The U.K. Only Hurts Itself by Slashing Aid Budget

Mihir Sharma
Sat, November 28, 2020

(Bloomberg Opinion) -- The most enthusiastic campaigners for Britain’s exit from the European Union insisted that Brexit’s end result would be a “Global Britain” — a country set free to forge alliances, agreements and trading pacts across the world. More than four years on, we still have no clear idea what a Global Britain would actually look like. No enthusiastic new trading partners have been discovered. Rather than rushing to remedy the situation, Boris Johnson’s government now seems intent on shredding what remains of the United Kingdom’s global image.

Chancellor Rishi Sunak has announced plans to slash about four billion pounds from the country’s development assistance budget. This would lower spending below a threshold — 0.7% of the country’s GDP — that has survived political handovers, a recession and austerity. One government minister has already resigned, former prime ministers have decried the move and MPs are in revolt. While Sunak says he hopes the cuts will be temporary, no expiry date has been set — and many within Johnson’s party are convinced that the foreign aid budget is still too big.

The stricken economy is just an excuse. Johnson has had Britain’s overseas development establishment in his sights for some time. The spending cuts were preceded by institutional changes that eliminated the cabinet position associated with the international development department, which now falls under the foreign office. Johnson himself has written in the past that British development assistance is too “austere and purist” in its approach. (With that well-known Johnsonian consistency, he accused it in the same column of tolerating corruption.)

I’m not going to argue with those who say that development assistance should be incorporated into a strategy that prioritizes the giver’s national interests. Like it or not, such selfish considerations are always going to be part of any national development agency’s calculations.

But I am astounded that even a Johnson-led government could imagine that, in 2020, development assistance represents wasted money. It is, in fact, a vital source of international reach and power. China has used its own money like a bludgeon, creating a web of dependence and debt across the continents. Meanwhile, U.S., British, and Japanese efforts still dwarf China’s in many ways. As long as they remain sufficiently “austere and purist,” they will be preferred by several countries as having fewer strings attached.

Indeed, development assistance is literally the only geo-political field in which Brexiting Britain can stand toe-to-toe with the U.S. or the EU. This is not the 19th century; we in the Indo-Pacific expect to see French warships in our waters, not British. For India, and most other countries in this neighborhood, multiple other trading relationships are more important than that with the U.K. We worry about investment flows from Japan or the Gulf. People would rather study in Australia or migrate to Canada.

Only in the world of development does Britain remain globally relevant. When it comes to augmenting state capacity, pioneering new development paradigms and a host of other influential issues, what Whitehall says matters a great deal. Britain is not now and never will again be a superpower in any other way.

It is this — Britain’s only calling card to the world — that Johnson wants to throw away. Does the move reflect a failure to appreciate the degree to which development assistance augments the U.K.’s soft power? Or a disdain for the wonky do-gooders of the development establishment? Or simple ideological discomfort with the notion of British money “leaving” its shores?

All of the above, I expect. It’s also more evidence that empire nostalgia is the true guiding spirit of the Brexiteers’ movement. While Johnson is cutting development financing by four billion pounds, he is raising defense spending by the same amount for the next four years. (I told you: It’s not about the recession.) It’s gunboats, not grants, that Johnson thinks will endear his global Britain to the world.

Pound for pound, that money would do more for the U.K.’s place in the world if spent on development financing rather than guns and tanks. The 19th century fantasies of Johnson and his followers will cost Britain influence and friends for decades to come.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mihir Sharma is a Bloomberg Opinion columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of “Restart: The Last Chance for the Indian Economy.”

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