Good afternoon, and welcome to the Atlantic Council. For those of you who dont know me, im frank miller. Im a member of the board here at the council. And the principal of the group. Were all very pleased today to have the opportunity to hear from steven lovegrove, the permanent secretary at the ministry of defense in london. Steven became the permanent secretary in april of 2016. Prior to that he was the permanent secretary for the department of energy and Climate Change and had distinguished career before that both in government and in the private sector. For those of you who dont know, the permanent secretary is the governments principle adviser on defense and has responsibility for policy, finance and planning as a departmental accounting officer. The principle the permanent secretary set strategy for defense, including corporate strategy, heads the department of state in the m. O. D. Civil service and the Overall Organization management and staffing of defense. So for those of you who are americans and dont understand that you can actually as a Civil Servant rise to a very senior positions and have real authority, youre seeing someone who actually does that in london. We appear to be approaching a cross roads in the history of the transatlantic relationship or so the pundits would have us believe. Were seeing protoe nationalism in many nato and european countries. Were certainly seeing protoe nationalism in russia and aggressive sense of trying to assert itself throughout the european space. We are seeing renewed efforts in the United States, the United Kingdom to make Large Defense Companies more responsive to both costs and schedule. And all of this is occurring in the midst of a great challenge, to the rules based order which emerged from world war ii and it is in this context well hear from the permanent secretary. Ive been asked to be a paid public announcement before he comes on, which is to say for those of you who are here and watching on computers, please join the conversation by following acskocroff and using the poundspecialrelationship. And with that, i give you steven lovegrove, the permanent secretary of the ministry of defense in london. [ applause ]. Well, thank you, frank. Im delighted to be here at the Atlantic Council with such a distinguished audience. Im going to talk today about britains place in a rapidly changing world and offer some thoughts on the implications for us all. But before that, should perhaps begin to build on a little of what frank talked about in my rather archaic title of in fact fully permanent undersecretary of state, which doesnt really translate very well into american english. I dont need to tell this audience that there are some important differences between our constitutions. An example from 1962, president kennedy and Prime Minister mcmilan in nassau with the Main Business of polaris out of the way failed to talk of other matters. The president asked the Prime Minister how his budget was going. Fine, thanks, said mcmilan. No trouble in the house of the commons asked the president . No, no, no replied mcmilan. We write the budget, throw it over the wall and the majority approves it. Well, said kennedy, wonderingly, anyone could run a country like that. So, another distinction, though, is that virtually all of our ministries are led by secretaries of state who are also members of parliament. So the members of the cabinet and a handfuls of more junior ministers who support them in leading their departments interact with their fellow parliamentarians nearly every single day. Everyone below those ministers is a career official. We have no political appointees like in your system, although i am aware you have rather fewer than youre used to. We always have only a very few political advisers and a handful in the Prime Ministers political advisers cant issue instructions to Civil Servants at all. The role of the permanent secretary is frank outlined my job is to lead the department as it supports the government of the day on the principle policy and management adviser to the defense secretary. By working close with the defense secretarys principal military adviser. Day by day i run the department. The cds gives Strategic Directions to operations and we come together to try to make it all add up. Together the cds and i are the defense voice at the National Security council official meetings and we jointly chair the Defense Strategy group. We jointly lead integrated teams of career Civil Servants and military offices working jointly. And that is an absolutely key characteristic of our system. And that is one of our most enormous strengths and one i suspect we dont make enough of or talk about enough in public. As frank says, i was an investment banker for a very long period of my career. I dont expect any sympathy as a result of that. But i can say that from that van teenage point and from the Vantage Point of not seeing the defense a huge amount of my career, the strengths that we have in the uk system have served us incredibly well and will continue to serve us incredibly well in the future. I could discuss the Civil Service and parliament for a lot longer, but its time for bigger things. Its traditional to begin these discussions with threats and challenges. I want to briefly mention some positives. The uk is the fifth largest economy in the world. We are a uniquely connected nation with alliances and partnerships the world over. We are the most trade dependent member of the g20 and we consider that a strength. The language of shakespeare remains the language of the world over. We are second only to the United States in our Technological Base and by that i mean human academic and industrial. The uk the well positioned to deliver 21st century defense and we continue to be the home of some of the greatest high End Manufacturing companies in the world and more on that later. We spend our money wisely. Weve increased investments in defense at the same time as reducing overall government spending. Were proud to meet the nato target of spending 2 , 2. 21 actually of our gdp on defense. The government is committed to increased defense spending by. 5 above inflation in each year of this Parliament Running out to 2020. And we are also proud of spending. 7 of our National Income on overseas development aid. Reducing the risk of future conflicts. In fact, we are the only country in the world to hit both that 2 nato target and the. 7 overseas development target. We remain an out ward looking nation. As the Prime Minister said in january, the uk is and shall remain a secure prosperous, tolerant country, a magnet for International Talent and a home to the pioneers and innovators who will shape the world ahead. The British Government reaffirmed those spending commitments along with publishing our strategic defense and review in 2015. Were proud of that strategy document, both in the judgments that we made, many of which have proved perhaps regrettably prescient and in the progress weve made since delivering our objectives. I dont need to rehearse and i wont rehearse the increasing challenging and increasingly challenging Global Security context for this audience. But briefly our sdsr concluded that the uk defense and security needed to respond to four main challenges. First, the increased threat posed by terrorism extremism and instability, second the resurgence of state based threats and intensifying wider state competition. Third, the impact of technology, especially cyber and Network Issues and wider Technological Developments and fourth the erosion of the rules based international order, which makes it harder to build consensus and to tackle global threats. Some of those challenges are very much as they were in 2015. We have found no magic bullet to fix weak and failing states. We know it takes decades of toil, treasure, political commitment and sometimes blood to develop economies democracies and resilient societies. Even as we deny them safe havens around the world, we know that the ambitions of daesh, al qaeda and the like to poison mayhem have not diminished. The uk is committed to playing a leading role in the Global Counter Daesh Coalition contributing all the arms of government, economic, diplomatic, development and defense. But some things have changed. Most notably the threat from state actors has crystallized in more ways and more rapidly than perhaps we anticipated. As the defense secretary set out in his recent speech at st. Andrews university, we have a very clear eyed view of russian behavior. Alexander was murdered on british soil in 2006. In 2015, the annexation of crimea and the shooting down of mh 17 in 2014 then its intervention in syria all showed how russia had become more aggressive. The 2016 saw a further step change in russian behavior. It is seeking to expand its sphere of influence. Destabilized countries and weaken the alliance. It seeks to weaken todays International Rules based system, to write a new set of rule on their terms and reflecting their values. We are responding as an alliance to desuede and to deter. And also to engage. As the Prime Minister has said last week, we stand ready to engage with russia, but we are the scale and breadth of those challenges, the speed and change in some other events, not least the uks decision to leave the European Union leads some distinguished and voices to suggest that we need to rewrite our sdsr. We disagree. We got those threats right and we built a robust and flexible plan to take them on. And as you all know, rewriting a strategy is an excellent excuse to avoid executing it. But that does not mean that we should not constantly test and adjust our planning. Indeed, it would be a grave error to do anything else. And when we do that, we need to remember the Guiding Principles of sdsr which are to be internationally, innovative. I will unpack those in term. We decided to make our defense policy and plans international by design. Our armed forces have almost always operate aid long side allies and partners. And first and foremost, with nato, the Strongest Military alliance the world has ever seen. Nato knows what it must now do. It must deliver greater resources, most particularly from Member States not yet meeting the 2 target. Efficiency is not a substitute for commitment. We need both. With resources nato must also reform. Nato has begun that journey and the uk is determined to lead the effort. Today, nato has embarked on a new defense and terror posture. We have a greater focus on our higher Readiness Forces and we are starting to develop new responses to hybrid threats, nuclear blackmail and cyberattack. But we now need to press the accelerator. The institutions of nato shape, act the joint forces commands and so on all need to play a part in the transformation of nato to a genuinely agile, flexible organization. One in which we can have confidence that can respond quickly enough to those who wish us harm. Such an organization requires nato to be adaptable and responsive to the changing environment. We need to strive for an alliance that is less bureaucratic, better at prioritizing, more capable of taking more capable of making difficult decisions quickly. We must empower senior officials to draw on their experience and insight to prioritize and resource the most pressing issues for its Member States. There needs to be a restored sense of relevance. Nato must demonstrate through action that it contributes to tackling our challenges, including terrorism. That contribution to count counterterrorism needs to be based on intelligence. To record two of the most important words in the treaty, north atlantic. Nato is an alliance for euroatlantic security. We are perhaps growing too comfortable considering our shared nation is safe, somewhere we dont need to worry too much about. That is wrong. If it ever was, it is no longer a benign environment. Is it becoming a contested space and we must continue to Work Together to protect it and the trade and Communication Channels to which it is home. Thats a point i could explore in other domains as well, but thats for another time. Nato cannot be the whole answer. Against haever more complex problems we must bring together military and Nonmilitary Responses and that means we must reinvigorate the relationship between nato and the eu. The uk is today a significant contributor to eu missions around the world. We are leaving the eu, but we remain committed to European Security and we will continue to be a supporter. Of eus effort for piece and security. We will continue to communicate with our partners for a supportive relationship between nato and the eu which is in our and all others National Security interests. Finally, our International Emphasis must include our most important bilateral relationships. It is worth dwelling on a couple of veexamples. They will undertake their first respective patrols. They will be the first of Nuclear Deterrent submarines responsible for providing the guarantees of our National Security against threats. At their heart, each of these classes of submarines will carry missiles. The warheads are National Assets for both our countries and the firing chains to launch them. A missile coming off the production line doesnt know if it zedestined for a uk submarin. Just dwell on that thought. Our respective guarantees of sovereigty and our last lines of national defense, national warheads, national firing change all borne on a common fleet of missiles, all holstered in a common missile compartment. No two countries in the world trust each other enough or have the raw engineering abilities to do that. Weve agreed that the u. S. Marine corps joint strike fighters will fly from our new aircraft carriers on their first operational deployments. It will be an unmatched demonstration of our commitment to working with one another. That relationship and that commitment starts at the top and the recognition of the historical and future joint endeavorss is genuine. Our partnership on the f35 Program Providers us both with an unmatched fifth Generation Air capability and it provides us with considerable industrial and economic benefits and there can be no defense waithout a sustainable base. British Aerospace Systems is a u. S. Company. Lockheed martin is a uk company. We should build on that reality delivering a twoway street for defense procurement cooperation. You know that innovation is the day job for any tactical commander. Its the day job for our engineers and Laboratory Staff creating new capabilities to keep us safe. Its a day job for the Defense Industry seeking to provide capabilities we need at prices we can afford. Innovation is foundational to everything about defense. The uk is good at innovation. Were number three on the Global Innovation index and in the hindsight we can see this is dispute the actions of government rather than because of them. We became comfortable with the idea that we would have technological capability. We missed early on that cyber would present our opponents to do us harm. So innovation is the second strand of our strategic response. The uk is not pursuing a third strategy of the sort that the deputy has spoken about in the last few years. Our ambition instead is to fundamentally change how we go about our business in pursuit of military advantage now and in the future. We also recognize that today technological innovation happens primarily in private enterprise rather than in government so weve established the defense and security excaccelerator. We recognize that the world changes faster so we need to invest in horizon scanning because the life scan of any defense is going to get short and shorter before anything new comes along. We have set up the innovation and research unit. Weve established an Innovation Fund to support suppliers with great new ideas in bringing them from concept to capability. We know that inside the department we need to be held to account for innovation so we have appointed a Defense InnovationAdvisory Panel to advise the defense secretary drawing on the uks world class capabilities that we have in so many sectors. We are doing all of this internationally, including krei corpora coop rating with governments. Ten years ago we recognized that many of our security challenges were coming from weak and failing states so we established ab stabilization unit originally staffed from the ministry of defense, the Foreign Office and the department of international develop. Today the st