Defence Written evidence from Commodore Steven Jermy RN
Summary
Britain’s security attention continues to be on the Middle East and North Africa, and related terrorism at home. Whilst these areas should be a continuing focus for the Strategic Defence and Security Review in 2015 (SDSR-2015), political and economic events elsewhere in the world may indicate that there are matters of potentially greater long-term import afoot; in particular as a consequence of an extended period of global economic stagnation, increasing energy security concerns, and early signs of climate change impacts. It would be unwise to forecast trajectories in each area, and the consequences for Britain’s security. Nevertheless, it is plausible that parallel events in all three could develop in a way that would have deleterious consequences for international security in general, and Britain’s security in particular. It is thus important that SDSR-2105 analysis be supported by plausible scenario analysis so that the implications for the potential roles of our Armed Forces be thought through and, if necessary, rebalancing initiated.
Background
1. I, Commodore Steven Jermy RN, am a retired naval officer with experience of operations and war, at sea, on land and in the air, and at the tactical, operational and strategic levels. After leaving the Royal Navy I published a book, Strategy for Action: Using force wisely in the 21st Century, that sets out a framework for strategic-thinking and practical strategy-making. I now work in the marine renewable energy sector, but am also an international strategy & security consultant and visiting lecturer with particular interests in developments in climate change, energy security and international economics, how all three intersect, and the consequences for international security.
2. The run up to the SDSR-2015 will see, amongst other things, Britain’s drawdown and extraction from Afghanistan, but it is important in the preparatory policy analysis that we are not seduced by recent operations—such as Afghanistan, Iraq and Libya—into thinking that they herald the shape of geopolitical things to come. The danger, otherwise, is that we will plan to fight the last war; and if British Armed Forces are, for example, configured for further extended counter insurgency operations, they may be ill-prepared for other scenarios of potentially greater import for Britain’s national security.
3. As such, SDSR-2015 offers a critical opportunity for the defence and security community—in Westminster, Whitehall and elsewhere in Britain—to raise its vision from immediate issues of international terrorism which, although roundly to be deplored, have had little substantive impact on Britain’s overall national security when compared to, say, World War II.
International Terrorism
4. Whilst, as we have seen as recently as last month on the streets of Woolwich, international terrorism will be part of the strategic backdrop for Britain for the years ahead, with the drawdown from Afghanistan the likelihood of it being the central security issue will probably reduce, unless there is some new ill-judged commitment of British troops in the Lands of Islam.
5. Whilst it is sometimes difficult for us to acknowledge, the events in Woolwich—and elsewhere, for example in Syria and Algeria—are linked to the deployment of the British Armed Forces in Afghanistan, Iraq and Libya. This is not to condone the un-condonable actions in Woolwich, but rather to recognise the plain and simple fact that British operations in the Lands of Islam provide a political nexus for the extreme Islamists, and a fertile cause upon which to throw their radicalising seeds. And that Britain’s homeland security has suffered as a result of the Afghanistan, Iraq and Libya interventions.
6. This is not a new conclusion. Eliza Manningham Buller, Director General of MI5 from 2002 to 2007, observed in the Iraq Inquiry in 2010 that threats to Britain’s security had increased as a result of Britain’s operations in Iraq. Indeed, the only confusing question is how the establishment has been unable to make this causal connection, and recognise that the idea of attempting to reduce terrorism at home through large scale military operations abroad is very often oxymoronic and can have the reverse effect to that intended.
7. Fortunately, with the planned extraction from Afghanistan—and assuming that Britain is able to do the right thing, and sit on its hands rather than act unintelligently in Syria—the extraction of British troops from the Middle East and North Africa should remove the high visibility nexus around which extreme Islamists have rallied their supporters, and thus slowly reduce the terrorist threat to mainland Britain. This is as well, because other strategic issues appear to be hovering over the strategic horizon.
Climate Change, Energy Security & International Economics
Climate Change
8. Matters of climate change give cause for concern, and should certainly be on the analytic agenda for SDSR-2015—not least of all because our understanding of the climate is still at such a relatively early stage, scientifically, that it is very difficult to say quite how the climate will evolve. Increased climate volatility seems likely and, with it, the continuance of more extreme climate events. And the way that the Armed Forces are shaped should include some provision for this—including, in particular, at least some recovery of an all-year-round capability to provide disaster relief to Britain’s overseas territories. But equally, it seems likely that concerning consequences of events in the spheres of energy security and international economics seem more imminent, and should probably be a more urgent focus for SDSR-2015, and given a weight at least the same as, if not higher, than international terrorism.
Energy Security
9. Britain’s energy security is an increasing concern. Four years ago, in a seminal book—Sustainable energy—without the hot air—the current Chief Scientific Advisor to the Department of Energy and Climate Change demonstrated that a very significant reduction in Britain’s electrical generation capacity would occur between 2015 and 2016, as a “substantial number of old coal power stations and nuclear power stations will be closing down.”1 Since this observation, although some restorative progress has been made, it is nevertheless difficult to find a compelling narrative in government that gives confidence that our energy needs will be fully met, post 2015. This matters because, of all the resources consumed by an industrial society, energy is, as the American energy commentator Chris Martenson has regularly observed,2 the “master resource.”
10. The issue may be doubly pressing given developments in the oil-&-gas industry (generally not well understood) and given that oil is central to the functioning of Britain’s transport infrastructure and gas will be increasingly central to Britain’s power infrastructure (with the increased planned reliance on gas-fired power stations in our future electrical generation plans).
11. The fashionable view is that the so-called revolutions in shale oil and gas, and “fracking”, will solve our immediate energy problems. It is an enticing narrative but one that, when subject to scientific and technological analysis, appears to have worrying flaws.
12. These flaws are best exposed, following the approach of Professor Charles Hall at New York State University, with the idea of Energy Returned on Energy Invested (EROEI)—this is the measure of the amount of energy that must be expended to extract energy and, as the Professor Hall’s analysis shows (Figure 1 below), reveals statistics and trends that call into question the popular shales and fracking solution narrative. Of particular note:
conventional oil—EROEIs have been reducing steadily over time since 1990, from figures of around 40:1 in the 1990s to around 12:1 in 2007. And this notwithstanding a very significant increase in the percentage of capital allocation of oil-&-gas companies in extraction capacity.
shale oil—EROEIs are, at around 6:1, even lower than those of conventional oil. This is to be expected, though, given that the extractive mechanisms for shale—and indeed “fracking”—are akin to mining (rather than drilling) for oil.
Figure 13
13. The key deduction is straightforward—there may or may not be very large volumes of oil-&-gas to be extracted from, for example, shale sites, but it will not be cheap. Thus, whether or not peak oil has arrived, it seems clear that peak cheap oil has been and gone.
14. This should not surprise us, given the preference in our economic system to extract the easiest—and cheapest—sources first, and then turn to the harder—and more expensive—ones. This, indeed, is the underlying strategic context of the BP Horizon disaster—not so much a failure of health and safety, but rather a symptom of the technological challenges and risks of operations at water depths in excess of 1,500 metres, because the cheap wells are increasingly exhausted.
15. There may have been some current respite in oil-&-gas prices—although by no means enough to justify the tales of super-abundant reserves—but the EROEI seems to suggest that the respite may not be for long. Which will be a general concern internationally, given the centrality of oil to our national and international transport systems, and a particular concern nationally, given the “dash-for-gas.”
16. The end of cheap transport and heating energy will be difficult to confront, politically, especially for Western populations—including Britain—industrially weaned on cheap energy, and who assume—mistakenly—that there is some magic Government wand to be waved to make things better. But confront the possibility we must.
17. Indeed, if we judge that a future scenario of continually rising energy prices over, say, the next two to three decades passes the test of plausibility, then it must be the responsibility of the British political establishment—including politicians of all parties—to be ready to prepare the British people for steadily rising energy prices, at least out until 2050. And more immediately, to commission the future analyses that will be necessary to allow us to work through the strategic implications—national and international—so that the British Armed Forces can be configured to deal with any deduced national security threats.
International Economics
18. International economics—and in particular international debt levels—is the other imminent concern. It is the general policy of all three main parties (or all four, if UKIP is included) that the solution to Britain’s economic problems lie in a return to GDP growth, and main political differences are to do with how that return to growth is to be engineered. But even if growth were to be the panacea, two structural headwinds make its sustained achievement extremely problematic. The first is energy pricing. And the second is debt.
19. The interaction between energy, debt and GDP growth is poorly understood by the schools of conventional—neo-Keynesian—economics that dominate the training and thinking of policy makers in Britain’s main economic policy institutions, notably the Bank of England and Her Majesty’s Treasury. Conventional economists generally assume that energy is an output of GDP—at least this is how they account for it in our national GDP statistics. Whereas Richard Ayres, the American physicist and economist, demonstrates unequivocally that it is instead an input to GDP and, with labour and capital, one of the three factors of production.4
20. This is important because of two obvious implications. First, our current and forecast GDP figures (which include energy production as an output factor) are likely to overstate our actual growth. Second, and more importantly, there will be an inverse relationship between future energy prices and future growth—if the energy prices do indeed continue upwards, as the EROEI analysis above already suggests, then our potential for economic growth will be continue downwards. Future energy prices are, thus, the first great headwind to growth—the second is debt.
21. British debt levels are generally understood to be high in political and intelligent circles, but few recognise that we are actually at levels without historical precedent. A McKinsey study in 2011 (Figure 2) gives a sense of the scale.
Figure 2
22. As the McKinsey nomenclature explains, the debts levels illustrated are not simply government as a proportion of GDP, but rather government, household, corporate and financial. And from this analysis Britain is, with Japan, the most indebted of the world’s 10 largest economies. The situation is, though, nuanced, given that a very significant proportion of Britain’s total debt—around a quarter—is with the City of London, as a result of its role as a financial centre. Whereas the lion’s share of Japan’s debt is government debt. But in any event, these debt levels are the second great headwind to growth.
23. Conventional neo-Keynesian economists appear to assume that debt is good, whether for consumption or investment and whatever the overall levels. Hence the continuing favourable government tax treatment for corporate debt and the Government’s strong push to get banks to lend, both to British businesses and to British households through schemes such as the Funding for Lending Scheme. All this notwithstanding the current unprecedentedly high levels of overall British debt.
24. And yet, as the brilliant Australian mathematician and economist, Professor Steve Keen, shows, high levels of debt actually have a perverse impact on GDP growth.5 This is because the maths shows that, during periods of necessary de-leveraging, the reduction in debt systemically and substantially reduces an economy’s capacity to grow. Debt is, thus, the second great headwind to economic growth.
25. Furthermore, the period required to de-leverage from current levels of debt is much longer than is generally politically forecast or popularly accepted—to the end of the current decade on the McKinsey view—and into the late 2020s on the Keen view.
26. As we can see in Greece, Spain and Portugal, stagnation and contraction leads to increasingly unstable political situations, and It will be important to ensure that the analysis to support SDSR-2015 includes scenarios of both protracted economic stagnation and extended economic contraction, both of which appear plausible, and both of which should be properly rehearsed, so that the need or otherwise to rebalance the British Armed Forces can be addressed in SDSR-2015.
Growth
27. The possibility of continuing rises in energy prices and the challenges of long-term debt deleveraging should perhaps also lead us to consider whether there is something more fundamental afoot—and in particular to consider whether it is plausible that it is the philosophy of the pursuit of economic growth that is the underlying cause of the systemic problems international society appears to be encountering and whether this, in turn, may lead to scenarios altogether more problematic than those of protracted economic stagnation or extended economic contraction.
28. It is a fact of mathematics that mathematical growth cannot continue indefinitely—because geometric growth leads to infinity, sooner or later. And it is a fact of physics that physical growth cannot continue indefinitely—at least not on a finite planet, with finite carrying capacity limits. It thus seems plausible that, at some stage, economic growth will arrive at a limit imposed by mathematics or physics. And indeed this is the theoretical case made by the systems dynamicists, Donella and Daniel Meadows and Jorgen Randers, in their seminal text Limits to Growth.6
29. Published in 1972, the book documented a system-dynamics analysis of human society on a finite planet over time. As Figure 3 shows, the book predicted that, in a “business as usual” scenario—ie no significant changes in population trends, fossil fuel consumption or industrial production—that limits to growth in industrial output would be reached in the second decade of the 21st Century, during the 2013–17 period.
30. The industrial output limits are reached as the combination of increasing population and the pursuit of economic growth consume the finite energy and mineral resources of a finite planet. And the “business as usual” approach that they modelled is the one that international society has largely followed, in the 40 years since the book’s first publication.
Figure 3
31. Their predicted output production peak in the period 2013–17 should thus perhaps cause us to ask the question of whether geo-political events playing out around us—for example, the financial crash of 2008, the Eurozone economic crisis, the Japanese debt crisis, the political chaos of the Arab Spring, and riots in capitals such as London, Stockholm and Istanbul—are not separate events but, plausibly, symptoms of a more deeply systemic problem, of a human society intent on the pursuit of economic growth finally coming up against the finite limits of its host planet’s carrying capacity.
32. In deciding whether we should consider such a scenario for the SDSR-2015 analysis, the test here for the defence planner is not that of the scenario’s probability but rather of its plausibility and the potential national security impact. If the Limits of Growth scenario of an industrial output peak in the 2013–17 period followed by a period of violent contraction passes the plausibility test, which as a strategic analyst I judge it does, then the question then is about national security impact.
33. This is difficult to judge in a short analysis such as here, but the steep decline in the industrial output trends after 2020 would suggest, at first glance, an impact of millennial consequences. Even if the output reductions were just half of those posited in Limits to Growth, this would still amount to a 50% fall in the world’s current industrial output levels. And it is difficult to see how a GDP contraction of this magnitude, over 30 or so years, together with the associated reductions in international employment, food and energy production, trade and wealth generation, could lead to anything else other than a period of extended international instability, associated international insecurity and chronic societal crisis.
34. In such circumstances, the Armed Forces could potentially have a central role in maintaining the security and stability of the British Isles and our Overseas Territories. Potential roles would include:
Military Aid to the Civil Power—including disaster relief, crowd control, and security of our Exclusive Economic Zones offshore.
Resource Security—security of our energy, food and commodity sources, including of the sea and land lines of communication along which they travel.
Containment of Conflict—including border control and the maintenance of maritime and air exclusion zones.
Stabilisation Operations—in a range of potential areas including, for example, the Mediterranean, North Africa and the Middle East.
National Evacuation Operations—potentially world wide.
35. And it is also difficult but nevertheless important to observe that, historically, events during periods of economic contraction have very often led to war.
Sdsr 2015
36. To return to the question of whether the issue areas above should be subjects for analysis in the preparation for SDSR-2015, the tests that Whitehall and Westminster in general, and HCDC in particular, must apply are those of plausibility and impact rather than probability. If the scenarios are deemed plausible and with serious national security impacts, then work must be commissioned to investigate them, no matter how politically unappetising this may be.
37. This is because if such events were to lead to the need to deploy the British Armed Forces for defensive reasons, or to pursue objectives critical to British security, then it would be unconscionable to do so unprepared, when the scenarios predicted had indeed been foreseen. Rather, the British Armed Forces should be given the best chances no matter how politically unattractive or popularly unwelcome the messages therein.
38. Defence and security are the fundamental responsibilities of government, and thus if the plausibility and impact tests are passed, there is surely a constitutional requirement to begin the analysis—on top of an overriding moral imperative.
Conclusion & Next Steps
39. SDSR-2015 presents a strategic opportunity for raising our vision from Afghanistan, but the issues that are hoving into sight over the strategic horizon could present a political challenge of unprecedented nature for, and test of, Britain’s political, official and military classes. But it is a challenge that must be faced.
40. How should this be approached? Strategically—rather than party politically—is the answer. We are not, as a nation, good at strategy—or not recently, in any event, if the failing situations in Afghanistan, Iraq and Libya are anything to go by. But we can do better, and do better we must, if the worry prospects of such scenarios are anything to go by. In Strategy for Action, I suggest that strategic thinking:
“… requires teams of clever, well-informed and operationally experienced people—the brightest and the best—with sufficient time and space to think. Teams that must not be rigidly constrained by decision making doctrine, processes and structures.”7
41. Early analysis by such teams would be a sound way to begin the new thinking. It is a military truism that time spent in reconnaissance is rarely wasted, and time spent by dedicated teams to consider the issues above—including to review the plausibility and potential impacts of the scenarios above—would, in my judgment, not be wasted.
42. Furthermore, because of the potential impacts on national security, it should remain the case that the leadership and direction of the analysis be vested in the national security organs of government—with the Defence Committee in the House of Commons, and with the National Security Council in Whitehall. The capacity to think unthinkable thoughts may be needed, and the military-strategic mind is generally better suited than most, through operational experience, in this respect, and best able to confront difficult issues such as these, and provide the direct and honest analyses needed to inform political decision-making.
43. In the light of the above, I would recommend for the Defence Committee’s consideration that:
first, the Defence Committee retain the Select Committee lead in the House of Commons for the issue areas outlined above;
second, the Defence Committee consider whether the sketch analysis that I have outlined here would merit, as I believe it should, further preparatory “reconnaissance” prior to the necessarily more detailed policy analysis that will no doubt begin in 2014, to underpin SDSR-2015;
third, if such preparatory “reconnaissance” is deemed appropriate, then the Defence Committee consider whether, as I would recommend, there would be merit in two separate analytic tracks be undertaken, through the formation of two small ad hoc teams to conduct the preparatory “reconnaissance”:
the first team, official, drawn from and using the existing the existing analytic capacity and resources of Whitehall; and
the second team, wholly independent, drawn from the brightest and the best of Britain’s independent academics, policy analysts, and military strategists,
fourth, that both teams are sufficiently resourced so as to complete their reconnaissance by early 2014, so as that it can in turn inform the design of the policy analysis that will be conducted in 2014 to underpin SDSR-2015; and
fifth, that the inter-relationship between SDSR 2015 and the next revision of the National Security Strategy (NSS) also be thought through and that any early “reconnaissance” work be undertaken in such a way that informs the detailed policy analysis for both the NSS and SDSR 2015.
44. Finally, I should conclude by observing that this has not been the most enjoyable of analyses to think through nor write, and I am also acutely aware of the likely unwelcome political messages herein, for all parties. But I have written because, having been deployed on operations and war on more than one occasion, I know very well the advantages that accrue from the opportunity to conduct intelligently informed military preparation.
45. And it would thus be unconscionable for me not to set out what seem to be increasingly plausible scenarios with consequences for Britain’s national security of a millennial nature nor to confront the possibility that the British Armed Force might need to be prepared and made ready for the consequences therein. Politically unappetising though the messages may be, I am clear that, because of their constitutional responsibilities, politicians need to be made aware of these possibilities—and for, my own conscience, it is important that I am on the public record as having done so.
June 2013
1 Mackay, D J C. Sustainable energy—without the hot air, London, 2009. p.5.
2 Martenson, C, Crash Course: the unsustainable future of our economy, energy and environment. New Jersey, 2011.
3 The positive ratios for hydro and, to a lesser extent, wind demonstrate a much stronger case for renewable energy, based on this measure.
4 Ayres, R U & Ayres, E H, Crossing the energy divide—moving from fossil fuel dependence to a clean energy future., New Jersey, 2009.
5 Keen, S, Debunking Economics, London, 2011.
6 Meadows, D H Meadows, D L & Randers, J. The Limits to Growth: A report to the Club of Rome’s Project on the Predicament of Mankind, London, 1972.
7 Jermy, S C, Strategy for Action: Using force wisely in the 21st Century, London, 2011. p.8.