Government spending on diplomacy should rise to 0.2% of GDP, according to a paper published by Chatham House today.
The paper – written by a panel including former UK ambassadors to the United States and Russia – argues that diplomatic spending should be protected in the current Spending Review and increased in the medium term, just as the military and overseas aid budgets are protected.
"It makes little sense strategically to have set spending targets for overseas development assistance and defence," the authors argue, "without ensuring the UK has the diplomatic capabilities to coordinate and leverage this across Whitehall and internationally."
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The FCO’s 2015-16 budget is £1.3bn, compared to £38bn for defence and £13bn for international development. Foreign Office officials are confident that they will “reach a good outcome with the Treasury”, the Financial Times reported yesterday.
Officials have submitted proposals to cut FCO budget by 25 and 40%, the paper reported, but are arguing that cuts at the higher end could jeopordise FCO operations without significant savings for government overall.
“If you take 40 per cent out of the Foreign Office budget, that it is very significant for what the FCO can achieve, but it is hardly going to impact on deficit reduction,” a senior FCO official told the paper.
"We are confident we can reach a good outcome with the Treasury,” said the official. “They understand that given the size of our budget, you are not saving vast amounts of money.”
The Chatham House report also calls for defence spending to be maintained, while saying the government must "accept more clearly than it has done so far that the smaller size of UK forces makes them more reliant than ever on close military cooperation with allies and partners".
It notes that “continuing determination to block” European defence co-operation “does not serve its own interests and no longer finds favour in Washington”.
Visa policy should also be revised, it says, to encourage more foreign students to study in the UK, and the government should foster a more internationalist attitude among the public by, for example, encouraging more people to study languages outside of formal schooling.
The authors warn government that when it comes to international affairs “they cannot have their proverbial cake and eat it”.
“They cannot talk the rhetoric of being a global player while at the same time cutting back on many of the institutions that sustain British influence abroad,” the report says, adding: “This habit has not gone unnoticed by others.”
The US, it notes, “has adjusted some of its European relationships” and now focuses on Germany in addressing international economic policy, while “developing deeper relations with France on security challenges in the Middle East and parts of Africa.”
Last month, MPs on the Foreign Affairs select committee also urged ministers to protect the FCO's budget, saying the demands on the department were “greater than ever”.