MAKE WAR, NOT PEACE
Niall Ferguson says it is madness to
cut the military in order to pay for yet more social services
`PEACE DIVIDEND' is a phrase which used to trip lightly off politicians' tongues. We have heard it often enough since the Cold War abruptly ended in 1989. But it is only this week, with the Government's White Paper on defence, that we have begun to appreciate who has to pay it, and to whom. To put it simply, servicemen and defence industry workers have to pay. The dividend goes to social security claimants and holders of government debt.
The arithmetic is simple. Between 1985 and 1991, the UK defence fell by some 7 per cent in real terms, from over 5 per cent of GDP to just 3.9 per cent. The latest cuts announced by Mr Rifkind on Monday take matters a stage further, cutting next year's budget by over a billion — around 5 per cent. In effect, the services have been the victim of a Treasury pincer-movement. First, manpower was reduced beginning the 'Options for Change' White Paper: regular servicemen, who numbered 327,100 in 1985, will soon number just 240,000. This week the axe has fallen prin- cipally on the equipment budget, with sub- stantial reductions in the size of the navy and air force, and the cancellation of the next phase of the Multiple Launch Rocket System. These cuts affect not only service- men. According to one estimate, employ- ment in the defence industry will fall from 618,000 to just 495,000 by 1995.
So who gets the dividend? The answer is depressingly obvious. In the same period that defence spending has been falling, expenditure on health and social security has been rising, pushing up total public spending by 12 per cent in real terms since nice, generous John Major became Prime Minister. That has not only swallowed the peace dividend, it has also necessitated massive increase in government borrowing, and thus in the cost of debt-service, which is likely to double in the next six years. Isa- iah ii 4 envisages beating swords into ploughshares and spears into pruning hooks. This Government is beating swords Into wheelchairs and spears into National Savings books.
We are not alone in doing this, of course. Similar cuts are being implement- ed in Germany; while across the Atlantic, the extent of disarmament is more striking still. Between 1986 and 1992, US defence spending fell by 13 per cent. It is projected to fall by at least a further 18 per cent by 1996 — and probably more. And at first sight such cuts seem justified. Since the collapse of the Warsaw Pact and the Sovi- et Union, our old enemies have disarmed on a far larger scale. The former East European states have cut their defence spending by an estimated 60 per cent. The point was often made in the 1980s (notably by Professor Paul Kennedy) that Britain and the US were suffering from `over-stretch', as a result of excessive mili- tary commitments. The end of the Cold War certainly justifies a thorough review of this country's confused defence priori- ties. When the Government finally under- takes this (as it did not on Monday), there may well be savings to be made as our 68,000-strong anti-Soviet army in Ger- many is reduced. But however our military role is altered, the idea implicit in the peace dividend concept, that defence cuts are in themselves economically beneficial, is simplistic. To be sure, public spending as a whole does need to be reduced if eco- nomic recovery is not to dissolve in a sea of red ink. But cutting defence spending in order to afford higher social security and debt payments makes no sense whatever.
The purveyors of received wisdom, of course, are inclined to hold their noses at the very mention of the arms industry, and no doubt derive some satisfaction from the thought of its decline. But, whether we like it or not, two world wars have left their mark on Britain's manufacturing base. We had always been good at making weaponry, and fighting the Germans forced us to excel at it. The defence industries have been responsible for a creditably large share of investment in research and devel- opment since the war, with benefits out- side the immediate military sphere. If the money saved from defence cuts were to be channelled into comparably sophisticated civil industries, there would be no objec- tion. But that is not happening. We are simply turning squaddies into 'scroungers'.
There is another argument against disar- mament: quite simply, war is not always a ruinous expense. True, the world wars devoured Britain's accumulated national wealth; and our post-imperial commit- ments have put a recurrent strain on our finances. But the end of the Cold War has opened up new possibilities, seen for the first time in the Gulf war. According to the National Audit Office's latest estimates, the Gulf war cost the Treasury little more than £415 million or less than the cost of funding the DHS for two days. Of the £2,464 million additional military spending necessitated by the war, £2,049 million came from foreign contributions. The Americans pulled off the same trick on a larger scale. Desert Storm cost $61 billion in total, of which 59 per cent was paid for by the Gulf States, and 27 per cent by Ger- many and Japan. This represented a huge transfer of resources from foreign economies to American and British sol- diers and (via the defence industries) workers. Quite apart from the economic benefits of liberating Kuwait (oil reserves under Western control) the Gulf war was self-financing for the combatants.
Such rough arithmetic will doubtless upset the pacifist. But it provides an important reminder that war can pay just as well in the 1990s as it did when Britain was in the military ascendant — a point often overlooked by historians. Between 1688 and 1815, Britain experienced rough- ly 76 years of war. Unlike the wars of the 20th century, these were not total wars: even at its height (against Napoleon), defence spending did not exceed 15 per cent of GNP, compared with 50-60 per cent in the world wars. They were above all profitable wars, establishing the frame- work of security necessary for the develop- ment of British commerce. And even in the 20th century war has had its unsung benefits: there is an unmistakable correla- tion between increases in defence spend- ing and economic growth, and a converse link between defence cuts and recession.
Moreover, as events in the Balkans have shown, pacifism can be costly too if regional powers (in this case Serbia) opt out of the peace dividend game. The West has wrung its hands at the prospect of mil- itary intervention in Bosnia, partly on the grounds that we don't have the military resources. The result has been carnage, and an increasingly acute refugee crisis in Central Europe. None of our business, per- haps. But it could be our business, and very good business, if Britain were to take part in a large-scale peace-making mission financed by those — notably the Germans — who want intervention but can't or won't themselves undertake it. Back home, such mercenary work could stimulate badly needed growth and employment. It would also set a useful precedent. Serbia is not the only regional power which has been increasing its military capability as we have reduced ours. Turkey, India, Pakistan, the Koreas, Japan and China have all sharply increased their defence budgets in real terms in recent years, perhaps sowing the seeds of future regional conflicts — in which our interests will be ignored.
In any case, the British are good at sol- diering. We are no good in Civvy Street, having lost our old aptitude for liberal indi- vidualism; but the parade ground seems to suit the aggressive, collectivist temper of the new Briton. The conclusion is obvious. Cut dole, not defence. Convert Britain from welfare state to warfare state; and make our armed services available to the highest bidder. British War PLC could become the one public utility to make a profit without being privatised.
Niall Ferguson is a fellow and tutor in mod- em history at Jesus College, Oxford.
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