- Get link
- X
- Other Apps
The writer is former chief of MI6 and UK ambassador to the UN
America’s friends and allies wait anxiously as the new Trump administration takes shape and its thinking on the world’s conflicts emerges. None more so than Britain, traditionally the US’s closest ally on defence and security.
There is opportunity amid the risk. On Ukraine, a new diplomatic initiative is badly needed to halt the carnage, preserve Ukraine as a nation and reduce the danger of Russian escalation beyond Ukraine’s borders. But what happens if, as is quite possible, the two parties cannot agree? Does Donald Trump simply walk the Americans away, taking their battlefield kit with them, and leave the mess to Europe to sort out?
The fact that Elon Musk recently met Iran’s ambassador to the UN suggests that both the Iranian leadership and the Trump team are toying with the idea of a deal to end Iran’s nuclear weapons activities, curb its support for militias outside Iran and ease sanctions. It sounds to me far-fetched and the Iranians are masters at stringing out such negotiations. But it is worth exploring.
Prime Minister Benjamin Netanyahu may have different ambitions, hoping that the US will do what Israel cannot — use its air power to destroy Iran’s nuclear facilities. The prospect could be attractive to Trump. But the idea of such a strike leaves our friends in the Gulf anxious and exposed and would be deeply divisive in Europe.
As for Asia, we know Trump will use punitive tariffs against China. But President Xi Jinping will be assessing the new administration’s approach on Taiwan. Trump’s aversion to war and his apparent lack of concern about preserving Taiwan’s democracy will leave Xi wondering whether the next four years are his opportunity to impose a blockade of the island and bring it back under Beijing’s control. The odds on a Taiwan crisis in the next four years have shortened.
America’s long-term allies in all three regions have a keen interest in how these issues play out, and we all recognise that a Trump administration will be less inclined than its predecessors to reflect our interests in its decisions. This poses a particular problem for Britain, as the UK’s two anchor points in the world — the US and Europe — have both become looser in the last decade.
Sir Keir Starmer, the prime minister, is fond of citing the “special relationship” with the US. It’s a term many practitioners like me try to avoid as it suggests neediness on our part. But there remains something unique in the ties between Britain and the US in the intelligence, nuclear and special forces fields. Operational detail is only briefed to a handful of cabinet ministers on each side who can be relied on to keep it secret.
Some of Trump’s nominees will present a challenge in this regard. I’m looking forward to the Senate intelligence committee’s confirmation hearings with Tulsi Gabbard, the president-elect’s nominee to be director of national intelligence. What exactly happened to trigger her Pauline conversion from left-leaning Democrat to admirer of President Bashar al-Assad of Syria and reliable mouthpiece for Vladimir Putin on the Ukraine invasion? Will the secrets that America’s allies share with US agencies be safe?
Will Pete Hegseth, if confirmed as defence secretary, bring the high-quality strategic leadership that the Pentagon badly needs to manage the technology revolution and keep America’s alliances together?
In terms of state-to-state relations, it will be easier for the Starmer government to strengthen security ties with European partners. Containing Russian aggression is the top concern of all the major countries of the EU, and Starmer and his ministers have invested in the personal relationships needed to agree a way forward. But in the defence and security field, we start from a lower base with Europe. There simply isn’t the depth of partnership even with France and Germany that we have in the Five Eyes network over intelligence and special forces. Nuclear co-operation with France has improved in the past 15 years, but it is still a pale shadow of the intertwining of the UK’s deterrent with America’s.
Being outside the EU makes all such co-operation harder. And any move by Starmer to sharply improve ties with Europe will also run into domestic sensitivities about undoing Brexit. Nato without committed American leadership isn’t an alternative as it won’t have the political heft of the EU.
The task of refreshing Britain’s relationships across both the Atlantic and the English Channel will fall to Starmer’s able new national security adviser, Jonathan Powell. Lord George Robertson’s defence review will hopefully provide a well-grounded policy framework. But there is a fresh reckoning to be had with hard-nosed realpolitik in global affairs — a brave new world where self-interest and strongmen are not dirty words. Trump’s chessboard is dominated by the US, China, Russia, India and Europe — powers to be contained, beaten and played off against each other in a zero-sum logic. The UK will need to find a distinctive role, drawing on areas of historic strength, to avoid becoming marginalised and exposed.
Marine Le Pen turns screws on PM Michel Barnier in French budget showdown
Leila Abboud in Paris and Ben Hall and Ian Johnston in London
Listen to this article
7 min listen
“The clock is ticking,” was one of Michel Barnier’s favourite lines as the EU’s chief Brexit negotiator, when he perfected the art of using deadlines to strengthen his hand. Now, as France’s prime minister, he is the one running out of time.
“He has until Monday,” far-right leader Marine Le Pen warned Barnier this week as she demanded further concessions on his contentious 2025 budget that aims to start trimming France’s yawning public deficit. Barnier had just given ground by scrapping a planned rise in electricity tax — a key demand of Le Pen’s Rassemblement National party. But she wants more.
Her ultimatum has underlined the RN’s hold on Barnier’s minority government, which has relied on the far-right party’s tacit support since he took office in September. Le Pen must decide whether to wring further concessions from Barnier or join leftwing lawmakers in toppling him.
“She wants to send a signal and show that she is not a crutch of Macronism and the government, but a resolved opponent who is winning concessions in favour of the French people, particularly relating to purchasing power,” said Brice Teinturier, deputy executive director of polling firm Ipsos.
“Will she go as far as a no-confidence vote? It was possible, now it’s probable but it’s not certain.”
On Monday Barnier is likely to push a financing package for social security, an adjunct to the budget, through parliament using a constitutional procedure that bypasses a vote but leaves the government open to a no-confidence motion. Le Pen is demanding more changes to protect pensions and scale back medical benefits for irregular migrants.
Barnier’s demise would deepen France’s political paralysis. The assembly is fractured into three incompatible blocs, leaving few options for a stable government. Fresh elections cannot be held before July, one year after President Emmanuel Macron dissolved parliament — a disastrous gamble that left him and his centrist allies weakened.
If Barnier were toppled, Macron could himself come under pressure to quit before his second and last term ends in 2027. Le Pen is likely to stand again — her fourth and possibly strongest chance to win the presidency.
So far, Le Pen has occupied the position of kingmaker to the government, spelling out RN’s policy “red lines” she says Barnier must respect: protecting living standards, cracking down on immigration and a shift to some proportional representation in parliamentary elections. But the concessions were slow to arrive.
A senior RN official said Barnier had for months refused to engage on the budget, only granting Le Pen a meeting last Monday. The prime minister’s opening remark to the far-right leader was “This is not a negotiation,” the official said.
“He initially said he would take into account our views, but that has not occurred,” said Edwige Diaz, an RN lawmaker. “Impatience is now mounting.”
Le Pen does not just want concessions, she wants recognition for extracting them like any other party. Barnier said he had retreated on the electricity levy because “practically everybody” had demanded it.
“His insistence on saying it is not a concession to the RN for me presents a democratic problem,” Le Pen told Le Monde. “They want our votes but not our faces.”
Facing resistance from all sides, Barnier’s strategy has been to dramatise the situation, warning of a “severe storm” in financial markets if he is brought down. His calculation appears to be that Le Pen, who has spent years trying to detoxify her brand and turn the RN into a respectable party, cannot risk being blamed for a bond market meltdown.
The political uncertainty around the budget and Barnier’s government has driven up the cost of French borrowing, which this week briefly surpassed Greece’s for the first time in decades.
Nevertheless, rating agency S&P maintained the country’s credit rating and kept its outlook at stable late on Friday night despite the political furore.
“[Barnier’s team] keep saying your voters will punish you,” said the senior RN official. “They are thinking for us. But we know our voters better than them.”
Diaz said the views of RN supporters had shifted during the budget wrangling.
“Initially there was a desire for stability but people have come to see Barnier negatively,” she said.
An Ipsos opinion poll published on Thursday found 53 per cent of respondents were in favour of a no-confidence vote — among RN supporters, that rose to 67 per cent.
If the government were to fall, many French voters would agree with Le Pen and blame Macron and his decision to hold snap elections for the current chaos, said Teinturier. However, he added that forcing out Barnier’s government would not come without some cost to Le Pen’s presidential ambitions.
“There is a section of the right, Les Républicains voters [Barnier’s conservative party], who could blame Marine Le Pen for taking part in a situation where interest rates climbed to the detriment of France. She needs this little section of the right to win the presidential election,” he said.
Some analysts have speculated that another factor in Le Pen’s calculations is her trial for allegedly embezzling EU funds when paying staff. The verdict is due at the end of March. If found guilty, judges could bar her from elected office for up to five years, even before the appeals run out.
“Marine Le Pen could say to herself, rightly or wrongly, that it would be even more difficult for judges to deliver such a verdict if we are in the middle of a possible presidential election,” Teinturier said.
Le Pen shows no sign of blinking. On Friday, she made new demands, saying it was “unacceptable” that Barnier’s retreat on the electricity levy, which will cost €3.4bn, together with other concessions made to other parties, had not been offset by savings elsewhere.
She claimed to have presented Barnier with alternative plans including cuts to overseas aid, a reduction in France’s contribution to the EU budget and the introduction of a tax on share buy-backs.
Beyond the showdown over budgetary lines, Le Pen has a bigger objective, say her allies: showing Barnier — and any other premier Macron may nominate — that as the biggest party in parliament, the RN is now a political force that can no longer be ignored or treated as a pariah.
“They still haven’t accepted that they lost the election, and the extent of the political power that the RN now has,” said the senior RN official referring to Macron’s centrist allies and the centre-right. “They only engaged with us on the budget when their backs were against the wall.”
What can convince more consumers to buy EVs?
Kana Inagaki in London and Sarah White in Paris
Listen to this article
11 min listen
Catherine Michaux and her husband Jean Yves seem to fit squarely into the target consumer group for electric vehicles.
A retired lawyer, she no longer needs to commute. The couple own a home where they could charge an electric vehicle on their own time, at lower cost. They have tried out electric car rentals in their small French village near Nice last year and enjoyed the experience.
Even so, the couple says they are put off by the cost of buying an EV. “People will never be able to afford electric cars. It’s impossible,” Michaux says.
The challenge is to kick off old habits, her husband adds. “We’ve always lived with engine cars. Those are the reflexes we have. We know there are gas stations all along the highway. Here, you have to think about your journey and plan it out a bit, and download a mobile app.”
Fifteen years after Nissan released the world’s first mass-produced electric vehicle in 2010, consumers in much of the world are still stubbornly reluctant to switch away from combustion-engine vehicles to fully electric.
What carmakers initially embraced as a necessary evolution has increasingly become an existential crisis for an industry that has spent tens of billions of dollars to develop electric vehicles and the batteries that power them with the hope that consumers will buy into the technology.
Last week, Northvolt, Europe’s leading battery champion, filed for bankruptcy, throwing the continent’s entire industrial strategy under question. Vauxhall owner Stellantis on Tuesday announced plans to shut its van factory in Luton, putting about 1,100 jobs in the UK at risk, only weeks after Volkswagen warned of unprecedented plant closures. Ford also recently unveiled plans to cut about 4,000 jobs in Europe to address slower than expected demand for EVs.
Mathias Miedreich, former chief executive of battery materials maker Umicore which will join German automotive supplier ZF Friedrichshafen in January, says European carmakers and suppliers are likely to continue focusing on getting leaner next year instead of building capacity to expand EV sales. “The year of the rebirth of the electric vehicle is probably 2026, and not 2025,” Miedreich says.
America is also likely to fall further behind in its green transition, given president-elect Donald Trump’s promises to kill the generous subsidies for electric vehicles. Despite President Joe Biden’s ambitious target of having EVs make up half of all new cars sold in the US by 2030, they were only 10 per cent of the market last year.
The industry’s capacity to build EVs is expected to fall further next year with carmakers having revised their EV production plans by 50 per cent in the US and 29 per cent in Europe, according to Bernstein estimates. The penetration of EVs is expected to reach 23 per cent in Europe, 13 per cent in the US in 2025.
“The EV production forecast for 2025 has seemingly only gone one way — down,” Bernstein analyst Daniel Roeska wrote in a report.
The reasons for the slowing growth in EV sales range from the high upfront costs combined with concerns over driving range and charging infrastructure. The promise of lower energy prices faded with the war in Ukraine while high interest rates globally have pushed up monthly lease payments.
According to analysis by NGO group Transport and Environment, the average price of an EV in Europe was around €40,000 before taxes in 2020. Today, the price is around €45,000.
A separate study by the European Commission suggests that the median price European consumers are prepared to pay for an EV is €20,000, including new and secondhand sales.
But car executives also blame government policy in various countries which has not been consistent despite having the common longer-term goal of decarbonisation.
Matthias Schmidt, an independent car analyst, estimates that EV volumes will decline by 29 per cent this year in Germany, Europe’s largest market, after Berlin abruptly pulled purchase subsidies for EVs in late 2023. France is planning to slash EV purchasing subsidies by as much as half for some families next year.
Michael Leiters, the chief executive of McLaren, says the government subsidies for EV purchase in recent years had created artificial demand that was not sustainable. “We pushed too hard on battery electric vehicles,” Leiters says in an interview. “I think incentivisation is not healthy and so we have seen an unnatural acceleration rate, and then we go through a dip.”
The industry and analysts are divided on what the right mix of incentives and inducements are to kick-start sales again. Car executives feel that governments in Europe are pulling back the incentives before consumers have fully warmed up to EVs — but governments are also aware that keeping sweeteners for too long can be risky and costly.
In China, a statewide project to electrify its car industry conceived almost two decades ago is bearing fruit.
More than half of new cars sold in China today are EVs or plug-in hybrids, while electric cars in Chinese showrooms are nearing price parity with petrol vehicles.
For Beijing, the policy to electrify the auto sector was conceived to help China rid cities of choking pollution and tackle crippling dependence on foreign oil. But it is now seen as a means to support decarbonisation and also give Chinese companies a path to global domination.
Government officials had concluded by the late 2000s that local carmakers would not be able to compete against western rivals in the realm of petrol vehicles.
But they saw the chance to beat the likes of General Motors and Volkswagen in EVs since the country had built a supply chain to produce lithium-ion batteries for mobile phones in large volumes at low cost. As a producer of rare earths, it also had strength in electric motors.
Beijing began pilot programmes in 10 cities across the country to promote the use of electric vehicles in 2009 with an ambitious target to invest Rmb100bn ($13.8bn) in “new energy vehicles” over the next decade.
Two years later, the World Bank came out with a set of recommendations urging China’s policy to move beyond purchase subsidies for EVs to include more comprehensive measures to develop charging infrastructure and investments in technology development and manufacturing capacity.
“In the long run, consumers will only commit to EVs if they find value in them,” the World Bank said as it called for the creation of a vehicle finance market and leasing scheme as well as a secondary market for batteries to bring down the upfront cost of buying a vehicle.
China’s entire EV supply chain . . . is joined up from end to end. Europe has nothing that looks anything like that
When the State Council, China’s cabinet, came out with a plan for the automotive industry in the summer of 2012, Beijing had incorporated most of the World Bank’s recommendations with a strategy to develop the entire automotive supply chain from components and batteries to materials and charging facilities, with smart grids as well as renewable energy, according to an analysis by law firm Akin Gump.
“China’s entire EV supply chain has been sewn up in an industrial strategy, which is joined up from end to end. Europe has nothing that looks anything like that,” says Andrew Bergbaum, managing director at AlixPartners.
But Europe’s free market cannot — and does not wish to — compete with China-style state capitalism. EU member states have agreed to impose tariffs of up to 45 per cent on imports of Chinese electric vehicles, arguing that heavy subsidies to local carmakers are making it harder for European rivals to compete fairly.
Shawn Xu, chief executive of Omoda and Jaecoo brands at Chinese carmaker Chery, argues that the success of the country’s automakers was not a result of government policy alone.
“All of the Chinese brands, especially the top brands, put a lot of investment to develop new technology,” Xu says, noting that consumers are now purchasing EVs and hybrids as much on in-car tech as any other aspect of the car. “This kind of technology innovation can bring benefit to consumers and this can also happen in the UK and the European markets.”
The potential and pitfalls of lavish incentives can be seen in Norway, the one country in Europe to successfully make the electric transition.
In October, 94 per cent of cars sold in the Nordic country were electric, putting it on course to hit a target of no new fossil-fuel passenger vehicles next year.
But the country, whose wealth is based on fossil fuels, has achieved this boom with tax breaks and spending far beyond anything offered elsewhere in Europe.
As well as lower parking fees and road tolls, Norwegian drivers have been offered generous tax incentives to choose electric over petrol vehicles. Charging infrastructure is also ubiquitous, thanks in part to government support.
Yet even in a country with a colossal sovereign wealth fund, this level of support has proved unsustainable.
With the cost of electrification subsidies topping $4bn in 2022, Norway began to roll back benefits from last year but the government has continued to struggle to wean consumers off the big incentives.
Even as some in Europe are removing carrots, others are reviewing the use of sticks.
In the UK, the government is considering easing requirements for carmakers to hit sales targets of electric vehicles. European automakers are lobbying the EU to extend compliance periods to meet CO₂ reduction targets.
But some in the car industry remain optimistic that an EV revolution is still within reach, even without dramatic changes in government support.
Executives hope the industry outlook may change as companies from Renault, Stellantis to Volkswagen, Toyota and Hyundai plan to aggressively roll out dozens of electric vehicles next year to meet tougher new emissions rules in the EU. Some of the new models will be far more affordable with price tags under €25,000.
Surveys have shown that consumers are unlikely to return to petrol vehicles once they make the electric switch. EVs are also much quieter, accelerate like sports cars and can save money in the long run.
In the short term, the focus will be on developing cars at affordable prices, even if that means relying on Chinese battery manufacturers to bring down the cost of batteries. “Now, consumers want to buy a good car and don’t care if it’s electric or not,” Miedreich says. “So what all the car manufacturers are looking for now is the cost.”
Additional reporting by Edward White in Shanghai
- Get link
- X
- Other Apps
