Advanced combat drone will boost UK-French industry

Subject Anglo-French agreement to fund the next phase of their collaborative drone programme. Significance The accord announced at the Amiens summit on March 3 between French President Francois Hollande and UK Prime Minister David Cameron commits the two countries to investing 1.9 billion euros (2.1 billion dollars) in the production of Europe's most advanced combat drone. A sophisticated drone programme will be vital to both countries' industrial bases, especially as neither currently has plans to develop a next generation fighter aircraft to replace the Typhoon or Rafale. Impacts Closer industrial cooperation between Europe's most advanced defence powers will strengthen European capabilities. The project will underpin growing cooperation in the defence and security field between the United Kingdom and France. A possible Brexit could affect the relationship, and the United Kingdom might lose out on an increasing EU R&D budget devoted to defence.

Subject The package of reforms on a new EU-UK relationship. Significance The agreement between the United Kingdom and its EU partners sets the stage for the UK referendum on EU membership, which Prime Minister David Cameron has set for June 23. Cameron said he had negotiated new terms that would allow the United Kingdom to remain in the EU. Impacts The deal bolsters the campaign to remain in the EU, but the referendum outcome is still highly uncertain. The deal will only come into effect if the outcome is for remaining, forestalling a second referendum for better terms. If the outcome is for leaving, a new relationship with the EU would have to be negotiated during a two-year transition period. It would also probably lead to a second Scottish independence referendum and UK break-up.


Significance Prime Minister Boris Johnson talks of a “calibrated” China policy that combines toughness in particular areas with continued engagement in others. Impacts Migration of Hongkongers to the United Kingdom in large numbers would invigorate anti-Beijing activism. Chinese investments in UK nuclear power are unlikely to proceed as planned. Beijing’s extraterritorial attempts to suppress dissent in the United Kingdom will intensify. Universities and researchers should expect a push for government-mandated reviews of UK-China research and educational partnerships. Beijing may target particular firms or economic sectors to ‘punish’ London, but most bilateral trade will continue.


Subject Recent developments in Japanese foreign policy. Significance This month has seen a flurry of high-level diplomatic activity. Prime Minister Shinzo Abe has visited Germany, France, Italy, Belgium and the United Kingdom and Russia. Over the same period, Foreign Minister Fumio Kishida visited China, Myanmar, Thailand, Laos and Vietnam. Impacts Except for Washington, G7 governments have more interest in economic ties with Beijing than in Tokyo's concerns about territorial issues. Japan's willingness to engage Russia may draw the West's ire in due course. The process of relocating the Futenma airbase may drag on for another decade. TPP ratification will be slower than Abe wanted, but US politics is the greatest obstacle. A weakened South Korean administration could find itself pushed into a more hostile approach to Tokyo.


Subject Brexit outlook. Significance If Prime Minister Theresa May can get the Withdrawal Agreement (WA) and Political Declaration on future relations approved in Parliament this week, the United Kingdom should leave the EU on May 22. However, it remains unlikely that her deal will gain a parliamentary majority, setting up a different deadline. The United Kingdom must come up with an alternative plan by April 12 or face the prospect of crashing out of the EU with no deal. Impacts The United Kingdom could have a new prime minister within weeks; a general election cannot be ruled out. The EU will remain distracted by Brexit as it heads into a season of political change beginning with European Parliament elections in May. As a final option, May could commit to resigning to get support for the WA from Conservative Party MPs.


Significance The bill establishes a new statutory regime for goods and services trade within the United Kingdom, which is essential for signing trade agreements. However, it also contains clauses on the Northern Ireland Protocol which threaten to override the legally binding EU-UK Withdrawal Agreement (WA), while giving London new powers over the devolved administrations, including on state aid. Impacts The EU is unlikely to collapse the trade talks with the United Kingdom. An EU-UK deal is still possible because the alternative would seriously threaten Prime Minister Boris Johnson’s political survival. The new bill, on top of COVID-19, will give the opposition Labour Party an opportunity to overtake the Conservatives in the polls.


Subject Bilateral relations between the United Kingdom and the United States. Significance UK Prime Minister Theresa May has been criticised for her eagerness to form a close relationship with US President Donald Trump, at a time when the new administration in Washington is lurching from crisis to crisis. However, as the United Kingdom heads towards negotiations on leaving the EU, it needs good relations across the Atlantic more than ever. Impacts Trump’s plans to roll back financial regulations will increase pressure for similar moves in the City of London. Good UK links with Republicans in Congress will be just as important as good relations with the White House. Investigations into links between the Trump administration and the Kremlin have the potential to overshadow other bilateral relations. The tone of the relationship will also be affected by the success or failure of Trump’s state visit to the United Kingdom later this year.


Significance Macron won 66% of the vote versus Le Pen’s 34%, on a turnout of nearly 76% -- the second-lowest for a second-round election since 1965. Once Macron is sworn in (by May 14), his selection of a caretaker government, and particularly of a prime minister, will provide only a temporary clue as to how he might govern, for the legislative elections on June 11 and 18 risk leaving him without a parliamentary majority. Impacts The French-German axis will strengthen, even if Chancellor Angela Merkel fails to be re-elected in September. Macron will restore France’s engagement in EU policy-making, with particular implications for Greece and the United Kingdom. France’s stance towards Russia may harden due to Moscow's likely interference in the election. Macron will likely adopt a pragmatic, Merkel-like approach to US President Donald Trump.


Subject Prospects for the United Kingdom in 2017. Significance Politics this year was shaken by the Brexit referendum, Prime Minister David Cameron's resignation and the failed attempt by a clear majority of the parliamentary Labour Party to force the removal of Jeremy Corbyn as their leader. The economy has remained resilient, but there are the first signs of a slowdown.


Significance The move comes in response to London’s apparent determination to pursue a ‘hard' Brexit, taking the United Kingdom out of the European single market. While UK Prime Minister Theresa May has so far refused to grant the order, Scotland’s First Minister Nicola Sturgeon is adamant that "Scotland's future will be in Scotland's hands". Impacts Council elections in May will give some indication of public feeling on independence. While the stakes in this referendum will be higher than in the last, it is likely to be peaceful. London's need to maintain an open border with Ireland will negate any threat of a hard border with Scotland.


Subject Prospects for the United Kingdom in 2018. Significance UK politics in 2018 will still be under the long shadow of the surprising setback Prime Minister Theresa May suffered in the early election she called in June. Meanwhile, growth forecasts for the economy have been downgraded and downside risks remain high. Since the Brexit vote in 2016, the United Kingdom has gone from one of the fastest-growing G7 economies to the slowest.


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