Thomas Nemes comments on the UK’s transition to commercial diplomacy in the twenty-first century age of austerity

The world has changed remarkably since the beginning of the global financial crisis in 2007. The old powers, like the UK, can no longer project their influence indefinitely in the expectation that Western business, society and culture have an inalienable right to supremacy. The new powers have continued to carve out a space for themselves in the global economy, with robust growth rates that make us wonder how we can ever keep up in an age of austerity. This leads us to an important question – how will the UK reinvent itself to maintain its relevance, ingenuity and prosperity in the twenty-first century?

Upon coming to power in 2010 and in light of this rapid global realignment of economic development and political power, the UK Coalition Government was quick to set out a fresh vision for the UK’s diplomatic endeavours. Prime Minister David Cameron made it clear that Britain’s diplomatic efforts need to support British business. Foreign Secretary William Hague followed up on this vision, reorganising the FCO and putting commercial diplomacy at the top of the agenda, proclaiming that ‘more than at any moment in modern history, British diplomacy must play a central role in supporting jobs and growth in our economy.’

As a sign of the Government’s commitment, the fiscally prudent Treasury has significantly increased funding for UK Trade and Investment (UKTI), dispelling any doubt that the rhetoric would not turn into action. However it is also important to observe that Britain has not reneged on its historic commitments to use diplomacy as a force for good to tackle threats in the world, such as climate change and terrorism, and to advance human rights and freedom. Instead, the Government is simply correcting an imbalance that had seen it downplay the role of the state in promoting business.

While Britain is at the beginning of its journey in this endeavour, our French counterparts have a more refined tradition of intertwining traditional diplomatic efforts with support for economic and commercial interests. During his time in office, the mercurial former President Nicolas Sarkozy seized the opportunity not only to build stronger bilateral relationships with BRIC countries such as China and Brazil, but also to ensure there were tangible returns to France plc. As President he was involved in the signing of an historic agreement between AREVA and China Guangdong Nuclear Power Corp (CGNPC) in a contract worth £6.9 billion. Meanwhile, in Brazil Mr Sarkozy led the way in signing defence deals to the tune of an estimated £7.8 billion. The FCO’s Head of the Diplomatic Service, Simon Fraser, himself a trade expert, revealed to the Foreign Affairs Select Committee in November 2012 that Britain’s diplomats have been told to learn lessons from the French if they are to become the best diplomatic service in the world, precisely because of their acute understanding of how to exploit commercial interests to deliver on strategic national interests.

More broadly, Britain’s civil service has stood the test of time, providing a solid foundation from which successive governments have built up the country, allowing it to project its soft and hard power far beyond its shores across all the corners of the world. During good times, we celebrate this achievement, however in bad times these perceived strengths become supposed weaknesses that need to be routed out. Following the financial crisis, a consensus emerged that the civil service has become a significant lag on growth.

To overcome this quandary, the Government has sought external commercial expertise and experience to secure prosperity at home and to assist in projecting core values and ideals abroad. The acumen of commercial enterprise has become an intrinsic asset in developing and implementing a strategic vision for the country. A concrete example of this new partnership between the public and the private sectors is the British Business Ambassadors Group, a legacy of former Prime Minister Gordon Brown, which was maintained by Mr Cameron. The group has an array of business and university leaders who work with Government to promote Britain’s excellence internationally and highlight trade and investment opportunities. Upon being appointed a Business Ambassador in August 2012, Brian Wilson, a former Labour MP and Trade and Energy Minister, commented that ‘trade is politically neutral and translates directly into jobs and prosperity at home.’ In only a few words he captures the essence of this new diplomatic paradigm shift that favours bilateral, and even multilateral, engagement on a more commercial footing.

A further development in the institution of commercial diplomacy has been the development of bilateral private sector-led groups, such as the UK-Turkey CEO Forum and the UK-UAE Business Council. The latter is co-Chaired by Samir Brikho, Chief Executive of AMEC plc, and Nasser Ahmed Alsowaidi, Chairman of the Abu Dhabi Department of Economic Development. Including companies such as BP, Standard Chartered and Serco, it has the objective of deepening ties between the two countries by increasing trade by 60 per cent from 2009 levels, to reach £12 billion by 2015. In the second meeting of the council in May 2012, both sides discussed proposals to set up joint working groups on energy, education, health, infrastructure, finance, business, SMEs and defence. Chair of the UK Business Ambassadors’ Network Lord Marland, who was in attendance at the meeting, noted that political and economic relations with the UAE have never been stronger as a result of growing trade and investment relations.

The concept of commercial diplomacy becomes more substantial, however, when these non-state actors move beyond brute trade and begin to develop long-lasting partnerships. The UK-UAE Business Council has done just this, opening up supply chain opportunities for SMEs and support investment in a diverse range of other areas such as educational services and healthcare.

This phenomenon is not only restricted to the private sector. The London Olympics opening ceremony saw Britain celebrate the country’s National Health Service (NHS) and since then the Government has launched Healthcare UK at the recent Arab Health Congress in Dubai. A joint initiative between the Department of Health, NHS Commissioning Board and UKTI, this new organisation helps international customers from both the public and private sectors to access the UK’s healthcare expertise and boost the value of the UK’s trade in healthcare products and services. Interestingly, Healthcare UK Managing Director Howard Lyons revealed that the London 2012 tribute to the NHS brought a raft of inquiries about setting up NHS-style services abroad, with a total of ‘100 embassies and high commissions that are already getting leads.’ This new organisation will provide a central platform that will allow the UK’s health sector to access key commercial healthcare opportunities overseas. NHS partners such as UK-based Hospedia, the world’s leading provider of point of care systems in healthcare, attended the launch in Dubai and will directly benefit from this and bring a tangible return to the NHS and the wider UK economy.

In a further twist, we have also seen the emergence of corporate diplomacy, breaking down this interaction further to the level of individual corporate actors. Google Executive Chairman Eric Schmidt’s recent private visit to North Korea was a historic moment and heavily weighted in symbolism. Until recently, no one would have thought that a company such as Google, which promotes an open and transparent digital society, would have any place in an archaic totalitarian country such as North Korea. However times have clearly changed and diplomacy manifests itself in many forms.

Speaking during a recent visit to Libya, Lord Marland said he would like to see more established figures from the corporate world rising to the top of politics. He is right to call for this but perhaps Mr Schmidt can keep his day job and still remain a diplomat.

With these developments in mind, the shift towards a commercial diplomacy has undoubtedly created new possibilities for the UK that will ensure the country is better placed to maintain its relevance, ingenuity and prosperity in the twenty-first century.