Blair's problem of priority

William Keegan Observer News Service London

Every pupil knows that some countries have a comparative advantage in performing economic tasks. The West Indies, for instance, seem to be better than Scandinavia at producing bananas. Germany is outstanding at engineering (we in Britain used to be). But most people these days, if asked what the UK is good at, will tend to say "financial services".

The current international situation however reminds people that the bellicose British are also good at war. "Bring in the Brits -- starting with the SAS (UK elite forces) is the frequent cry. The British armed services are up to their necks in Afghanistan, and now there is the little matter of Iraq.

First, it has to be said that the American enthusiasm for invading an Iraq that has not recently invaded Kuwait is not shared widely in Britain outside Tony Blair's office in Downing Street. Traditionally Britain usually gets involved in a war only when there is evidence of manifest aggression. On top of that the British service chiefs are reportedly doubtful about the ultimate objectives in Iraq and complain that they are in any case overstretched.

Even the hawks in the UK, such as Charles Moore, editor of the right-wing Daily Telegraph newspaper, are concerned about the pressure on Britain's resources of all its overseas military activity. Moore said this week: "I think Gordon Brown (the UK finance minister) said it (the war on terrorism) could be done with US$142 million and it has already exceeded that".

UK Labor Governments are traditionally associated with calls for disarmament and less military spending. Not Tony Blair's New Labor, however. But if the present international tension gets worse, Labor could be hit economically on two fronts.

The first and most obvious problem -- which would affect all countries, not just the UK -- is if the Middle East situation goes from bad to worse and drives the oil price up dramatically, as happened during periods of tension in the Middle East in the 1970s and early 1990s. An oil-price induced world recession would soon rub the gilt off the "New" Labor Party's reputation for economic confidence.

The second problem is that Brown already has plans for vast increases in public expenditure, notably on health. There is a danger that serious demands for more money from UK military chiefs could break the bank.They could even induce the kind of increases in taxes that would threaten Labor's new found reputation for not taxing punitively.

When Tony Blair first came into office his spending priorities were, in his own words, "education, education, education". Then it became apparent that there was growing dissatisfaction with the state of the National Health Service, and that, too, became a "priority".

Strictly speaking you can, by definition, have only one priority. But, as UK government ministers bid this week for more resources for their departments in the coming annual Budget, the so-called priorities are mounting. Recently the London-based Financial Times newspaper listed no fewer than five priority areas for government spending -- health, education, law and order, transport and "meeting Britain's international obligations" -- notably development aid and military commitments.

You see the point? We have reached the stage where under New labor, everything is a priority, but a hard-pressed UK Treasury is warning that few can win prizes...