 Thank you very much. Thank you for having me here. Brendan delighted to be at the institute which you founded in a lovely building. So I appreciate good buildings for institutes as I'm lucky enough to be in a nice building in London as well. It creates I think some of the culture and the mood of open discussion and hopefully we'll be able to have that. I'm very happy to engage obviously on this topic or others after I've finished my remarks. The timing is quite good I think for the talk. I was particularly interested to be able to come and do this because we are sort of a little over a year into the government in the UK. And so there's been some commentary about a year in how has the UK's foreign policy done. Although the visit by President Obama last week in a way sort of, how could I put it, changed slightly the context in which that kind of discussion might have happened absent that visit and give it maybe a bit more of a US focus than we might have had otherwise. But what I'm talking about today is rethinking UK foreign policy. I think it's worth perhaps throwing in the word limits. What I want to talk about a bit today is the extent to which the UK government has been able to follow through on its intention I believe to recalibrate, reorient somewhat UK foreign policy from a heavily Euro-Atlantic focus to a more international focus. So I might call that back to the future rather than necessarily being a real change. But nonetheless that's the approach as I've seen it, being one year in and in particular being one year in after the dramatic events in the Middle East of these last few months makes it a particularly interesting time to review it. So let me sort of do four things. Talk a bit about how I think I view where the UK sits right now and I think the kind of overlaps let's say therefore with where the UK government thinks the UK sits. Secondly a little bit about what they've been doing about it for the last year. A little bit about the challenges, the difficulties that are emerging to kind of put the foreign policy into action. And then just a couple of comments for conclusion. So on this first bit of where is the UK today or where has it been and where did it think it was when the new government came into power. Three important things, self-evident perhaps to state. And these were all in the paper that I put out back in May of last year around the time of the changing government. But I think the three things from the UK standpoint, the shift in economic gravity and I use the word gravity quite advisedly because I'm not sure it's a shift in power. There's certainly a shift in economic gravity from west to east, that kind of magnetic effect that's taken place because of the rise economically of China principally but countries around it. This has led and is leading to a shift in political power as well, the emergence of a G20 world. For a UK that's prided itself, as you were saying, being at the heart of some of the key institutions that helped govern the world, one way or another, since the Second World War, this rebalancing is important for the UK. We don't want to lose our centrality, no country that has power once on a COVID, and a UK with a fairly internationalist outlook feels it has something to offer. So it's wanted to adapt itself to a G20 world, and I think you saw this in the way that the Gordon Brown government really embraced the emergence of the G20, has even helped try to define what it might be in the future and the kind of agenda it might undertake. So that was the first element. The second is that I think the UK government has been conscious that there are new risks emerging with this shift from west to east. Risks which come about partly through the huge competition for resources come about also because fragile states have a way of exporting their fragility over to the UK and to other countries in the world, and therefore an awareness that even though the kind of interventions that we undertook in Iraq and Afghanistan may have had unintended consequences, the UK would not be able to bury its hand in the sand and assume that its stability around the world would not continue to be of concern and whether we'd have to adapt our strategies to reflect that. And then finally, and perhaps most importantly almost, a realisation that the UK had hit a brick wall in its growth model. You know, we spent a good ten years lauding it over continental European countries, you know. Well, of course, you know, Germany stuck with eight or nine percent unemployment and stuck with one percent economic growth forever. And here we are with our five percent unemployment and our two and a half percent, three percent growth. And it's because we have a better model. And it's the inheritance of Maggie Thatcher, et cetera. Well, I think we woke up to the fact that a large part of that model was credit and spinning money faster and faster around the UK economy. It was the large contribution that the UK financial sector played in offering large amounts of money through tax revenue into our coffers, allowing a new labour government to be old labour, new labour simultaneously, et cetera, et cetera. Any case, we need to do something differently at a time when the world is shifting in the centre of economic gravity is shifting. We need to grow and not just cut and growing at home won't be enough. And so, you know, my call on this I suppose in the paper that I made is that the UK should go back to the future somewhat and focus heavily on open markets. If you'd had to pick one theme that would be relevant from the UK standpoint that would in a way answer almost all three of those questions from the UK national interest standpoint from a point of view of slowly integrating the weaker economies into growth models and that would make sure that the rise of new powers didn't lead to some sort of instability, let's say, in the international system, then supporting and promoting open markets would be good. It's especially good for the UK and I should note this just quickly here because the UK has relied hugely on foreign investment and exports to drive economic growth through that 2010 period. About 30% of the increase in UK GDP over that period was accounted for solely by exports and FDI and foreign direct investment. That's a significant element and in service sector that's been even more important where we are one of the world's, well the second largest exporter of services in the world after the United States. So those are logic. Now the UK government, not because I wrote it, I think they were thinking elements of the same thing in any case and this is the UK government that proclaimed when it came in a distinctive British foreign policy. It would be different and I think a key aspect of this distinctiveness has been a reference to open markets but trade and especially less reference to open markets, more about the need for commercial diplomacy. A kind of shifting of British foreign policy into the service of its commercial policy and as I said I find that understandable, logical and fine. Second has been to trying to take advantage and you've seen speeches by William Hague about the importance of the UK in a networked world. The UK is particularly well placed within a networked world to take advantage of this changing power because we're not just in the old institutions of the UN Security Council of NATO but we're also in the new parts of the G20 and we're influential in the financial stability board etc. Thirdly they have taken this shift in global economic gravity to mean a real emphasis on bilateral relationships with new powers. So to state the obvious is China, India etc. Finally the government has decided that it didn't want to let go however of the importance of values and in the series of four I think it was foreign policy speeches that William Hague gave each of which touched on an aspect of this foreign policy agenda just describing values and the importance of keeping an eye on the values of democracy, openness, politically etc. has been an important part of this component. So that's kind of where the UK is, that's how the strategy has been laid out over this last year. What's happened over the last year? What have they done? A second part. Well I think it's been quite interesting. This has been a government that has been really active over this last year I think in redefining some of the axes of British foreign policy. With President Obama's visit here I think one of the most interesting issues and something I'm particularly interested in has been the US-UK relationship. There's no doubt that the UK-US relationship is now more balanced than it was when the coalition government came into power. Remember all the phrases that they used before they came into power wanting to have a solid but not slavish relationship? Well they've gone ahead and done it. If you look at the G20 debates about whether you should be stimulating your economies or cutting, we've now got the US on stimulating and the UK firmly, in fact probably at the lead of the pack on cutting. So no longer do we have Gordon Brown and Barack Obama shoulder to shoulder at the London G20 summit talking about the importance of stimulus. While the French and the Germans were more in being cautious we've had a complete flip of that in the most recent G20 summits with the UK really on a different side of the ledger to President Obama. It's interesting that Obama picked his words very carefully on this topic and his speech is in London. UN Security Council vote on settlements. UK went right out there, you know, did not stand back with the US and was supported the resolution critical of Israeli settlement policy. And I think more broadly you could look at the Libya, you know, how much we pushed on that action. I guess there have been a bunch of issues where the UK has stepped aside somewhat from where the US was. And now in a way they're in a position to re-engage. Now we can talk about an essential relationship. The phraseology used in the jointly penned article, though I think David Cameron's team had more to do with it than the Obama team on rephrasing this as an essential, not just a special but an essential relationship. Secondly, this is a government that is, because it's wanted to look more internationally, has put the EU into cold storage. I'm happy with putting it. We don't want any issues with the EU. Not good, not bad, just will have good relationships. In fact, we'll treat the EU somewhat like the bilateralism that we want to have around the rest of the world. We'll do a Franco-UK deal on defence. David Cameron hosted his kind of Nordic summit of governments, including I think Norway was there. So not just countries inside the EU. It has not wanted to rock the boats on financial regulation. It said that the euro is a critical national interest for the UK government. They've really kind of want to say we don't want to fight over the EU because we need to move away from this Euro-Atlantic focus where the US was the plus and the EU was the negative. But each of them were distracting in a way and we need to focus more third point on the bilateral relationships and there they really have done it. And I think whether you look at the rejigging of embassies that were just announced earlier this month with a huge increase, well huge in terms of personal times in the Beijing and New Delhi embassies and in other parts of the world, some cuts back in parts of Europe, that's been interesting. Fourthly, they've gone into the smaller states, Turkey, Gulf, Chile, Colombia, visits to Australia, New Zealand. This is a government that's looking at all those middle-ranking powers that might be influential in a G20 world. It's not just China and India and Brazil. It's other powers, South Korea, Japan, ones that are at a UK level that need to be nurtured and cultivated if the UK is going to be able to push its international agenda going forward. Fifthly, it's pushed its ideas on open markets. Sixthly, push for Doha, rhetorically at least, a big argument in favour of opening up a single market rhetorically at least. Sixthly, they have focused on fragile states, adding a lot more money to the international development part, not just on traditional international development, but more on the security dimensions of those fragile states that we talked about earlier. It's very interesting to see the increases in diplomatic capacity in countries like Pakistan, Madagascar, Kyrgyzstan, South Sudan, Cote d'Ivoire, El Salvador. These are all countries, interestingly, in many cases, pre-conflict, the impact that you can have. Don't go in in an Afghanistan point with your development aid. Try to get in there before the crisis gets out of hand. Finally, and maybe this is all worth a completely separate discussion, I've only got five minutes left of my 20 minutes, is on the whole business of the national security strategy and the strategic defence and security review, which took place, which again was part of this rejigging British defence resources as well to a new world, except that I would say this was the area that has been most explicitly inconsistent with the vision, in my opinion. And we can talk about this in a minute, but you would have thought if open markets, rising powers are the theme of your foreign policy, then you'd be thinking more about your navy. You'd be thinking about being able to be influential in sea lanes and around the South China Sea or the Malacca Straits or capacity maybe to do targeted interventions in fragile states. Instead, we've hardly cut the army and we've cut the navy back heavily, and this has all to do with Afghanistan and legacy problems. But any case, the point I wanted to make is this is a government that has been activist in my opinion, activist in the last year to try to say this is a different foreign policy. But I suppose the hinge point of the talk is this working, isn't it? How's it going? Let me talk about three issues where I think the limits stand out. The first is right at the crux of it, this business of hanging our star to the rise of the new economic powers of the world, the countries where growth is powering ahead, the Brazils, the China's and the India's. If you look at the end of the first year, you might say it's too early to tell, but actually our performance at least in the hard nugget measurement of exports and so on has not been particularly impressive. You all know the UK economy has been basically in standstill over the last six months with a 0.5% growth in the last quarter of 2010 and only a 0.5% then growth, so a sort of negative 0.5 cancelled out by a plus 0.5. But if you look at the trade, our exports have gone up in this first quarter by about 4%, imports dropped by half a percent, but still we're running $3 billion in a quarter roughly deficit. So trade is still a negative overall in terms of UK economic growth and most of that trade we've done, the increase that has taken place, has gone to the US partly to Europe. Our trade profile remains heavily EU with 50% US, almost a quarter focused. And our ability to break into those great markets despite all of the trade missions, diplomatic discussions and David Cameron, I thought quite, how can I put it bare-facedly, criticising Pakistan in India, criticising Israel in Turkey, people said, gosh, that was a very naive thing to do. I thought it was actually quite mechanistically intelligent. He was playing to the gallery and playing to markets, but it hasn't made that much of a difference yet. And I think what we've suddenly realised is you can say it's so, but that doesn't make it so. And the one thing Germany knows, was in Germany giving a talk just the other week, comparing the UK and German economies, they've spent 10, 20 years building their relationships in China and India and Brazil. And their export machine, which has done so well during that period, has really been on the basis of long, long-term structural change, not because the government decided those markets were important in the last six months or a year. So this is a difficult ship to turn in the UK economy. And in addition, I think what we've realised is that if the UK is going to suddenly break its way into the Chinese, the India and the Brazilian markets, especially in the service sectors where we're so competitive, we're going to need the EU behind us driving those markets open. Because actually our diplomatic clout, while it might be important on issues of high security in the UN Security Council and even the G20, that doesn't mean we have clout when you go to Beijing economically, et cetera. And there really the weight of the EU is what makes the difference. But have we played our EU card well? This is where I'd say that the idea of treating Europe in cold storage doesn't help. Europe, as I'm sure many of you will know here, is all about package deals. Are you helping me on the budget or are you helping me on Schengen or are you helping me on the euro? And then yes, maybe we'll talk about trade. No, the UK has thought that if we just put Europe into the quiet space, people will be grateful. And somehow we can then turn around and play the economic card. Well, no. And this is, I mean, I don't think the government is unaware of this. But the fact is that, you know, it's all very well for William Hague to stand up in his mansion house speech back on May the 4th and proclaim that Europe should look at having a free trade area, and even a customs union with North Africa in coming year states, because that's, you know, the best for the future. But have we been building the relationships with those countries that will bear the brunt of that more open market, which will be Italy, Spain, Portugal, all of those countries that are suffering most within the euro crisis at the moment, in a space where we're really not playing in that debate. So I think we've kind of confused commercial diplomacy with what it takes to get open, what open markets mean. Commercial diplomacy is a good slogan, but I'm not sure it's quite working out right. Last two points on this. One is the US relationship, and maybe I'll save up some of this for Q&A because otherwise I'll go on too long. But am I okay? Well, you know, one of the most, I think, fascinating shifts in UK foreign policy has been this effort to detach itself from its obsession about having a special relationship with the US. And in a way what the government is leaning towards, I think, is a sort of alachart relationship with behind it aspects of specialness that are purely tactical. That's a phrase I used in the Foreign Affairs Committee evidence which I gave, which is that, yes, it's still a special relationship, but it's in intelligence cooperation, it's in aspects of military cooperation, it's in sharing nuclear missiles on trident submarines. These are tactically extremely important, but they're not really a definition of a strategically special relationship. And we have drifted into, as I said, almost in our efforts to try to show that we're over it to ourselves, not to America. We just think America would like us more if we didn't seem so desperate to have a special relationship. We've ended up drifting towards an alachart relationship, which I felt the Obama visit actually epitomised. High on pomp and ceremony and all of that, but maybe a little lacking on the substance. While we're running our commercial diplomacy with China, the US is thinking the future of Southeast Asia and Asian security. And I don't think we have much to say about that, to be frank. And while we're trying to maybe make sure that our very successful commercial relationship with Russia isn't undercut by the hangovers, the Lvivianenko assassination, the Americans are really well into actually, I think, quite an effective reset of their relationship with Russia that goes way beyond commerce. We've got commercial bits, but it's not doing well for the US. So, you know, in India, do we really have a weight on it? America's got a really long-term strategic idea for what it's doing with India. Do we? No, we want to sell some more aircraft or some bits and pieces. You know, I just have this feeling we're on a slightly different track. Afghanistan timing, again, we have a different view on that. The Palestinian vote on statehood, which is coming up September, I can see some real sort of bumps in the road going forward. And what worries me is that our credibility in the US has probably been most affected by, in my opinion, this is what I said at the end of my worry about the disconnect between strategy and actions has been in the strategic defence and security review, where I'm worried that our effort to play the short-term political game of the importance of Afghanistan is undercutting our relevance and our value in the US on the really strategic questions of security that we'll be facing in the next five or ten years. You go down to 19 ships in your navy. You know, that's just not a credible naval force in my opinion. And the US sees this, and we had a very interesting meeting on this just ahead of Obama's visit with some senior former US officials, who this was their main concern, was that we just wouldn't be standing alongside going forward. The third point, which is the most interesting one for this government politically, the disconnect, is that our commercial diplomacy is starting to look like mercantilism as the Arab Spring blooms. Suddenly, I mean, it's a little unfair, it's a low punch, but the fact that what was the arms trade trip to the Gulf, I remember a tale on the news, and there was David Cameron in Egypt. I thought, brilliant. First there, ahead of Cathy Ashton, ahead of everyone. This is Britain doing some of its leadership stuff. Of course, I hadn't quite looked at the calendar. This trip had been long planned and was planned as part of the commercial diplomacy to the Gulf and to other parts of that world. And all of those countries, China, which way is China going right now? Heavily on the crackdown track. Russia will see where they go with their presidential elections. Saudi Arabia, the Gulf states that were always mentioned, including by me, as being countries that you had to pay attention to. What's their view of the Arab Spring? Well, we know Saudi Arabia's $4 billion that were just put on the table, already been put on the table, unlike the EU's $20 billion plus, is not there to support the Jasmine Revolution, as far as I can tell. I mean, it is important. It will help stabilize the economy. But I think it's fair to say that some of the Gulf monarchies have a different view of how these revolutions should play out to a values-based UK and US foreign policy. And maybe the UK has even been more in the forefront of the values-based foreign policy in the US, which has got a lot of brickbats, and Obama's got a lot of brickbats for playing it cautiously. But I think he's probably measuring up a little bit more his commitments and his rhetoric with his actions than we have been in that area. So any case, we're in a very interesting hinge point where a government that I think does not want to detach itself from its values, values that I think it believes in and which I would share, is having to sort of work out how does that fit with a desperate need of the UK economy to be adjusting to a more bilateral, multipolar kind of commercial diplomacy. And my conclusion would be, therefore, how do we adjust? And all governments adjust after their first year. I'm sure this government will be no different from any other. The adjustment will have to take, I think, within Europe. And that's going to be very painful and difficult for the government as the cuts start to happen and as the backbenchers get a bit more restless. But whether it's on the budget, whether it's in the kind of role that we play in making sure we're supporting any further downturns in the euro crisis, not within the euro group, obviously, but in parallel to it, there will have to be some tactical compromises in that space. We're going to have to think about who we partner with vis-a-vis the Arab Spring. I think it's fascinating that the G8, which had been pretty much written off, became the vehicle of choice, not just for the US, but for the UK as well, to lay out its response to the Arab Spring in Doverville what last weekend. That was quite a shift from the G20 multipolar world that we were presenting just prior to that, and suddenly the reliance on the EBRD, the European Investment Bank, et cetera. And finally, I think we will have to realise that this absolute emphasis on commercial diplomacy is clearly insufficient without the deep changes that will have to take place within the UK economy, which are going to take a long time to play through. This government is not going to be able to pivot UK foreign policy alongside its economic policy into this more multipolar world without realising that education reform, venture capital funding for small banks, for small companies, export credit insurance, all of these types of things are going to be as important as the big trade visits and the increases of consular staff in Beijing and Moscow and Brasilia, et cetera, over the coming years. And to be fair again, I think the government is already making this adjustment with some of its appointments and some of the linkages between our UK trade investment and our foreign office. But nonetheless, adjustment will have to take place, but it's a fascinating time to be looking at UK foreign policy. So thanks for the chance to talk about it. Thank you very much.