are told that state-on-state warfare in the traditional sense cannot be ruled out and if anything, however remote the possibility may seem, this form of warfare is likely to pose the biggest threat to UK sovereignty.
This has led many to believe that we have to choose between fighting 'the war' or 'a war'-but this is a false dichotomy.
The choice between the two schools of thought is not binary and mutually exclusive. It is no more true to say that we will face only asymmetric threats than it is to say we face only state on state threats. The truth lies somewhere in between-in a hybrid form of warfare-that will require Britain to maintain generic and flexible defence capabilities.
Insurgencies are not a new phenomenon-they have been fought in some form or another for hundreds of years.
The counterinsurgency operations currently being conducted in Afghanistan are not a guarantee of what warfare will look like in the future-but a continuation of past trends.
State-on-state warfare is viewed by many as an anachronism in the Twenty-first Century but until there is a radical change in the Westphalian nation-state system that has been around since 1648, state-on-state warfare remains a possibility-and one that we must be prepared for regardless of how unlikely it may seem today. There is always the possibility of the UK being dragged into state on state warfare between other nations.
But even state-on-state warfare would not necessarily take the same linear, symmetric, and conventional form as it did in the Twenty-first century.
The present superiority of Western conventional military might, coupled with the advantages offered by globalisation, have led our adversaries to look beyond the approach of choosing between conventional and asymmetrical types of warfare and adopt a hybrid warfare approach.
Potential adversaries may strive to face us with conventional military might that at best is equal to, or at a minimum competes with, Western technology.
But it is more likely that, knowing that they cannot match our technology, resources or conventional firepower our adversaries will resort to strategic and tactical asymmetric measures in an attempt to defeat us.
But with hybrid warfare we should assume that our adversaries will simultaneously employ a mix of conventional weapons and irregular tactics that may even include organised crime and acts of terrorism.
We must understand that the conflicts of the future will go beyond the conventional arena and threaten our social well-being, our domestic infrastructure and our economic capabilities.
Russia's invasion of Georgia, with heavy armour, air strikes and ground troops-all very conventional- was augmented by a surgical cyber attack on the Georgian Government and a sophisticated information operations campaign aimed at the Georgian people and the international community.
The changing scope and nature of these threats have implications for our procurement plans. We need to focus more on capability and less on specific equipment.
Saying that we can only focus on 'the war' at the expense of 'a war' is not good enough for the British people and would be an easy way out for any government whose first and foremost responsibility is the defence of the realm.
To accompany our SDSR, we will undertake a fundamental and far reaching review of the way we provide defence capability in this country.
From the way in which we procure defence equipment and support services, to the structure of UK R&D.
From our relationships with our NATO allies, to the promotion of defence exports.
And from reviewing the role of our world leading defence Primes, to maximising the contribution made by our SMEs - often the engine room of our defence industry.
Let me briefly explain why such procurement reform will be central to the successful implementation of our SDSR.
Shaping defence policy under the current financial situation will be a challenge not felt since the Nott Review of 1981.
In short, then as now, money is tight, and the demands are great.
As I have already stated, it is clear that the 1998 SDR has been persistently under funded by the Treasury.
The consequence of Gordon Brown's actions has been a 12 year increasing imbalance between resources and requirements with only the will, ability and loyalty of our Armed Forces and their families, making up the difference.
So what can be done about it? The Gray Review has shown us that there is up to £35bn in unfunded liabilities in the current equipment programme.
This year's Major Projects Report recorded an in-year cost increase of £1.2bn alone- and that's just the 15 largest programmes. It's easy to see that with a compound unfunded liability of over £3bn a year, the MoD finds it very hard to make ends meet.
But money, or the lack of it, is not the only reason why reform of procurement is so essential.
We need a procurement system that strikes a balance between developing long-term defence capability, to compete with the very best, through the application of in depth blue sky research, a considered through life maintenance plan and incremental upgrades.
We also need to cope with the rapid evolution of warfare through the use of UORs, the application of novel technologies and adaptable commercial relationships.
In order to ensure we are able to respond to rapidly to changing threats we must have a vibrant defence industrial base. Without it we would have no operational sovereignty-thereby threatening our national sovereignty.
The focus of DE&S must move away from obsessing over initial cost, process and volume to capability based contracts and commercial arrangements that can ebb and flow as operational requirements change.
So you can see that far from being an ancillary benefit, improving the way we provide defence capability will be central to the success of the wider reform agenda.
Although much needs to change, we do have a solid foundation on which to build. The UK Defence Industry is already amongst the best in the world but industry knows that it, too, must help us meet the challenges we face.
The UK's defence talent is not limited to the private sector. Within the MoD, we have a dedicated and talented workforce who work tirelessly to support our Armed Forces. The Staff of DE&S have demonstrated, through UORs, that it is possible to bring on line unprecedented changes in defence capability, on time, and on budget.
Where DE&S is not working properly it is not the problem but the symptom of a problem that originates in the MoD itself. It is a structural and management problem which requires radical treatment.
It is essential that we get this process back on track. To help provide clarity and direction defence procurement under a future Conservative Government will have four explicit objectives.
1) To provide the best possible equipment to our Armed Forces when they need it, where they need it and at a reasonable cost to the taxpayer.
2) To use defence procurement to underpin Britain's strategic relationships. Closer cooperation with the United States-our key global ally, and France-our key European ally, and maximising our unique relationship with Commonwealth countries around the world.
3) To provide better stability to the Armed Forces and better predictability to the defence industry-regular SDSRs will play an important role in realising this objective, so to will a future review of our Defence Industrial Strategy and defence trade relations within the EU.
4) To preserve UK defence jobs by maximising exports. The Conservative Party will use defence exports as a foreign policy tool and we will seek to increase Britain's share of the world defence market.
To meet these objectives we will test any future equipment programme against five criteria:
1) Capability: The determination of defence capability should be the product of an objective analysis of our defence needs, and not driven by the parochial interests of pork-barrel politics. We also need to move away from talking about equipment programmes as if they exist in the abstract, and in isolation, when we should be talking about capability in the round, across all Defence Lines of Development.
2) Affordability: Clearly, we must be able to afford not only the initial procurement costs but also the through life costs. As recent delays to the Carrier programme have taught us, we also need to be able to afford a programme on schedule, in-year. The default position should be 'spend to save' not 'Delay to spend'. Speedy procurement saves money.
3) Adaptability: We need to get the greatest flexibility in the equipment we buy while ensuring that as many potential roles as possible can be fulfilled. Future capabilities may be with us for 50 yeas, but intentions can change overnight. This will require truly open systems, UK based IPR where possible and adaptive commercial support arrangements.
4) Interoperability: If we are to maximise the utility of our equipment platforms then they must be able to take part in Combined and Joint military operations with our NATO allies, most notably the US.
5) Exportability: We must seek out equipment that will have a high export demand which, in the long term, will create UK jobs, reduce the unit cost of equipment to our Armed Forces, support the wider British economy and reinforce out strategic relationship with our allies.
Reforming the procurement process will be no easy task. In fact, it may prove to be our greatest challenge in terms of increasing the efficiency of the MoD.
The thousands of hardworking civil servants and military personnel involved in procurement have been let down by a failed system which has still not shaken off the Cold War mentality. And the effects are being felt on the frontline today. Defence reform must become a national endeavour, and all options for reform, no matter how radical, are on the table.
The Economic Backdrop
The government in office after the election, whenever it comes, will find itself with a military that is overstretched, undermanned and in possession of worn out equipment.
We know that the equipment programme is underfunded-by exactly how much is anyone's guess but most estimates measure the total in billions of pounds.
Bernard Gray placed the figure at £16bn over the next ten years. This equates to unfunded liability of £4.4 million per day.
The plunging value of the pound alone has left an estimated £1.3bn black hole in Britain's defence budget.
Current operations in Afghanistan are placing a strain on the core budget.
The Defence Secretary's recent statement on cuts-to the tune of £900m- in December confirmed what many have thought all along: that operations in Afghanistan are NOT fully funded from the Treasury Reserve despite what we have continuously been told.
We have learned from the testimony of former Defence Secretaries at the Chilcot Inquiry that the last SDR was never fully funded.
As Geoff Hoon stated during the Chilcot Inquiry, within the MoD there was:
'quite a strong feeling that the 1998 Strategic Defence Review was not fully funded' and that 'in the subsequent CSR programmes, we asked for significantly more money than we eventually received'.
Sir Kevin Tebbit said that as Permanent Secretary he had to operate in a permanent crisis budget.
More significantly, whatever happens at the election, the SDSR will be conducted against the most adverse financial backdrop for decades. As I said in the House of Commons last week, Government debt is some £799 billion. That is the equivalent of borrowing £1.1 million pounds every day since the birth of Christ.
As a consequence, what is waiting for the next Government is grim.
Defence cannot be immune from the economic realities but we should use the difficult challenges to grasp the opportunity for long overdue radical thinking and reform.
It is a dangerous world-you don't need me to tell you that. This Government is tired. The MoD needs a new vision and new life that only a new Government has the energy to provide.
The next SDSR will have to be a step change and full overhaul of the status quo-not a minor tinkering to the system.
It will be carried out ruthlessly and without sentiment. Tough decisions will be made and there will be winners and losers at the end of the process but Britain will be safe and our interests secure.
We are at a tipping point in Britain. We need to decide if we want to stay in the First Division or slide into the Second Division. I choose the former.
The fact that the last SDR was in 1998 is completely unacceptable.
This is why, on top of immediately conducting an SDSR, the Conservative Party has pledged to hold regular defence reviews every 4-5 years. If necessary we will put this requirement into legislation.
This will allow our Armed Forces to respond to new threats as they emerge and will also give the defence industry the predictability they require. The longer you wait between defence reviews the more instability you can expect.
But this will not be enough.
We need to be able to drive the process from one review to the next. Furthermore, we need a mechanism to absorb strategic shock.
If another 9/11 style event takes place-an event that alters the way we view global security, how can the Armed Forces absorb the shock of change if we are in between reviews. This capability will have to be built into the system.
For the Ministry of Defence a successful SDSR should:
Above all, we must have a coordinated response across the whole continuum of national security. The threats are real and immanent. Time will be of the essence.
The views expressed here are the authors alone and do not nessecarily reflect the independent views of the Institute.Event manager: Sabrina Downey