Investment will strengthen Danish-US defence ties

Subject Denmark's defence policy. Significance Denmark's decision to acquire a new fleet of fifth-generation F-35 stealth joint-strike fighter jets to replace its ageing and non-stealthy fourth-generation F-16s ends a long period of uncertainty around the future of the Danish air force. The purchase of the F-35s will also solidify and deepen Denmark's political-military links to the United States and could open the door for increased cooperation with other northern European countries operating F-35s such as the United Kingdom, the Netherlands and Norway. Impacts The decision will increase the chances of Finland also selecting the F-35 in its upcoming competition to replace its current fleet of F-18s. Participation in future out-of-area operations may be limited, owing to the need to increase the share of the procurement budget. The deal will help solidify Denmark's orientation towards NATO and Washington and away from defence cooperation under the EU.

Subject Brexit and international security. Significance Brexit in any form will make defence and security cooperation between the United Kingdom and the EU more difficult. While intelligence-sharing and security cooperation are likely to continue, even if in a more cumbersome form, there is a high likelihood of declining defence cooperation and a divergence of UK and EU defence efforts. Impacts Brexit will force EU member states to build up their military. The United Kingdom and Ireland will strengthen security cooperation over fears of a return to violence in Northern Ireland. The United Kingdom may be excluded from security arrangements between the EU and external actors such as China and the United States.


Subject Post-Brexit defence policy. Significance Much of the discussion surrounding the impact of Brexit on defence and security has focused on its effects on the EU. However, with the EU’s recent defence initiatives and London’s lack of a clear position on the future of EU-UK security cooperation, the United Kingdom could face greater risks than the EU. Impacts UK-EU security and defence cooperation will probably remain largely unchanged until the transition period ends in December 2020. EU defence cooperation will continue to develop, regardless of input from the United Kingdom. Uncertainty over Brexit negotiations will make London more reluctant to take on leadership roles in joint EU projects. The United States, France, Germany, Japan and Australia are likely to be London’s main countries of focus for strengthening defence ties.


Subject MiFID II implementation and compliance Significance The EU’s flagship investor protection reform -- the Markets in Financial Instruments Directive II (MiFID II) -- will come into force on January 3, 2018, Valdis Dombrovskis, the EU Commissioner responsible for financial stability, confirmed on October 17, saying that there would not be a further delay. Despite already having been given an extra year's extension, banks are struggling to comply in time because of the directive's complexity. Regulators, too, are behind in expanding their capacity to enforce it. Impacts Firms across the world that do any of their business within the EU will have to comply, not just those registered in the EU. All firms trading in financial instruments must comply but those where this is a small part of their business may be caught unawares. MiFID II will come into effect before the United Kingdom leaves the EU and is likely to be written into UK law post-Brexit. The United States is keen to deregulate, but US firms whose EU activity is not compliant will be punished, possibly harming US-EU relations.


Subject Outlook for the Five Eyes alliance. Significance The stability of the Five Eyes intelligence sharing partnership between Australia, Canada, New Zealand, the United Kingdom and the United States is under stress over Chinese participation in the members’ 5G telecommunications networks. Impacts Possible US concessions on the supply chains of Chinese firms would ease strain within the Five Eyes alliance. European corporates will redouble efforts to burnish their security credentials to capture 5G market share. London’s eventual decision on Huawei will influence the EU and Asian democracies.


Significance At the same time, the EU will lose the United Kingdom’s vital role in coordinating intelligence and leading investigations. In addition, Brexit undermines the prospects for EU-UK security and defence cooperation based on institutionalised relations. Impacts Now that the politics of Brexit is less intense, the EU and United Kingdom have more capacity to focus on building pragmatic relations. The main EU nations will only join inter-governmental arrangements with London if such cooperation aligns with EU objectives. Regulatory and trade pressures could see European defence companies, such as Airbus, more reluctant to invest in the United Kingdom.


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.


Subject The impact of Brexit on northern European countries. Significance The United Kingdom's vote to leave the EU presents a particular challenge to northern EU countries -- some of which are, like the United Kingdom, not members of the euro-area -- as they will lose a powerful ally for a more competitive, fiscally disciplined and globally oriented EU. Impacts Brexit could accelerate a closer economic, financial and fiscal integration of the euro-area, which many non-euro-area capitals oppose. Brexit could widen the gap between an 'inner circle' of euro-area members and a periphery of non-euro ones. The loss of UK contributions to the EU budget means that the burden shouldered by northern EU countries, all net contributors, will rise.


Significance Agreement between Iran and the P5+1 (France, Germany, the United Kingdom, Russia, China and the United States) on the former's nuclear programme in July 2015 has been heralded as a success for economic sanctions. They had a considerable economic impact and created a window of opportunity for negotiation. However, each sanctions regime must be considered on a case-by-case basis. Impacts Sanctions will require more systematic assessments of negative side-effects if they are to remain a viable foreign policy tool. Similar success with North Korea is unlikely owing to its commercial and political isolation, and China's support for the regime. Russia is also less likely than Iran to bend to EU sanctions given difficulties maintaining unity within the EU. Russia's ability to diversify trade partners and create domestic alternatives also make sanctions less likely to be effective. Sanctions on Syria are unlikely to succeed owing to the low success rates of sanctions in resolving armed conflicts.


Significance The Zapad-2017 exercises, held in Belarus and north-western Russia, ended without incident on September 20. They underlined Moscow's capacity to wage conventional war in Europe and its ability to deploy large number of troops in Belarus at short notice. Belarusian President Alexander Lukashenka and his Russian counterpart Vladimir Putin attended different parts of the exercises in their own countries, symbolising (even if inadvertently) the gulf between them. Impacts The scale and relevance of the Zapad exercises will encourage the United States to strengthen its presence on NATO's eastern fringes. The Eastern Partnership offers the EU and Belarus a framework for building closer ties. Ukraine will seek opportunities for greater defence cooperation with NATO, although accession is not an option.


Subject UK-US trade talks. Significance Hard-line Brexiteers have long viewed a trade agreement with the United States as an important political and economic benefit for the United Kingdom from leaving the EU. With Prime Minister Boris Johnson’s determination to deliver Brexit by October 31 with or without a deal -- the latter appearing more likely -- the prospect of UK-US trade negotiations has risen up the political agenda. Impacts Washington knows a trade deal is politically important to the Conservatives, strengthening its ability to drive a deal favourable to itself. It will be very difficult for London to address regulatory obstacles with the United States without increasing them in trade with the EU. London’s positions on such issues as Iran and Huawei will likely affect the UK’s overall leverage with the United States.


Sign in / Sign up

Export Citation Format

Share Document