Onslow on Fisher and Pedaliu and Smith, 'The Foreign Office, Commerce and British Foreign Policy in the Twentieth Century'

Author: 
John Fisher, Effie G. H. Pedaliu, Richard Smith, eds.
Reviewer: 
Sue Onslow

John Fisher, Effie G. H. Pedaliu, Richard Smith, eds. The Foreign Office, Commerce and British Foreign Policy in the Twentieth Century. London: Palgrave Macmillan, 2018. 594 pp. $159.99 (cloth), ISBN 978-1-137-46580-1.

Reviewed by Sue Onslow (University of London) Published on H-Diplo (September, 2019) Commissioned by Seth Offenbach (Bronx Community College, The City University of New York)

Printable Version: http://www.h-net.org/reviews/showpdf.php?id=53997

As the Brexit debate continues to roil on in British politics and the possibility of an abrupt “no-deal” departure from the European Union looms ever larger on the horizon, the importance of current and future commercial diplomacy in British foreign policy is starkly evident. This volume of collected essays on the history of British commercial diplomacy across the twentieth century, edited by three specialists in British foreign policy, is therefore both extremely timely and very welcome. As the editors state firmly, “commercial diplomacy is the Cinderella of international history” (p. 25). The latter-day “Prince/ess Charmings” of John Fisher, Effie G. H. Pedaliu, and Richard Smith are determined to address this neglect by bringing together a range of chapters written by individual specialist diplomatic historians on “the intricate and complex relationship ... between commerce, finance and foreign policy” (p. 26).

Overall, the volume makes an important contribution to the study of diplomacy, with the combined emphasis on the need for a wide range of perspectives on the importance of commercial matters, and the value of multi-archival research. Taken as a whole—as the co-editors adeptly underline in their introduction—British foreign policy has always had important commercial dimensions. During the nineteenth century, there was reluctance to intervene actively, conditioned by the prevailing laissez-faire orthodoxy of the Victorian era and an upper-class diplomatic disdain of “grubby” commerce. However, gradually, there were louder calls for state support as the British economic preeminence and dominance of international market share faced challenges from surging American and German industrialization. There were lags in boosting consular services and the appointment of commercial attachés, further delayed by the outbreak of World War I, and commercial promotional work continued to be separated from diplomatic work. Yet the experience of total war and blockade, together with the dislocation of British export trade and rising competition from the United States, combined with fear of postwar German revival, highlighted the need for postwar reform to address these institutional shortcomings. Bureaucratic squabbles between the Foreign Office (FO) and the Board of Trade (BOT) led to the compromise solution of the creation of the Department of Overseas Trade (DOT) with responsibility for promoting British trade overseas and disseminating commercial intelligence. However, this simply led to duplication of departmental areas of responsibility and exacerbated the separation of commercial and foreign policy. The FO also faced an assertive Treasury determined to maintain its control over financial diplomacy, although modest gains were made with the establishment of an economic liaison section. As the editors acknowledge, there was enduring snobbery toward consular services and the persistence of an aristocratic conviction that “a gentleman does not soil his hands with trade” (p. 19).

The volume charts the shifts in areas of activity, competence, and topics of concern around economic and industrial issues. By the mid-1950s approximately one-third of FO work was involved in commercial, economic, or financial aspects of diplomacy, with British diplomats at the “front line of the Board of Trade in foreign lands” (p. 7). The Plowden and Duncan Committees of inquiry led to greater state activism in support of British trade, economic work, and export promotion, and resulted in a shift in emphasis and appreciation of commercial work across the diplomatic corps itself. There were certainly persistent accusations of amateurism from businessmen and matching official skepticism toward British entrepreneurial responsiveness. Smith raises questions around whether Foreign and Commonwealth Office (FCO) diplomats were so influenced in the 1970s by the clarion call of trade promotion that they overlooked political intelligence work. “The single-minded effort came at a cost in terms of prioritization and in the wake of the Iranian Revolution the FCO was left wondering whether its priorities were right” (p. 501). The volume also points to ironies in the bureaucratic learning curve: by the turn of the millennium “things had gone full circle” with the establishment of a non-ministerial department, United Kingdom Trade & Investment (UKTI), which has, the editors muse, perhaps brought together the FCO and the Department for Business, Innovation, and Skills (BIS) in a way that the DOT was originally intended, back in March 1918 (p. 10). 

Taken as a whole, the essays chart the fluctuating relationship between the FO/FCO (post-1968) and commercial diplomacy: its political leaders and civil servants shifting structural and institutional management of economic and commercial work across Whitehall as successive British governments engaged more actively with British overseas trade and investment. The series of bilateral and multilateral case studies explore themes of changing attitudes and focus on export trade promotion, Britain’s varying economic fortunes, the loss of overseas markets and varying attempts to address this, the shifting structure of the international political economy through imperial blocs, economic nationalism, and the strains of war and postwar economic decline. The authors variously assess the relative importance of prevailing ideological assumptions and orthodoxies; institutional frameworks; the geostrategic imperatives around uninterrupted energy supplies, together with the dangers of regional political instability and vulnerability; the varying fortunes and outcomes of trade missions; the advantage (and drawbacks) of proactive (possibly maverick) ambassadors; the possibilities as well as challenges of commercial intelligence in hitherto closed economic markets, such as China; decolonization and commercial interests; the value of networks for business, finance, and senior officials; the interplay between the city and government; and enduring pragmatism in British diplomatic efforts to balance national security, trade, and prosperity in both the 1930s and the postwar Cold War era. Commerce and the lasting damage of world war is another repeated theme, as well as challenges of postwar reconstruction and debates around the imperatives of redevelopment of overseas trade. Time and again, the contributors emphasize the importance of individual capability and professionalism, along with bureaucratic frictions and departmental rivalries, and the ways this could aid a resourceful diplomat.

Individually, then, the chapters cover a spectrum of themes, time periods, and geographic areas, citing a variety of bilateral and multilateral case studies. T. G. Otte’s magisterial survey of commercial diplomacy before 1914 seeks to rebut the cliché of the FO as “a hidebound institution” (p. 26). While acknowledging the existence of aristocratic prejudice against commerce in British officialdom, Otte presents a nuanced picture of the influence of laissez-faire orthodoxy and London’s preference for the commercial treaty: “Prising open overseas markets with the tip of a bayonet was generally considered unacceptable” (p. 29). As the international economic environment grew progressively more competitive from the 1870s onward, these prevailing convictions were increasingly challenged by demands for more energetic official support to counter trends toward protectionism. Otte paints a persuasive picture of more varied and effective British commercial policy than has been acknowledged hitherto. Yet, even when commercial policy moved up the political agenda, the work of the Commercial Department of the FO continued to be hampered by ideological preference for free trade, Treasury parsimony, FO staffing levels and mediocre caliber of appointments, and institutional separation from the expertise of the BOT.

Fiona Venn’s study of British policy and the oil industry traces the trajectory of British policy to ensure security of access to oil supplies in the Middle East. Rather than rehearsing the debates on the influence of oil on successive British governments’ policy in the Middle East, Venn focuses her analysis on the importance of oil as a vital commercial and strategic resource in wider context, highlighting successive governments’ “deep wariness of the oil business” and profound suspicion of rival American oil companies (p. 73). Postwar policy differences between London and Washington over League of Nations mandates in Iraq and Palestine, naval competition, the future of the Anglo-Japanese alliance, and reparations were exacerbated by this Anglo-American competition, which initially culminated in a brief “oil war” in the early 1920s. Following a determined change of strategy, the FO’s main goal of improving fractious Anglo-American relations was achieved through commercial cooperation, obliging British companies to reach compromise arrangements with their American counterparts. “American involvement in the oil riches of the Persian Gulf were taken solely at the instigation of the Foreign Office, and with only the interests of British diplomacy in mind:... the overriding importance of improving and maintaining good Anglo-American relations” (p. 81). Commerce did not drive British diplomacy; British diplomacy drove commercial relations.

Fisher’s chapter on the De Bunsen Mission to South America in 1918 explores the role of an enterprising and committed diplomat, set against the context of the development of Britain’s commercial diplomatic service and consular support. Despite his identification of postwar commercial possibilities and official consensus that British commercial attachés in Latin America should be increased, war-time changes in Latin American countries’ economies stimulated demand for American and German manufactured goods, rather than British ones. This international competition, combined with bureaucratic parsimony, resulted in Britain’s “perceived abandonment” of Latin American markets (p. 106).[1]

Using three case studies of Bulgaria, the Soviet Union, and Germany, Miklos Lojko examines the impact of institutional reform that had led to the formal establishment of the DOT in 1918. Initial hopes of its quasi-political as well as commercial representative and promotional roles were soon thwarted. Economic and commercial intelligence structures remained firmly separate; the FO retained responsibility for the political aspects of commercial policy, while the BOT’s remit remained the protection of British commercial interests abroad. The DOT was thus the epitome of bureaucratic compromise and limited financial resources (yet again!), resulting in limited authority and constrained effectiveness. Despite these shortcomings, somewhat surprisingly, Lojko concludes that the DOT “evolved into an efficient and reliable organization during the interwar years while its dedicated cohort of diplomats of commerce remained, as civil servants do, more or less hidden from public view” (p. 134).

Gaynor Johnson’s chapter seeks to reinject wider interest in the importance of economic and financial diplomacy in the post-World War I peacemaking process as this stretched across the 1920s. She underlines not only that distinctions must be drawn between commercial and security diplomacy of Britain, France, and Germany but also that for the United Kingdom each strand impinged on and at times contradicted the others. Her arguments are also an important plea for international historians to read and research outside “traditional” fields (for example, business/banking history). She concludes that permanent officials at the FO and Treasury “set the true and consistent tone of British foreign policy, aided by the diplomats who served them” rather than their political masters (p. 157).

Francine McKenzie explores the limitations of imperial solutions to the international economic crisis in the 1930s. While trade, the Commonwealth, and foreign policy all came together in the 1930s, McKenzie points out the divergent aims between Britain and dominion governments, the limited tangible benefits of Imperial Preference, and the complications this preferential tariff regime caused in other areas of British foreign policy. Neil Forbes’s essay on the FO, commerce, and Anglo-German relations in the interwar period is another deeply knowledgeable contribution, giving insights into the dynamics of big business and foreign policy as successive British governments and institutions sought to address the challenge of Nazi Germany. In another welcome essay incorporating differing perspectives and drawing on new archival material, Antony Best reassesses debates on the interaction of commerce and government as forces influencing British policy toward the Sino-Japanese War. He concludes that while British firms were an important source of information, banks and business were as divided as departments across Whitehall on how best to respond to Japanese aggression. Consequently, the division of “capital and goods” resulted in “conservative” alignments of the Treasury, the Bank of England, and the commercial banks who both distrusted the Chinese and misread Japanese intentions, versus the FO, business organizations, and trading firms who remained naively hopeful of possible advantages of collaboration with the Chinese (p. 225).

Thomas Mill charts the importance of economic diplomacy to the Anglo-American relationship during World War II (perhaps better characterized as sharp rivalry), reminding us that each side was firmly concerned with the postwar nature of the global economy and their respective country’s position in the international trading system. As the debate played out at a variety of intergovernmental levels and fora, he argues, British industry played a far more important role in these fractious discussions than has been recognized.

Stephen Twigge addresses the gap of the literature on British nuclear history by focusing on the FO/FCO, the BOT, and the development of civil nuclear power in the postwar period. (To date, historians have given primacy to the development of atomic and then nuclear weapons capability.) This presented successive British governments with geostrategic choices and foreign policy dilemmas. Among the dilemmas were how to balance the close relationship with the United States with British autonomy, problematic industry-government relations, and issues around securing a stable source of enriched uranium.

Aysegul Sever uses Turkish commercial relations with the UK in the 1940s as a case study of neutrality, British commerce, and the threat of rival economic partners, especially Germany. He emphasizes that British/Turkish relations were influenced but not dictated by military developments on the ground and that British trade was never sufficiently lucrative to stop Turkey from looking for other commercial partners. In contrast, the chapter by Pedaliu looks at the challenges and stumbling blocks of reestablishing commercial relations with a former foe, Italy, and in particular, the personal stamp of the foreign secretary, Ernest Bevin. Her chapter, “The Foreign Office, the Board of Trade and Anglo-Italian relations after WWII,” highlights the politics and practicalities of commercial reengagement with a defeated enemy and shows that the greatest impediments to foreign commercial policy may lie within the home government and supposed war-time allies. Peter Beck’s overview of Britain’s long presence in Antarctica underlines complex inputs to policymaking: historical politico-legal aspects originally fusing with financial returns (from whaling), as justification for British geopolitical commitment to the “empty” continent evolved. Beck downplays the importance of economics, which were (and remain) progressively subordinate to high-profile scientific and environmental objectives.

Victor Gavin’s consideration of Anglo-Spanish commercial relations in the immediate aftermath of World War II offers an interesting comparison to Pedaliu’s chapter on Anglo-Italian commercial relations: Gavin stresses the importance of cheap, vitally needed Spanish foodstuffs to the beleaguered British housewife, combined with the demands of postwar domestic reconstruction and the Spanish economy’s complementary role to British industry. These factors set firm limits to British ideological opposition to Francisco Franco’s regime and determined resistance to international pressure for economic and diplomatic sanctions against Madrid. (It made me wonder if the same was true of Anglo-Portuguese commercial relations in the same period.)

The volume includes a number of chapters on British strategic policy in the Cold War and East-West Trade. Alan Dobson offers contrasting insights into British pursuit of commercial links and opportunities with the Soviet bloc and the recurrent disputes within the Anglo-American alliance around trade controls as British officials sought to reduce the number of embargoed items. It is clear that the pattern was repeated in the era of détente and the onset of the “second Cold War” over technology transfers to Eastern Europe (see Angela Romano’s chapter, "British Trade towards Socialist Countries in the 1970s: Trade as a Cornerstone of Détente"). As Dobson observes, “The Western Alliance as a whole was clearly and usually decisively led by the USA, but it was rarely in a position to dictate policy.... In the British battle for more exports through relaxing the strategic embargo directed at communist states there was considerable consistency in their policy on the embargo against the Axis in the Second World War” (p. 375). He continues: “It had to be multilateral to be effective and that required compromise and accommodation from the USA. And that in turn provided the British with wiggle room to pursue their national priority of expanding exports and allow economics to trump strategic foreign policy priorities” (p. 376).

The politics of oil features prominently in a number of essays: Simon Smith looks at the FO, business, and end of empire in the Trucial states in the Gulf, both in the heyday of British commercial dominance (during which British diplomats were privately deeply critical of dubious business practices) and in the progressively more competitive commercial environment of the 1970s and 1980s. The chapter on Britain and the politics of oil in the early 1970s (by Francesco Petrini) emphasizes the tensions between British political imperatives and the alignment between multinational corporations (MNCs) and OPEC countries in maximizing oil prices in the early 1970s. Richard Smith looks at the FCO, Iran, and the possibilities of a commercial “bonanza” in the same decade.

Another recurrent theme is the assiduous work of diplomats to promote British defense sales as a matter of high policy. Ed Hampshire’s fascinating chapter on British defense sales to China in the 1970s spells out British hopes of commercial advantage as well as possible wider diplomatic benefits on the future of Hong Kong. The essays on Britain, commerce, and multilateral institutions/fora—the FO and the preparation for the United Nations Committee on Trade and Development (UNCTAD) (Edward Johnson) and inter-North Atlantic Treaty Organization (NATO) debates on trade with the Soviet bloc (Evanthis Hatzivassiliou)—assess British preemptive policy and sustained British efforts to ensure maximum wiggle room. British diplomats worked untiringly to ensure that the postcolonial institutional innovation of the UNCTAD conference was not co-opted by the Soviet Union as a vehicle of anti-imperialism. The concluding chapter is written by the former senior diplomat and high commissioner to Australia, Sir Roger Carrick, giving a diplomat’s long perspective on evolving commercial diplomatic policy and practice.

It is always a challenge for editors in assembling a book of this ambition and breadth, and Fisher, Pellaliu, and Smith are to be commended for the overall analytical quality of the chapters in this large volume. Taken together, the essays show that a sophisticated understanding of diplomacy and activity should include official and unofficial networks of diplomats, bureaucrats, non-state actors, and financiers. There are clear continuities and institutional themes: for example, the extent to which British officials regarded themselves as the vanguard of international policy (be it free trade in the nineteenth century or in Western Cold War policies); and recurrent bureaucratic division and discord between the FO and the BOT, which stymied more effective cross-Whitehall collaboration in the DOT. Notwithstanding the examples of FO areas of activity and individual enterprise, successive chapters point to persistent institutional sociocultural resistance, reflecting the upper-class origins of many diplomats. There are also unexpected continuities: official disquiet over the questionable entrepreneurial ethics of some British businessmen; FO/FCO frustration at limitations of British commerce, be it limited capacity or delivery bottlenecks; lack of responsiveness to commercial openings, meaning that diplomatic endeavors supporting commercial relations were not necessarily effectively exploited; and little recognized areas of activity or importance of commercial diplomacy. Treasury determination to assert its authority in financial diplomacy and to pinch the diplomatic purse strings comes up time and again as straitened or limited resources inhibited effective support for trade promotion. The chapters point to the value of horizontal networks of officials and non-state actors, as well as tensions with top-down hierarchies. Discord with the United States over transfers of advanced technology to East European states have reverse contemporary echoes in current Anglo-American differences over Chinese technology. Analysis of fractious relations and discord with Britain’s ideological allies, both the United States and within the NATO alliance on trade with the Eastern bloc, similarly position British policy in a distinctive category within the Western alliance, underline that British political outlooks were importantly different from Washington’s Cold War lenses, and reflect a frequent hard-headed commercial pragmatism that was not to the liking of their transatlantic allies. The tempered caution about using economic and financial levers as part of Britain’s diplomatic tool kit also comes through, a caution born of bitter experience of failed sanctions, against Italy in the 1930s and Rhodesia-Zimbabwe in the late 1960s-70s.

Understandably, given the title of the volume, contributors draw heavily on documents from the FO/FCO series. However, given that many of the chapters refer to interdepartmental rivalry and bureaucratic infighting across Whitehall, it is curious that these authors do not also draw on Treasury and BOT/Department of Trade archival material. Secondly, and inevitably, given the breadth of British international trade and commercial engagement across the twentieth century, this volume cannot be completely comprehensive. While there are chapters on the trials and tribulations of establishing trade with former antagonists (Germany and Italy), strangely there is nothing on comparable British-Japanese commercial relations in the postwar period. While I hesitate to argue that a volume, which is already 574 pages long, should have been even longer, there is a marked absence of studies on commerce and British foreign policy with postwar Commonwealth countries—the remit of the Foreign and Commonwealth Office from 1968. Carrick’s concluding overview as a policy practitioner (covering Australia) and William Bishop’s chapter on the role of Anglo-Nigerian commerce and investment in the resolution of the Rhodesian crisis are the sole exceptions. Unfortunately, Bishop’s arguments come across as only partially formed and at times strangely referenced. (Oddly, the author makes no mention of the Lagos government’s decision to nationalize BP’s holdings on August 1, the opening day of the Commonwealth heads of government meeting, and the British government’s response. Furthermore, the British government had already decided to pursue all-party constitutional talks in early July 1979 but chose to conceal this from other Commonwealth member states until the Lusaka meeting.) The popular narrative is that the Commonwealth comprehensively withered in commercial importance to British politicians and diplomats after Britain joined the European Economic Community in 1973, as the FCO’s mantra shifted to “Europe, Europe, Europe.”[2] It is certainly true that in 2019, Commonwealth countries comprise a mere 10 percent of British overseas trade, with four Commonwealth countries (India, South Africa, Australia, and Singapore) ahead by a “country mile” in these statistics. Chapters exploring this received verity would have been most welcome—for instance, on Anglo-Indian commercial relations, or British-Commonwealth commercial relations after the signature of the Lomé Convention, or perhaps, the UK and Malaysia in the 1980s, at the time of Mahathir Mohamad’s government’s “Buy British Last” campaign.[3]

In sum, as the editors stress at the outset, many of the volume’s themes have sharp contemporary relevance: debates around the trade-off between national security and overseas trade (can pragmatism go too far, distorting crucial political and economic priorities?). How active should British government intervention be? What is the role of civilian/industrial specialists, compared to professional diplomats? Does “economics trump ethics”? “Who drives commercial policy in Whitehall” (p. 19)? How deferential should the UK be to the US administration, if the drive for overseas trade, national security, alliances, and ethics appear to conflict and collide?

British “diplomats have long had an important role in creating markets, both by removing barriers to trade and developing the international rules-based economic system, and also by supporting UK firms” (p. 2). The contemporary fresh emphasis on commercial objectives underlines the contemporary and future role of the FCO, bureaucratic capacity and effective collaboration across Whitehall, and the demands that will be placed on British diplomats and civil servants particularly now, as Britain stares down the barrel of a post-Brexit world. We are really, really going to need them.

Notes

[1]. Fisher cites Roger Gravil, “‘Anglo-U.S. Trade Rivalry’ in Argentina and the D’Abernon Mission of 1929,’” in Argentina in the Twentieth Century, ed. David Rock (London: Duckworth, 1975).

[2]. Sir Peter Marshall, former deputy secretary general (economic), Commonwealth Secretariat, interview with Sue Onslow, November 18, 2013, An Oral History of the Modern Commonwealth 1965-2012, https://commonwealthoralhistories.org/2014/interview-with-sir-peter-marshall/.

[3]. The recent Documents on British Policy Overseas volumes on British-South African Relations, edited by the FCO chief historian, Patrick Salmon, do address British commercial relations with the Pretoria government, against rising international calls for economic and financial sanctions against apartheid South Africa in the 1970s and especially 1980s. See Documents on British Policy Overseas (New York: Routledge, 2017); and Documents on British Policy Overseas, ed. Patrick Salmon and Martin Hewitt, series 3, vol. 11, The Unwinding of Apartheid: UK-South African Relations, 1986-1990 (New York: Routledge, 2019).

Citation: Sue Onslow. Review of Fisher, John; Pedaliu, Effie G. H.; Smith, Richard, eds., The Foreign Office, Commerce and British Foreign Policy in the Twentieth Century. H-Diplo, H-Net Reviews. September, 2019. URL: http://www.h-net.org/reviews/showrev.php?id=53997

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