Britain’s balancing act: Proving its worth in an Indo-Pacific age
The Cable | No. 04.2025
Welcome to the 27th Cable, our weekly roundup of British foreign and defence policy.
The world is fast coming to grips with the return of Donald Trump, President of the United States (US), and his administration’s transactional approach to foreign policy. While global sanctions have yet to be implemented, a new, more realist American foreign policy is emerging. In this new era, His Majesty’s (HM) Government continues to engage in diplomacy across the world. With key government ministers travelling to Africa, Switzerland and the Indo-Pacific to advance British interests.
Welcome back to the Cable!
Special relations: The old alignment falls away
The UK-US relationship is based on shared interests. As America emerged as a global power in the early 20th century, it realised its defence strategy would not be too dissimilar to Britains. As Nicholas Spykman, author of the most influential book on US geostrategy in the 20th century, put it:
The position of the United States in regard to Europe as a whole is…identical to the position of Great Britain [sic] in regard to the European continent. The scale is different, the units are larger, and the distances are greater, but the pattern is the same. We have an interest in the European balance as the British have an interest in the continental balance.
The question is, with the Trump administration’s focus on the People’s Republic of China (PRC), and the broader Indo-Pacific, whether the two nations will retain the sort of geopolitical affinity they developed during the last century. If the US sees the UK as a less critical ally, to say Japan and Australia, HM Government will have to work extra hard to uphold the national interest – not least because, as we explain in ‘Kratos’ below, British power has declined in recent years relative to America.
How should Britain respond? Firstly, HM Government needs to strengthen the national powerbase, which means making long-term economic growth central to the national agenda. Planning reform and upgrading Britain’s national infrastructure will be central, as will, perhaps counter-intuitively, increasing defence spending, taking a tougher stance on the PRC, and buying more American energy.
The UK also needs to work harder to convince the US of the connectivities between the Indo-Pacific and the Euro-Atlantic, as well as its willingness to lead European allies. The Trinity House Agreement with Germany and new security pacts with Poland and Ukraine will help, but more is needed if Britain is to guide the continent through increasingly uncertain times.
As the geopolitical environment worsens in Europe and beyond, the UK will have to work quickly to enhance its position. Simply put: this will require more resources, and determination. Trump’s new America will not look favourably on any ally which deludes itself into thinking that foreign and defence policy can be done on the cheap.
Key diplomacy
Sir Keir Starmer, Prime Minister, held calls with several world leaders last week, the most important being:
On 26th January, Sir Keir spoke with Trump to congratulate him on his inauguration and for his role in securing the Israel-Hamas ceasefire. The two leaders agreed to meet soon and stressed the importance of Britain and the US to continue working closely together.
Sir Keir held a call with Benjamin Netanyahu, Prime Minister of Israel, on 21st January. Sir Keir thanked the Israeli government in its efforts to secure the release of British hostage Emily Damari. The two leaders also discussed the need to implement the next stages of the ceasefire deal, while Sir Keir stressed that Britain ‘stands ready to do everything it can to support a political process’ to end the longstanding conflict, which should also result in a ‘viable and sovereign Palestinian State.’
David Lammy, Foreign Secretary, was in Egypt and Chad last week:
In Cairo, he met with Badr Abdelatty, his Egyptian counterpart, to discuss regional security, in particular the humanitarian crises in Sudan and Gaza, and to explore pathways for cooperation on economic and illegal migration. Lammy also called for Egypt to release Alaa Abd El-Fattah, British-Egyptian writer, who has been in prison since 2019 despite his sentence concluding in September 2024.
He also visited the Chad-Sudan border town of Adré to see the Sudanese humanitarian crisis first hand. While there, he announced an additional £20 million aid funding to address the ‘catastrophe’. This increases UK aid for the Sudan crisis to £226.5 million.
Catherine West, Minister for the Indo-Pacific, visited Indonesia and East Timor last week:
In Jakarta, she discussed with Indonesian officials the advancement of a UK-Indonesia Strategic Partnership – due to be signed later in 2025 – as well as forging deeper cooperation on economic growth, climate mitigation and digital technologies. West also discussed the progress of the UK-Indonesia Just Energy Transition Partnership and launched new environmental protection programmes, supporting vulnerable coastal communities to adapt to the impacts of climate change.
In Indonesia, she also met permanent representatives to the Association of Southeast Asian Nations (ASEAN). Britain has been an ASEAN Dialogue Partner since 2021.
In East Timor, the minister reaffirmed HM Government’s support for the country’s application to join ASEAN. She also spoke with Timorese officials on Britain’s continued backing for development, healthcare and climate initiatives in the small island nation.
Rachel Reeves, Chancellor of the Exchequer, and Jonathan Reynolds, Business and Trade Secretary, flew to the World Economic Forum’s annual meeting in Davos, Switzerland, to promote Britain as an investment partner to global markets. Highlighting the UK’s political and economic stability while also promoting plans to enact a pro-business reform agenda, HM Government hopes to attract significant investment in Davos. This comes on the back of PwC, a leading consultancy firm, recently ranking Britain as the second most investable country, after the US.
Defence
The Ministry of Defence (MOD) has signed a £9 billion deal with Rolls-Royce to enhance the Royal Navy’s nuclear submarine fleet and bolster the UK’s maritime industrial base. The eight-year contract will see Rolls-Royce deliver ‘design, manufacture and support services’ to the nuclear reactors of the Royal Navy’s submarines – part of HM Government’s ‘triple lock’ commitment to Britain’s nuclear deterrent.
Maria Eagle, Minister for Defence Procurement and Industry, unveiled the first British-produced Boxer Armoured Fighting Vehicle at the International Armoured Vehicle Conference in Farnborough last week. Supporting over 6,000 jobs in the UK, the joint venture between Germany’s Rheinmetall and the UK’s BAE Systems is the first armoured vehicle to be built in the UK since the Terrier armoured engineering vehicle production line closed in 2013. With 623 Boxers on order, the British Army expects to have the first 27 in service by the end of the year, with all ordered vehicles expected to enter service by 2032.
Last week, the Royal Navy deployed HMS Somerset and HMS Tyne to the English Channel to escort and monitor the Yantar, a Russian intelligence and research vessel which had entered British waters. This is the second incident with the Yantar in UK waters in recent weeks. In November 2024, an Astute class submarine surfaced close to the Russian vessel after it was caught loitering over British critical undersea infrastructure. In an oral statement in the House of Commons on 22nd January, John Healey, Secretary of State for Defence, issued a warning to the Kremlin:
I…want President Putin to hear this message: We see you. We know what you are doing. And we will not shy away from robust action to protect this country. And with our North Atlantic Treaty Organisation (NATO) allies, we are strengthening our response to ensure that Russian ships and aircraft cannot operate in secrecy near the UK or near NATO territory.
Environment and climate
HM Government has announced £410 million investment into the UK’s fusion energy industry. The funding will support the sector over the next two years, focusing on developing critical skills the industry requires and supporting the construction of a prototype fusion energy plant – known as STEP (Spherical Tokamak for Energy Production) – in Nottinghamshire by 2040, with the objective of commercialising fusion energy in the UK.
How Britain is seen overseas
Rand released a commentary piece arguing in favour of a formal UK-Mauritius treaty over the future status of the British Indian Ocean Territory (BIOT). The author argues that a successful treaty should balance issues over sovereignty and international law, foreign direct investment, and the grievances and aspirations of both the Chagossians and Mauritians. The article also suggests that leveraging PRC-Indian geopolitical competition – by involving New Delhi in the negotiations over the BIOT – will help draw India in as a ‘partner in competing against China’.
How competitors frame Britain
TASS released propaganda claiming that the recent 100-year security partnership between Britain and Ukraine ‘contains some secret provisions’. The article also states that the agreement will focus on increasing Ukraine’s military capabilities, through the creation of a joint flotilla and Britain’s continued support for training Ukrainian troops. Good to know that Russian state media continues to fear British power.
The Global Times published a statement from the Chinese Embassy in Britain, which ‘strongly condemned’ the recent visit to Taiwan by Tom Tugendhat, Member of Parliament for Tonbridge. According to the article, Tugendhat’s visit was an attempt to incite ‘Taiwan independence activities’ and ‘create obstacles to the development of China-UK relations’. Obviously, the visit represented nothing of the sort, though Beijing always fails to distinguish between private and state activity.
Assessing national power
The first week of the second Trump presidency has shown that the new US administration is far more willing to wield American power than many of its predecessors. Threats of immediate 25% tariffs on Colombia over disputes on migrant deportations resulted in an immediate backtrack from Bogota. If Washington’s relations with others are set to become far more transactional, it warrants an exploration of just how much the power disparity between the US and the UK has changed over the last two decades.
In the mid-2000s, the Gross Domestic Product (GDP) – albeit an imperfect measure of national power – of the US was US$13.04 trillion and its GDP per capita was US$44,034. The UK’s GDP was US$2.55 trillion dollars and its GDP per capita was US$42,144. In other words, the UK’s total economic output was 19.5% of the US and its output per person was 96% of the US.
Many analysts since the financial crisis of 2008 have written off the US economy, especially with the meteoric rise of the PRC. However, the figures for 2025 tell a stark story of just how much growth the US economy has had in comparison to the UK. Estimates for this year place US GDP at US$30.34 trillion and its GDP per capita at US$89,678. The figures for the UK are US$3.73 trillion and US$54,280, respectively. In other words, the UK has slipped to just 12.3% of the economic output of the US and has dropped to just 60.5% of the output per person of the US.
These figures only tell part of the story. The US has several other key power attributes which have only grown in relative terms. To take just a few examples, the US is now fully independent in terms of energy, is home of the world’s largest technology firms, and the dollar is still dominant in the global economy. Spurred on by the return of great power competition, the US is now putting renewed efforts into the development of future technologies, such as ‘Project Stargate’ (a US$500 billion plan to invest in Artificial Intelligence infrastructure) which could be key to unlocking even more growth.
The UK is not alone: the US has been putting distance between itself and almost everyone else. The reasons for this are complex and cannot possibly be explored in any detail here. What is important is what this means for the future of US-UK relations. This growing power disparity offers both a set of risks and a set of opportunities. The risks revolve around the UK’s need to work harder to prove its relevance to Washington to keep the benefits which the close relationship between the two nations has brought. But there are also opportunities: how can the UK cultivate its national power base to create added value to its relations, including with the US, but also with the growing economies of the future such as India and Indonesia? And how can Britain use the fact it has these options to push simultaneously for more preferential trading terms with the European Union (EU)?
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Which book of Nicholas Spykman's are you referring to?