NEWS

January 31, 2018

The scale of financial pressure on the British diplomatic service has been underlined by a Foreign Office announcement that it has raised £420m by selling its embassy in Bangkok to fund modernisation projects across its global estate.
The sale represents the largest land deal in Thai history and the Foreign Office’s biggest ever sale. The department said the proceeds, equivalent to a third of its core annual budget of £1.2bn, would pay for 30-40 modernisation projects around the world, including renewing the wiring in its Paris embassy and refreshing the decor at the Washington embassy.
The Foreign Office has long complained about budget cuts, even as it prepares to project the UK’s diplomatic heft in a post-Brexit world. By comparison, the budget of the Department for International Development (DfID) is booming.
The foreign secretary, Boris Johnson, has been looking at how he can capture parts of the DfID budget without breaching international rules on the definition of aid. A series of pooled budgets have been established, including the conflict, security and stability fund. The transparency of the spending in these budgets has been repeatedly challenged.
The Bangkok embassy is being sold to a joint-venture consortium of Hongkong Land, a member of the Jardine Matheson Group, and Central Group. The new embassy will be based in the AIA Sathorn Tower in the central business district.
The colonial-era embassy was built in 1922 on a 3.5-hectare (9-acre) site on the outskirts of Bangkok that is now prime real estate. The villa is housed in a compound that features a large garden and is considered one of the jewels in the crown of the city’s Wireless Road – a wide, tree-lined avenue also known as “Embassy Row” – that is home to top restaurants, international hotels and shopping malls.
Announcing its sale, Johnson said: “Britain is a leading player on the global stage and I’m determined to ensure that our diplomats have all the necessary tools to do their job effectively. This includes working in modern, safe, fit-for-purpose premises, not just in Bangkok but around the world.”
Simon McDonald, the permanent undersecretary at the Foreign Office, said: “In a tight fiscal environment it is right that we take tough decisions to ensure that the UK can maintain a global presence while getting the best value for taxpayers.
“This deal will ensure that we have modern, state-of-the-art premises in Bangkok, confirming our long-term commitment to our relationship with Thailand, while releasing much-needed funds to modernise other embassies around the world, including in Cairo, New Delhi and Washington.”
A survey by the Lowy Institute, an Australian foreign affairs thinktank, ranked the UK seventh in the world in terms of international footprint measured by the number of embassies. However, the sale of the Bangkok embassy has prompted fresh concern that the Foreign Office is struggling to find resources.
“It would be a great mistake to scale back our presence when our message is ‘global Britain’,” the former foreign secretary William Hague told a Lords select committee on Wednesday.
One former Conservative Foreign Office minister said the disconnect between what the British people still expected the diplomatic service to do, and “the unbelievably skimpy” resources at its disposal revealed something deeper about the UK’s inability to adjust to its place in the world, and the global spread of prosperity.
“There is a gap between rhetoric about our global role and reality of the Foreign Office resources that is rarely communicated to the public,” the former minister said. “Basically, we have been bluffing about what we can achieve. We can no longer change the course of events in China, Vietnam or even Zimbabwe, but we often refuse to admit this to ourselves.”
A Commons select committee will shortly launch an inquiry into the resource implications of the phrase “global Britain”, and its members are determined to find out whether British diplomats, excluded from the resources of the EU foreign policy service, know how they can effectively wield influence.
The Foreign Office core budget, required to fund 274 posts in 169 countries, has been in steady decline, down from a core budget of £2.1bn in 2012. It is now dwarfed by the French diplomatic budget, as well as the legally protected £13bn aid fund largely available to DfID.
Hague insists the Foreign Office needs special treatment if it is to succeed in promoting the UK’s interests abroad.
Another former minister was more blunt: “Yes, we can sell the family silver for a bit and, yes, we punch above our weight, but unless we are careful, we are about to step into the ring with people way above our weight and without any gloves.”