"Stick a Trident in it, this country is done"

Well, the British Summer has been and gone, so that's probably my last chance to use a barbecue reference. Work - new job - has been busy, so apologies for the lack of updates.

This last week, like so many others, has been bad news for defence. Nick Clegg announced four more deaths at PMQs on Wednesday, RUSI suggested cutting back from four Boomers to three and so dropping us to a fleet too small (9 boats) to sustain a submarine-building industry, and then on Friday morning it came out that George Osborne was insisting that Trident funding comes out of the MoD main budget.

The BBC were quick to jump on the story, questioning whether this will mean cuts to carriers or to JSF procurement, and they broadly supported Osborne's statement that "All budgets have pressure. I don't think there's anything particularly unique about the Ministry of Defence.". Really, George?

How many other departments have their staff being killed on a daily basis?

What's that? There are no IEDs in schools? No snipers in Whitehall? No insurgents ambushing doctors in hospital A&E departments? No landmines in police stations?

Defence is unique in that if you do it right, British citizens will die; and if you do it wrong, you won't have a country left to run.

That's not so say things are done well in the MoD, they're not. The procurement process is hugely inefficient and not fit-for-purpose, the tens of thousands of pen-pushers make the ministry top-heavy, and the budgets are too low in any case (2% of GDP is lower than other Western powers and a peace-time fantasy).

I had hoped that ousting infamous defence hater Gordon Brown would mean a change in the way things were done, even though I saw little evidence that they would be. Now it's clear that the Liberal Conservatives are no better. They live in the same centre-left puddle of "nice" middle-class Progressive soi-disant liberalism as New Labour and focus on the same populist demagoguery. Nobody values defence, because "the world is safe"; we have a few token wars thousands of miles away, but no "real threats". We have the luxury of being able to worry about how much aid we give away and what our carbon footprints are and how our eating habits will affect long-term healthcare provision. And so defence spending is always and ever a target for cuts to buy votes from the client state. A few people will wring their hands when Land Rovers are blown up and helicopters shot down, but then go right on claiming their "entitlement" to Tax Credits and congratulating themselves for being "a shrewd investor" by buying a house which is now bubble-valued at significantly more than they paid and demanding action on their "rights" not to have other people smoke or drink or eat unhealthy food.

So, Defence remains under attack from the Treasury, remains incompetent at procurement and remains right at the bottom of the ministerial pile. Useful idiots like Douglas Carswell and Lewis Page continue to attack the "cozy" (adversarial) and "protectionist" (largest open defence market in the world) industrial policy, encouraging us to take - with defence of the realm! - the sort of counterparty risks that the banks are being banned from taking. Liam Fox is a good man, but it now seems clear that he's on a hiding to nothing - rearranging deckchairs on the Titanic, in effect.

I left the defence industry when the bank bailout showed that some industries were more equal than others, and that defence wasn't something anyone actually cared about. I guess you could call it a Falling Down moment. I find it hard to express my feelings more succinctly than Michael Douglas' character:

I helped build missiles. I helped protect this country. You should be rewarded for that. But instead they give it to the plastic surgeons.

I wasn't the first to leave the industry on that basis and, from the sounds of it, I won't be the last.

It's going to take a while. Decades, probably. But then the UK won't have a defence industry (or any manufacturing at all, really), won't have a nuclear deterrent (or the seat on the UN Security Council that it buys) and so won't have any influence in geopolitics. So not much point in having a military, really - Belgium and Ireland have pretty much gone that way already. The UK will probably fragment along nationalist lines and will almost certainly be swallowed up into a giant Federal Europe. Citizens will be squeezed for ever-higher taxes to pay for the immense bureaucracy needed to keep the gravy train rolling, the make-work jobs and the "entitlements" of the populace and, just like the USSR, the continent-wide centrally-planned economy will collapse under its own weight. A gigantic public sector will pretend to work and the government will pretend to pay them, all the while sliding into oblivion.

Count me out.

Not today. Not tomorrow. It takes time to build a new career and a new life from scratch, but that's what I'm now working on. Where will I go? Not sure yet. The US or Japan are reasonably safe options; the BRICKs offer lots of opportunities.

- KoW

Drayson Racing at Sebring

Lord Drayson, Minister of State for Strategic Defence Acquisition Reform, and previously (as MinDES) the architect of the DIS has been racing again over the weekend in the 12 Hours of Sebring competition. This is part of the American Le Mans Series - endurance races in the spirit of 24 Hours of Le Mans, with durations of up to 12 hours.

Drayson Racing's car (LMP1 class) started in fourth place and finished fourth amongst the LMP1s and twelfth overall - a very credible performance despite engine troubles and two broken alternators.

The timings show that they were on the pace of the winning pair of cars from the Peugeot factory team - Emanuele Pirro's best race lap (beating his qualifying time!) for Drayson Racing was 1:45.550, compared to 1:45.704 (Anthony Davidson) and 1:44.972 (Sebastien Bourdais) in the Peugeot 1-2, making Drayson Racing's Lola B09 60/Judd the second fastest car on the grid. Sadly, they had to make 15 pit stops compared to 8 for the Peugeots and the mechanical problems meant they were 43 laps down at the end (324 completed vs 367 for the leaders).

Unless the points system has changed from last year, I believe this gives the team 20 points - almost as many as the 24 points the Drayson-Barwell GT2-class Aston-Martin managed in the whole 2008 season.

So, congratulations to Lord Drayson, Jonny Cocker, Emanuele Pirro and all the guys behind the scenes on a great start to the 2010 season!

- KoW

Don't Cry For Me...

Today's Metro also has another story about the escalating tensions over the Falklands. Argentina is threatening to ban companies associated with the drilling for oil. As the article notes, this includes Barclays, who are shareholders in Desire Petroleum.

HMS Sceptre, the last of the Swiftsure class, and due to be decommissioned in December, has been sent to keep things under control. Presumably that means there's also a very small chance that she will follow HMS Conqueror's lead in returning home flying a Jolly Roger - this is presumable the last 'opportunity' for the Swiftsures to do so before being consigned to history. It seems (thankfully) extremely unlikely, though.

HMS York is there, as is a large RFA vessel (RFA Wave Ruler - 31,500 tons displacement, about six times the size of a destroyer), providing a visible deterrent. The Falklands are much better protected than they were in 1982: a permanent garrison of around 500 troops, air defences including four Typhoons (1435 flight) and Rapier FSC SAMs.

Enough to deter scrap-metal merchants from raising a flag, certainly.

The Argentinians would have to launch a full-scale attack to gain control of the islands, not just turn up and wait to be kicked out, which would not sit well with the Americans. It may work, it may not, but it would be a huge gamble and the attempt would likely result in significant Argentinian casualties, making it political suicide for Cristina Fernandez de Kirchner.

So, her only real option is trade sanctions. How effective are those likely to be? No idea, to be honest, but I don't think Barclays makes a particularly large proportion of their money from Argentina...

- KoW

KC-X and the Sky-high Cost of Sky-high Fuel

EADS' (Airbus' parent company's) annual report, about a week ago, contained an interesting note that slipped by many observers. It caught Lord Mandelson's attention and got a bit more ink, but still was largely ignored. That note was that EADS has pulled out of the KC-X bidding.

There's quite a story behind that, and I shall tell it as well I can remember.

The KC-X is the replacement for the old - ancient - KC-135 Stratotankers, the US military's air-to-air refuelling capability and key to global operations. They were adapted from Boeing's 707 airframe - the forerunner of the 747s, 767s and 777s that we see at airports today - and built in the 1950s and 1960s. The youngest ones are 45 years old, and some a decade more than that!

The story of the bidding process is rather unusual. The USAF issued the RFP (i.e. call for bids) in January 2007. The process began in an unusual way by stressing that this was an urgent requirement, and that delays in procurement would put lives in jeopardy. The two bids submitted were from EADS/Northrop-Grumman using a version of the Airbus A330 to be assembled in Alabama using US workers and imported parts, and from Boeing with a modified 767.

A mere 13 months after the bidding process began, in February 2008, the selection was made: EADS/NG had won. Again, in an unusual move, the USAF made a point at the press conference that, due to the age of the equipment being replaced, delays would cost lives - a not-too-subtle warning. This didn't seem to bother Boeing, though, who filed an appeal against the decision. That appeal was upheld in June 2008, bidding re-opened in July following the forced resignation of the head of the USAF - and then the project was put on hold in September. A year later, September 2009, bidding started again.

The project, particularly the un-selection and reopening of bids, has been dogged by allegations of jingoism amongst the US players: a feeling that letting a foreign company win would be unAmerican. This, despite the fact that Northrop-Grumman is at least as American as Boeing, that a significant proportion of the work would be undertaken by Americans in America, and that Boeing were - in 2003 - accused of corruption and stripped of $1bn of government contracts.

EADS has apparently realised that the deck was stacked against it, and pulled out in March this year, leaving this whole sorry mess as nothing but a historical note. KC-X is still on the drawing board. The US is still flying the creaking half-century-old tankers it was trying to replace. The UK MoD is trying to buy a couple of those rusty old KC-135s, refitted for electronic battlefield surveillance - the RC-135 'Rivet Joint'.

Hey, if you wanted a happy ending, you should have gone to a "massage parlour".

- KoW

February Snippets

A400M Saved

EADS has agreed a plan with European governments to save the A400M. This is a good thing as, even though C-17s are lovely and carry huge amounts (~170,000lbs), we can't afford more than half a dozen of them... which means that our air bridge might have lots of capacity, but not enough actual planes to use it. The A400M is half the size (~82,000lbs capacity) and half the price of the C-17, so the capacity is less "lumpy" - rather useful with our diverse commitments. We need something to replace the clapped-out C-130Ks and C-130Js - the Hercules was a fine aircraft, but the oddly-shaped cargo space and now rather small carrying ability means it's well past its sell-by date. The A400M will fill that role nicely, giving more lift into the bargain.

Plus, of course, keeping the ability to build large cargo transports is useful if we don't want to have to rely on the US.


Iceland bankruptcy

The Icelandic negotiators have walked away from meetings with the British and Dutch, refusing to pay anything above LIBOR on the €4bn Icesave debt. Since LIBOR measures short-term rates (various components from overnight to 1 year), Iceland is demanding long-term repayments below the yield curve - i.e. they want to turn their defaulted debt into a loan at below normal market rates.

Iceland is unable to access IMF cash until it reaches an agreement on repaying its debts, and - as the CityAM article notes - this walk-out is likely to result in their sovereign debt being downgraded by the ratings agencies. After all, if someone has just walked out on one obligation, wouldn't you want to charge a bigger risk premium to deal with them?


UK General Election

With Q4 GDP now revised to being +0.3% on Q3, and Labour closing the poll gap despite Bullygate, there is a lot of talk about whether the election will be called this weekend. This has to be at least 17 working days in advance, and a visit to the palace this weekend would mean a March 25th General Election.

I've got a bet on this, doubled since the GDP revision was announced, but we shall see. There are good reasons for a snap election - avoiding the Chilcot inquiry (and hence questions about how he slashed defence budgets and vetoed helicopter purchases), no need to present a Budget, the Q2 GDP figures (likely to show a double-dip from the VAT rise and snow hitting sales) won't be out until late April, and the tax rises on April 5th announced previously still won't have kicked in - but the Labour party is still skint and has to fight local elections on May 6th no matter when the general election happens. Plus there's Gordon Brown's personality - he "bottled" the 2007 election, and I don't think he's in any hurry to face the electorate. Could go either way.

My head says that it'll still be May 6th, but my heart says the election will be called this weekend.

- KoW

Defence Industrial Strategy

Douglas Carswell has a blog post about the "Defence Industrial Scam" which he concludes with the words

Getting better value from the procurement budget isn't just about dealing with inter service riviary or dozy officials. It means buying kit off-the-shelf and scapping the Defence Industrial Strategy.

I think this is flat-out wrong. A friend put it very succinctly: "DIS was about the only way of getting cheap kit anyone had ever come up with".

Below is a comment that I tried to post in reply to him last night, but which hasn't appeared for some reason:

Hi Douglas!

The DIS hasn't been implemented, which is part of the problem.

Instead there's a sham of competition where one or two bidders slug it out for months or even years to jump through DE&S hoops before the whole process is tossed aside and something is bought off-the-shelf from someone else, then scrapped after 18 months because otherwise the Urgent Operational Requirement would have to come out of MoD funds rather than from the Treasury as it's deemed to have been part of the Equipment Plan.

Naturally, after being jerked around like that, industry (located anywhere) starts charging more for the hassle of dealing with the UK MoD.

The main benefit to industry from the DIS is not the protectionism, it's the long-term strategy - as with the French 'Loi de Programmation' for the DGA.

Long-term contracts mean that investment can be made, costs cut and risk premiums slashed, lowering the price to the customer, while still being profitable for industry. Short-termism has the opposite effects.

It's either a virtuous or vicious circle, depending on how the hand is played, but the number of players is too small for it to be a free market.

Since the matter has been broached, I plan to write a full post about the DIS. Most likely focusing on the collapse of FRES and the wider AFV sector - a project I have had no direct involvement with, so do not have to worry about confidentiality, but one which I've followed the progress of nonetheless.

UPDATE: The comment has appeared now, must have done something wrong when trying to post it. Apologies all round.

- KoW

Iceland Strategy

A quarter of the population of Iceland have signed a petition asking to be let off for the country's debts.

They didn't seem to mind when the billions in cash were flowing into Iceland, but now they've pissed it all away they don't want to give any back. Hmm. Pretty sure that's not how it works.

Since the debt is in Euros, Iceland can't just devalue its currency and inflate away the debt (and its assets). Iceland can, of course, default on its debts - but as an isolated volcano in the North Atlantic that's not going to help much, as tariffs on (needed) trade will just claw the debt back another way. There's the option that everyone the UK and Holland would like: paying up (over a couple of decades).

Or there's a fourth option: prostitution. Get someone else to pay the debt for you, in return for... services. There are three candidates I can see there: the US, the UK, and Russia.

The UK, despite overwhelming naval superiority, lost the Cod Wars - the expansion of Icelandic fishing rights from 4nm in 1958 to 200nm in 1976. We could take that back, write off our portion of the debt, and revitalise the northern ports - Hull (Alan Johnson and John Prescott), Grimsby (Austin Mitchell since 1977) and Fleetwood. A Labour government so profligate with tax money should easily be able to afford a bung to its heartlands, and might even be able to turn a profit if fishing rights were negotiated well.

Russia doesn't have much access to the Atlantic for shipping, and its submarines are tracked by the sea-bed sonar across the GIUK Gap. Strategically and commercially, Iceland is in a prime location for access to the West. It is also a good source of geothermal power, if the Russian oil/gas oligarchs want to broaden their remits. Of course, the Russian ambassador has publicly refused to get involved.

The US, until 2006, maintained an airbase at Keflavik as Iceland was recognised as strategically important in the Cold War. Given the still-endemic fear of "commies" in the US, if Russia were to show an interest in Iceland then it would be easy to find the money to reopen the base and thereby pump enough money into the economy to pay off the debts. If there's no Russian interest, the US has already shown its intentions by closing NAS Keflavik.

I can't see the EU being interested - too many internal squabbles and no real interest. The most likely involvement would be on trade tariffs if Iceland should default on her debts. China would probably love to help, to be owed a favour, but is literally too far away.

Of course, nice though it would be for the UK to get involved and get some fish to go with our chips, we have already shot ourselves in the foot by invoking anti-terrorist legislation to seize Landsbanki assets when the problems started. So that's about as hostile a relationship as you're going to find anywhere outside of a divorce court.

I think Iceland are screwed.

- KoW

Metro Journalists Cannot Count

The front-page story on today's Metro contains some absolutely ridiculous numbers. They try to put the £850bn total of taxpayer support to the banks in terms of other spending, saying

The figure is more than the entire NHS budget, almost three times the annual defence budget and more than five times what Britain spends every year on transport.

This is complete nonsense. £850bn is not "almost three times" the defence budget, it's closer to thirty times it!

The 2009 budget is here, on the Treasury website. Chart 1.1 on page 12 (the 18th page of the PDF, just to be annoying) shows a total budget of £671bn (against total receipts of £496bn, but what's a £175bn overspend between friends?). £850bn is nearly twice the total receipts, and a quarter more than the budget.

Of the budget, defence gets £38bn, transport £23bn and the NHS £119bn. If "the figure" were £117bn or £131bn (other numbers mentioned in the article) then the comparisons might hold - we have already spent more than it costs to run the NHS for a year or the armed forces for more than three years. Including the guarantees/liabilities adds nearly 90% of GDP to the country's balance sheet - so much for the "golden rule" of debt not to exceed 40% of GDP!

As an aside, £850bn is around 20 months' defence spending for the entire planet put together.

- KoW

Bonuses - in MoDeration

So, the MOD has paid £47m in bonuses to civilian staff in the first six months of this year, and nearly £300m since 2003. That's rather a lot compared to the £20m cut in TA funding and it's shameful that they considered their own wellbeing ahead of the troops. What's interesting, though, is that this story is being spun in two different directions.

The BBC story above takes the tack that, as it's split 50,000 ways (out of 85,000 staff), the average payment is less than £1000 - though other reports note that some senior officials are getting £8k and some got bonuses of £17k in 2007-8.

However, Alan Johnson - yes, the home secretary is taking point on a defence story - is pushing the angle that the civil servants are being paid "danger money" and in lieu of overtime for their work in the field. Afghanistan is mentioned and the implication is that the bonuses are going to those people.

Clearly both cannot be true: the number of unique Brits in Afghanistan in 2009 is unlikely to get anywhere near 50k, even including the troops. Main Building and Abbeywood haven't suddenly decamped to there.

The truth of the matter, as I suspect any intelligent reader has figured out for themselves, is that the MOD has decided to make moderate discretionary payments to a bit over half of its staff, and a few larger ones for extraordinary circumstances. Rationally, that's not a big deal - it's a tiny proportion of the wages budget (85k people x £30k salary = £2.55bn), so why the need to lie and spin?

Surely the bigger scandal is why we're paying billions in wages to office workers who have repeatedly failed to deliver.

- KoW

Carriers redux

Following on from yesterday's post about the carriers, another possibility occurred to me last night: perhaps the two JSFs purchased for evaluation have been evaluated - and found wanting?

If that were the case, we might see the more radical of the two cutting options - if the Fast Jet squadrons have taken a look at the F-35, and don't like it as much as the Typhoon, that would halve the number required. If the Fleet Air Arm feel similarly - or the Royal Navy wishes to, well, spend its money on boats - then it could well be just 30-40 purchased to provide a mobile air superiority capability.

It's still expensive to run a small fleet of aircraft, though, so viability is still a question...

- KoW

Carry On Carriers

On page 18 of tonight's London Lite there's a very short story entitled "Navy can't buy jets for carrier". The story doesn't appear to have reached the BBC yet. The gist is that, although there were two Queen Elizabeth class (CVF) carriers ordered, there won't be sufficient budget to put JSF on both - so one may "become a commando craft".
This seems odd. For years, the government has allegedly been committed to "about 150" JSF - OK, the rising costs made that more like 120-130, but even so... A full complement for both carriers is 70-80, and the balance would be for the RAF and an attrition batch. If, as this story implies, the numbers are now being cut, where does the cut fall?

Two possibilities spring to mind:

• There is a huge cut, down to 40-60 JSF, which will be flown only by the Fleet Air Arm and from a single carrier - saving £5-6bn?
• There is a more modest cut, down to perhaps 80-100 JSF, and the RAF will still get theirs - as well as Typhoon - saving £2-4bn?

I can't think of any other options - though I'm happy to concede that they may exist. In either of those cases, however, something is badly wrong. The RAF has little need for a STOVL aircraft, and maintaining two separate parts/maintenance/munition supply chains is ridiculous. Or, the big-cut option... that makes more sense, but is it going to be sustainable? There are well-known integration problems for munitions onto the JSF - it basically won't fire anything we've got, so we have to either pay hundreds of millions in integration costs or buy AMRAAM/Sidewinder/etc.

Could this be the first step to the UK pulling out of JSF? It's expensive, it's pretty much the antithesis of sovereign capability - look how long it took Lord Drayson to get "guarantees" over source code access - and we've got basically nothing for sinking £1bn into R&D as a "tier 1 partner". Italy and Israel got better deals for far less...

Will CVF end up as a helicopter carrier?

Modern choppers don't suffer the old limitations - a Merlin has a 1400km range compared to 1600km for a STOVL JSF, provides tactical airlift which is sorely needed in both war and humanitarian operations, and is already in service allowing for whole-fleet management.

There's a lack of deep-strike and air-to-air capability, but can those be provided by other means? For fleet defence, we've already got the Type 45s and could, no doubt, fit Sea Viper to the carriers; for deep-strike, UAVs or Storm Shadow/TLAM perhaps? The only thing you're losing is the ability to park off the coast of Baddiestan and pick a dogfight in their airspace - that might well be a pragmatic choice, given that they can't attack us without running afoul of the fleet's air defences.

I wonder why the story was buried so deep in a free paper, though. Maybe nobody cares.

It doesn't bode well, though, if defence equipment spending is being cut back. If there is fat in the budget, it's the huge number of civil servants - a third of the Whitehall total according to one report - not the forces themselves.

- KoW

Robbing Peter to pay Paul

The BBC reports that TA training budgets have been cut, saving a pathetically small £20m.

For those who don't know, the Territorial Army's "weekend warriors" are already serving in Afghanistan, yet now those in the UK will have no training for the next six months. It's already been reported that general army fitness levels are insufficient for the hot-and-high environment of Afghanistan - ground altitudes in Helmand province can reach 10,000ft, where the air is noticeably thinner - and that some troops have arrived in theatre without ever having practiced with their weapons (particularly grenade launchers, but also rifles, as I understand).

There is one inevitable and, frankly, obvious outcome here: more British troops will be killed because training was cut back.

Gordon Brown can try to score points off General Dannatt in the press with beancounter quibbling over the precise numbers of troops in theatre, but the simple fact is that one cannot say that 7999 people isn't enough but 8000 is. It doesn't work like that. While a small force and a large one may both achieve the same goal in the end, the larger force will likely do it with fewer casualties. It therefore follows that we should not be fiddling around the exact number to deploy, we should deploy twice as many men and vehicles and do the job right.

- KoW

Defence Spending Clarification

As the point has been raised, I should clarify one of my earlier points about defence spending.

I believe that the MOD has far too many desk jobs, and probably still would even if it had only one civilian for every ten squaddies in the field. I've not seen the figures, but I'm inclined to believe that 25% of the departmental budget is wasted on personnel and pointless faff, and that it's probably a reasonable savings target.

However, I do not believe that any such savings should be returned to the Treasury or used to pay for current operations.

The current level of defence spending (~2.3% of GDP) is a peacetime fantasy: it implicitly assumes that nobody will ever attack us or our foreign interests, and that if they do, we'll have some warning. Which we never have had in the past. Conflicts look predictable in hindsight, but this is a Black Swan fallacy. Given the lead times required to develop arms and to ramp up production (and, analogously, to recruit and train people), this is a luxury we cannot afford to take. It's telling that the last time the spend was this low was in the wake of the Great Depression - and meant we were caught flat-footed later that same decade when WW2 started and we had to spend extra in lieu of preparation time. Lend-Lease nearly bankrupted the country.

We must use the defence budget to ensure we have balanced forces ready and equipped to operate against plausible enemies in any battlespace - maritime, aerial or land. Just because the last couple of skirmishes have been against poorly-equipped tribesmen doesn't mean that the next one will be: Iran has a decent air force and Russian "double-digit" SAMs, to pluck an example from the press. Or if we have to enforce a naval blockade against Somalia or North Korea - Admiral Nelson would be spinning in his grave at the thought that we didn't have enough ships to do that.

- KoW

Cutting defence spending is a mistake

The BBC is reporting that the Tories want to cut defence spending by 25%. This is foolish. Defence spending (as a proportion of GDP) is already at its lowest point since the 1930s.

The MOD has, like it or not, already made huge spending cuts - the 1992 recession, the Strategic Defence Review in 1997, and through Gordon Brown's well-known aversion to defence while he was Chancellor of the Exchequer, its budget has been slashed by around 50% in real terms in two decades. Other departments have picked up the "slack" and blown the cash on... what?

One must remember that we are fighting a war at present, and that like no other department in government, the MOD has personnel killed by the enemy almost every day.

I agree with Dr Liam Fox that there are far too many staff in Main Building and, in particular, at Abbeywood, both uniformed and civilian. Defence procurement is a horrendous mess, and - literally - billions have been wasted through inefficiencies.

That money should be spent on equipment, not slashed from the budget.

The MOD is, at best, struggling to pay for its commitments. Lord Drayson's Defence Industrial Strategy has been almost completely side-lined, Bernard Gray's damning report into defence procurement has been buried, and it's likely that cuts will come to "big ticket" projects if the budget is cut further.

I don't support the view that Afghanistan is "the war", it's just "a war". While support and equipment for front-line troops (which is generally a euphamism for the army) is vital, and Dr Fox has rightly pledged to maintain the spending in these areas, there are strategic challenges for which we are completely unprepared.

We're hopelessly underprovisioned for both strategic (C-17/A400M/Hercules) and tactical (Chinook/Merlin) air-lift, long-range strike (strategic bombers, aircraft carriers), defending commercial shipping (T-23s are good, but there aren't enough to go around and FSC is already late) and ground-based air defence; we'll lose our suppression/destruction of enemy air defence (SEAD/DEAD) capabilities fairly soon, sacrificed on the altar of "stealth".

We cannot put enough boots on the ground, jets in the air or boats in the water to handle even the small conflicts we find ourselves in. If something like the Falklands kicks off again, we probably couldn't handle it. Our most-similar neighbour, France, already spends more (as a proportion of GDP) than us, and President Sarkozy has guaranteed this for the future. We should not cut back our defence spending as a response to the sort of economic problems which are likely to cause wars, not avert them!

Defence of the Realm is the first duty of government.

Without that, there is nothing to govern.

- KoW

And besides, the wench is dead

The SFO case against BAES has been praised by the former Attorney General, Lord Goldsmith. "The Serious Fraud Office intends to prosecute BAE unless it pays a fine." according to the BBC, and the story was leaked to the press on Thursday morning.

The allegations are certainly serious, but this whole affair stinks. "Give us a billion pounds or we prosecute"... targetted leaks to embarass the company and harm its share price (the worst performer in the FTSE 100 for most of Thursday, down 5% just after opening)... how is this any better than the man claimed to have been blackmailing Letterman?

Surely, if you have a good case that someone has done wrong, you prosecute them? Maybe allow them to admit guilt after being charged and get a lesser punishment for saving the effort of a trial... but to start out with dirty-tricks negotiation of what the plea-bargain will be seems... wrong.

It also suggests that maybe the SFO's case is nowhere near as strong as they'd like, and so they have to rely on anti-arms-trade sentiments and public embarassment as they can't prove it in court.

Thinking along those lines, why might that be? Well, the BBC Today programme claims that the prosecution is to be under the Prevention of Corruption (Amendment) Act, 2001. Slight problem there, in that said Act is an Irish law! No doubt they mean Part 12 of the Anti-terrorism, Crime and Security Act, 2001 - the same law they'd previously accused BAES under. Yes, that's right, the same people accusing the same company again, but for a different incident - shades of the "we'll keep prosecuting until we get a conviction" attitude over Saddam Hussein's trial?

Let's look at some facts.

The Act in question received royal assent and came into force on 14 December 2001, in the wake of 9/11. The Tanzania deal was made in 2001 (before October, when the ICAO commented on it), the South African one in 1999. I'm told that the Romanians investigated the allegations and found no evidence of criminal activity. No idea about the Czechs, but that's starting to look awfully thin: someone may have done something that was legal at the time but would now be illegal, therefore they should pay us a billion pounds for having not broken the law in the past? Or is the law retroactive - despite there being no hint in the wording and a strong tradition against ex post facto laws?

Then there's an issue of jurisdiction. Nobody is suggesting that bribes were paid in the UK, and if bribes are legal (as is the case for much of the world) where they were paid, what business is that of the SFO? The UAE has extremely strict policies on drug-taking - is it reasonable for them to prosecute people in Brighton and Amsterdam? Should US citizens drinking beer at 18 in the UK be locked-up for underage drinking when they return home (sober) to a 21 drinking-age? It seems to be a somewhat idiotic form of cultural imperialism, yet ironically it's widely supported by soi disant liberals and left-wingers - presumably because of a personal distaste for the military-industrial complex.

Even if the law is valid and applies in these cases, how strong is the evidence? Arms deals are notoriously shady, and usually involve government help on one or both sides. Is the SFO really expecting to get testimony from Saudi princes, senior foreign government officials, and the accused themselves? The UK MOD won't even let the NAO have full and accurate figures, so it's a bit unlikely that their foreign counterparts will suddenly decide to admit to accepting bribes.

So what sort of case does the SFO have? I once heard a very wise quote from a detective sergeant: "If you can't prove it without a cough, you shouldn't try and prove it with."

- KoW