Europe’s security debate has been transformed overnight.
After President Trump announced his 90-minute phone call with Russia’s dictator, Vladimir Putin, the 47th Commander-in-Chief sent a chill wind through European capitals as he made clear that he’s happy to negotiate away Ukrainian sovereignty and that the return of great power politics is back.
This was made worse by his newly confirmed Defence Secretary, Pete Hegseth, who, upon arriving in Europe for the first time since being confirmed, ruled out future Nato membership for Ukraine and said that it was ‘unrealistic’ to think Ukraine will ever get back Crimea and other territories Russia has occupied since 2014. He also made clear that he expects Europe to take the lead on supporting Ukraine, and that the US will be taking its eye off the continent as it focuses more on China.
As America begins its European retreat and Tulsi Gabbard – a notorious spreader of Russian disinformation narratives – is confirmed as the new US Director of National Intelligence, this has been Putin’s best week in a long time.
All of this has a ring of the 1930s about it, and if it doesn’t lead to a major psychological shift in thinking in European Nato, then we really will only have ourselves to blame for what’s to come.
Too often, Britain approaches 21st-century problems with a 20th-century mindset, but now is the time for a major rethink about how our institutions can be reimagined to serve our modern-day national interests – and it should be a proper whole-of-society effort too.
This will require the Treasury to have a personality transplant when it comes to defence spending, but it’s also worth thinking about what other institutions need to change too, or what new ones can be created to meet the moment.
Enter Edward Lucas, General Sir Nick Carter and Guy de Selliers, who have come up with the revolutionary idea of a European Rearmament Bank, allowing governments to club together and finance the increased defence capability Europe needs, and do so in a way that isn’t bogged down by existing structures and policies that move far too slowly.
The idea has been endorsed by Poland’s Foreign Minister, Radoslaw Sikorski – an important endorsement given Poland currently holds the rotating EU Council presidency.
A rearmament bank would help answer a complaint from Nato Secretary-General, Mark Rutte, who took banks and pension funds head on because many of them see investing in the defence industry as immoral – a view more suited to university campuses than boardrooms.
In a speech last year, he said:
Tell your banks and pension funds it is simply unacceptable that they refuse to invest in the defence industry. Defence is not in the same category as illicit drugs and pornography. Investing in defence is an investment in our security. It’s a must!
So now that the Nato SG has clarified that protecting your citizens isn’t morally equivalent to running an OnlyFans account – what a time to be alive! – it brings me to the role of Scotland’s National Investment Bank.
The bank adheres to what it calls an ‘ethical investment policy’. That means that it will not invest in things like gambling, animal testing, companies who use unfair work practices or ‘brothels, pornography and adult entertainment’. A fair enough stance, you might think, but the bank also prohibits investing in Scotland’s domestic defence industry – because clearly, manufacturing equipment to protect our democratic values is morally indistinguishable from exploitative betting sites.
Our national investment bank should contribute to our national security
Lumping Scotland’s 30,000-plus defence workers in the same bracket as Pornhub, sweatshop bosses and those who inflict suffering on animals to make expensive coats isn’t ethical: it’s just absurd.
We are indisputably in an age of rearmament, and it would be an act of unpardonable folly to behave as though Scotland has no role to play. The bank’s policy is not only inimical to our own national interest but is a plain breach of the European solidarity that the Scottish government keenly professes.
The defence sector in Scotland is worth around £3.5 billion per year and employs more than 30,000 Scots, around 1,500 of whom are apprentices. It’s an industry that isn’t only critical to our national security but is one that makes a significant economic contribution.
The bank’s mandate is to deliver financial returns while advancing Scotland’s economic and environmental goals. Scotland’s defence industry, particularly the SMEs, often represents stable and profitable investment opportunities. By excluding the sector entirely, the bank is limiting its ability to generate investment in other priority areas, such as renewable energy or affordable housing.
None of this is to say that the bank should not have an ethical investment policy – plainly it should. But should it really include a ban on investing in the very industry that underwrites our own freedom and provides critical support to those fighting for that same freedom in Ukraine?
In an increasingly uncertain global landscape, these tired ways of thinking must be consigned to history and our institutions must engage with reality: Scotland’s defence industry is essential. The new age of uncertainty requires new ideas, and Scotland can play a small but important part in shaping what is to come. If we don’t, others will do it for us.
Our national investment bank should contribute to our national security. That’s not a controversial or revolutionary view; it’s just plain common sense.
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