Statesmanship must have something to sell

WE RESIDE in a trading nation, surrounded by cold salt water. We are proud, but live in reduced circumstances. We are keen, most of us, to return to an honourable prosperity, based not on military prowess but on making things, then exporting them. Once we got back ambergris and Rhenish, now it's German marks. But the idea is the same. That said, have we got our foreign policy priorities right?

This is the question John Major is asking senior ministers. He has decided to conduct a total review of Britain's overseas commitments, involving the Foreign Office, the Ministry of Defence, the aid budget, the British Council and the Special Intelligence Service, or MI6 as was. Are we doing the right things in the right places? Are the departments duplicating? Are they speaking? Above all, are we getting the business? These are unsettling questions and fierce defensive lobbying has already started in Whitehall.

The review will be conducted informally but, by involving all the relevant departments, it ought to break down cultural walls and produce new thinking as well as inflame old arguments. We won't, I suspect, see brilliant diplomats digging wells in Africa or spooks being retrained as English teachers (more's the pity). Even so, nothing quite like it has happened in Whitehall for years.

Its genesis, inevitably, was cost savings. At the climax of last year's expenditure round, Malcolm Rifkind, the Defence Secretary, told his colleagues that deeper cuts could not be absorbed by his department while Britain's overseas commitments remained unchanged. If they wanted another defence review, they had better have a foreign policy review first. He did well out of the spending round; but the big review now follows. At the same time, the Foreign Office has been aware that the salami-slicing it has imposed on embassies could not go much farther. It, too, had some basic questions.

And there are plenty. The assumption that Britain's military posture enables it to 'punch beyond its weight' in diplomatic and commercial terms deserves to be challenged. In his recent speech at Chatham House, Douglas Hurd argued that, since trading countries such as Britain prospered in a peaceful world, our enthusiasm for UN peace-keeping was on all fours with a cold, clear-eyed assertion of national interests. Now this was a characteristically thoughtful, serious speech, but it did not wholly convince. Do British troops in Bosnia, or indeed Cyprus or Belize, really protect or create jobs at home? Is not the true motive for such operations a sense of post-imperial noblesse oblige? There is nothing disgraceful about that. Far from it. But the two impulses need to be treated separately, not fused.

Other fundamental questions are geo- political. Senior officials already muse about how much hi-tech kit the British army needs in Germany these days, or whether it still needs to protect Belize. What about the Navy's 40-plus surface fleet? As one official put it: 'The Falklands saved the Navy'. But does the small risk of another sea battle justify its cost?

Because of the size of its budget, the MoD comes quickly into the firing line. But the Foreign Office has some tough decisions ahead in its own right, particularly when its current spending deal runs out in 1995-96. Mr Hurd warned last week that 'our diplomacy is now undermanned compared to that of our competitors'. His department faces the prospect of having no embassy staff across large swathes of west Africa and Central America. It has tried two-man missions in some countries, and even a one-man posting (in Panama), which didn't work well.

The posh, important embassies, such as Washington, Paris and Bonn, have already been decimated (in the correct sense of the word). It looks unlikely that Britain will return to Unesco, which it boycotted because of corruption, but which has since reformed itself. Nor will there be British representation at the UN Commission on migration, which is relevant to European immigration policies.

Those examples of cost-cutting and closures have allowed the expansion of British diplomacy into countries emerging out of the former Soviet empire. There, 14 new British missions, some shared with Germany and France, have opened in the past 18 months. Often the new diplomacy is commerce-led. Diplomats had to learn fast, for instance, when BP needed help with a big oil and gas deal in Azerbaijan.

But the switching of resources that has gone on up to now is only the beginning. At the moment, some 40 to 50 per cent of the work done in British embassies is exports-related, but the pressure will be on for more. Mr Major has been banging on privately about how ruthless the French are in using diplomacy to win overseas contracts. His recent trip to India was a sign of things to come, and businessmen say they detect a new willingness to blend statesmanship with salesmanship.

Since, quite often, this comes down to selling arms or know-how to countries that owe Britain some obligation, it is a long way from the high-minded 'new world order' which today's diplomacy is supposed to be about. But this is an inevitable part of Britain's reduced circumstances, even if it has been disguised by the turmoil of the collapse of Communism and the high seriousness of Mr Hurd. Diplomatic power follows economic power, and cannot last long without it. So, to put the matter brutally, if the review makes Britain richer, though less influential, it will have served its purpose.