143. Was Starmer Right To Woo Trump?

0:00Now, I'm delighted to tell you that Monzo Business are now a proud partner of The Rest is Money. We're teaming up for the next six months. You'll be hearing why they're a great option for your business banking and how they're supporting small businesses up and down the UK. Now, since I am a Monzo business customer already, I can tell you all about it. They've got three different plans to choose from depending on the size of your business. So, for example, with two of us in mind, me and a business partner in our latest venture, we've opted for the pro version, which comes with a load of tools to help us simplify all of that financial admin.

0:37There's also light for sole traders and team for those slightly larger businesses that are scaling up. So why not join me and over 500 ,000 businesses already banking with Monzo Business and sign up for an account today. Only sole traders or limited company directors in the UK can apply. Invoicing is available with Monzo Business Pro for£9 a month and team for£25 a month. T's and C's apply. Hello and welcome to The Rest is Money with me, Robert Peston. Steph will be joining us in a minute, but I'm going to do a little preface. And it's because of some extraordinary events that have happened in the last couple of hours.

1:15And we decided, Steph and I, that what we would focus on in the podcast is Keir Starmer's recent trip to see Donald Trump. And obviously, therefore, we talked about what that historic visit meant for British trade relations with America, what it meant for peace in Ukraine. My judgment, Steph's judgment, were made before those absolutely unbelievable scenes in the Oval Office of the White House, in which we saw that furious row between the American President Donald Trump and on his side, his deputy J.D. Vance, and the President of Ukraine, Vladimir Zelensky. And the point, of course, some of the judgments that we make were predicated on the idea that, for example, we were moving towards this in itself rather extraordinary deal that President Trump wanted, where America would take control of potentially hundreds of billions of dollars of Ukraine's precious minerals, rare earth and energy.

2:39Now, let's be clear, with Zelensky leaving the White House in high dungeon and the kind of extraordinary, shattering things that President Trump has said about withdrawing American support from Ukraine. Certainly that deal now, I mean, goodness any knows when and whether that deal will ever happen. But, you know, there are now extraordinary uncertainties about how Ukraine will continue to conduct this war. It means, of course, that the meeting of European leaders that Keir Starmer has convened on Sunday, at which President Zelensky will be present, and he's going to have a conversation with Starmer before that meeting, that summit of European leaders now looks overwhelmingly important.

3:41and the one thing that I didn't talk to Steph about in the podcast which is the question of you know whether Starmer's decision not to choose sides between America and Europe saying that that is a false choice that he will never make whether that is genuinely sustainable I mean he's had a very good trip to America in the sense of seeming to win favor from America. But given what many people would say was Trump's outrageous, apparent rejection of Zelensky and Ukraine, this is shattering for European security. It puts all European leaders in an incredibly difficult position in terms of how they continue to support Kiev, Zelensky, Ukraine.

4:35And, you know, it is now, I think, a genuine question whether Keir Starmer will have to side with Europe against America. And then, of course, there'll be an assessment about if he does do that, what on earth that means for global security. So vast amounts to consider in coming days. We still think that it is worth listening to the podcast we recorded earlier because it'll give you a window on what were historic talks between Starmer and Trump. But I am issuing this health warning now that if I had recorded that podcast after I'd seen the just mind blowing scenes in the White House between Trump and Zelensky, I would not have said some of what you are about to hear me say.

5:32And I think exactly the same thing would be true of Steph, too. So I hope you enjoy the podcast, but do recognise, as they say, that events have moved on.

5:55Hello and welcome to The Rest is Money with me, Steph McGovern. And back from the States, Robert Peston. How are you, love? Fighting form. What can I tell you? Well, in your absence, it was myself and Alistair Campbell, obviously of the rest of politics firm, talking about what Keywords hoped to achieve from this meeting with Trump. So can you just paint the scene for us in terms of what was the atmosphere like? Was it one of optimism? Were people worried about how it was going to go? How did it feel for you? The Prime Minister, his entourage, officials and ministers were plainly very anxious in the days running up to what many people have described.

6:38And I don't think this is much of an overstatement as the most important meeting between a British Prime Minister and an American president since the Second World War. And it was incredibly important for a number of conspicuous reasons. But, you know, you can summarize all of them by just saying Donald Trump, because Trump is an American president, unlike any that we've ever encountered. And so much of what he wants to do potentially has an enormous material impact on our prosperity and on our security. And, you know, we've talked loads about the threat of tariffs, which could obviously lead to higher global inflation, slower growth and do cause a lot of damage to our prosperity in the UK.

7:26We've talked a lot about the way he's trying to get a peace deal with Putin, which if it is handled in the wrong way, could embolden Putin and make the security of the whole of Europe much more in peril. So masses of importance for Keir Starmer to grapple with. And, you know, nervousness because, A, Trump himself is also just one of the most unpredictable politicians any of us have encountered. Starmer, like so many world leaders before going to see him, did enormous amounts of preparation, you know, sort of plotting strategies on whiteboards, talking to endless people who've met Trump or have knowledge of Trump.

8:19But bottom line, you know, one of his closest officials, you know, sort of put it this way to me, you know, you can do all the preparation in the world. But in the end of the day, the American President Trump could just take the conversation off in any old direction that they're not prepared for. I mean, there's a famous story. I don't know if you look at Angela Merkel in her recent biography, revealed that she got many of the world's or many of Germany's leading psychologists in a room to sort of help her understand Donald Trump before she saw him for the first time. During the first Trump presidency, that meeting was an absolute catastrophe despite the fact that she did all this preparation so inevitably Starmer was nervous so what looked like a really kind of interesting move then because it's something you and I were talking about on the podcast before was that use of the letter from the king starting with that and having that as a kind of opening move was basically what you said on the show you said you know like are we going to see them use their own family and that's exactly what it did and it worked didn't it?

9:28It felt like that was actually, even though it felt so cringe watching it, it worked. It got him unsigned. It massively worked. Yeah, I mean, I'd heard a couple of days before that the King had been persuaded to write this letter of invitation, and it was written in the most flattering terms. It contained a phrase that was absolute music to Donald Trump's which is that this invitation to do a second state visit was unprecedented. No American president had ever been asked twice on a state visit. And of course, you know, Donald Trump's whole self-idea is that he is special and different from anybody else, probably in the history of the universe, ever been born is what he thinks.

10:18So to be told that no other president has been invited twice, well, for him, what could be the greater confirmation of his own extraordinary specialness in his own view. And the other thing, which is just, I don't know, it is interesting. And I think most people know that although I'm not sort of an anti-monarchist, I'm not exactly a royalist. I mean, I've spent quite a lot of my life sort of questioning the point of the royal family. But I have to say, on this occasion, you know, given the importance of the relationship between Britain and America, I did think, oh, well, now I sort of understand why we pay them all this, pay the royal family all this money.

10:59Because, you know, when you've got somebody like Donald Trump, who literally worships the royal family, to see the goodwill that was created by that letter, that was astonishing. Yeah. And it was then really interesting when Kia did his bit in the presser. So Trump spoke for about 10 minutes before Star was it. But then one of the first things Kia Star was said was about roots in Scotland, obviously, but also a close bond with King Charles. and you could just sit and you just like does Trump not realize he's being totally played there that's just fascinating me that I thought because you know I'm similar to you I think in that I've always questioned why we have the royal family and I just thought wow that is hilarious that we've just been able to use the game I'll do us a letter go on Charles do us a letter make him feel good and then there's this whole unprecedented no one's ever been a second time it it was really smart do you think then because of that obviously we heard talk of deals there's you know we're gonna get a deal we're hoping there's gonna be this deal reach between the uk and the us trump talks about it being a deal done quickly and hopefully that means we avoid tariffs which again he implied what what are your thoughts on what what's going to come from this in terms of a deal and when we're talking about speed what are we talking when they say quickly um so look let's let's let's just actually just focus on one one point to start with if for argument's sake some really punitive tariffs are imposed by trump on the european Union and Trump said some very hostile, made some very hostile remarks in the White House yesterday when he was with Starmer about the European Union.

12:56As I say, if he imposes punitive tariffs on the European Union, but chooses not to on the UK, that's immensely valuable to the UK. And, you know, it's getting back to how much we pay for the royal family, If some of that is to do with just the goodwill created by King Charles, then some would say maybe he's worth every penny we provide of subsidy. I mean, I think it's important, though, to be hardheaded about the kind of things that Donald Trump said about trade deals. It's quite clear to me, talking to British officials and ministers, we are not talking about a comprehensive FTA, a comprehensive free trade deal.

13:39deal. That is not on the agenda. What is on the agenda is specific deals for sectors of importance to us. Now, Peter Mandelson, who is the new British ambassador in Washington who I ran into, went over there. I mean, he has been working very hard on something that looks to me to be potentially very significant, which is a sort of compact and agreement between the high-tech businesses and the high-tech research institutes in the UK and those in the US. And we've talked a lot about the importance of accelerating the growth of our high-tech businesses, whether they're in, you know, digital, artificial intelligence, life sciences, and potentially this kind of cooperation with the US could be incredibly valuable.

14:42I mean, there is still this missing link, which, you know, worries both you and me, which is that when our high-tech businesses get to a certain size and they can't raise the money here, they all go to America. And I hope that Rachel Reeves in looking at this kind of tech partnership that actually the US president semi-endorsed yesterday, that she also recognizes, therefore, that the urgency of creating a financial ecosystem in the UK, which allows these companies to expand without having to sell out to the Americans or indeed the Japanese, that she'll get a move on and, you know, actually help provide the boost to the institutions that can support those British businesses.

15:31But that in itself, I think, could be potentially very valuable. And then they are just looking, as I say, at a whole range of other sectors, defence being another obvious example, partly because, you know, the government has recently announced this massive, which we may come back to in a minute, this massive increase in funding for defence. But again, that could be another area of closer cooperation between the UK and the US. But again, just a word of caution. Although, you know, the American president volunteered that he wanted trade deals with the UK, for me, the most important, in a sense, thing that I took away from that was it slightly signaled that when it comes to tariffs, if he can find a way not to impose them on the UK, he won't.

16:20But I well remember after 2016, when he first became president, you know, whether it was Theresa May, whether it was Boris Johnson as successor, the number of times I heard them big up the prospect after we left the European Union of great new trade deals with the US, and none of them materialized under Trump. And then, you know, they all just disappeared, even as ideas when Biden was there. I think we have to recognize that actually, this is a country, the US, which puts its interests first, pretty much whoever's in the White House. And that means that these trade deals are incredibly hard to negotiate, because in the end, they'll drive a very hard bargain and you know a trade deal is all very well so long as it's of mutual benefit it's not much use of a trade deal for the uk if in the end all the benefit goes to the us yeah so even though like starma said you know this is that they're going to start working on this economic deal with advanced technology at its core we don't know yet any of what it's going to go like when the teams meet together to actually thrash this out because you know all we kept hearing from Trump was, our teams are going to be doing a lot of work together, but they might completely disagree the entire time about what we have to forego in order to get, to not have a tariff imposed on us or, you know, what we have to give away.

17:50And I remember back when we were first talking about tariffs with the States, it was all about, are we going to have to have chlorinated chicken here? And everyone was kind of panicking about that. So... And to be clear, Steph, the chlorinated chicken threat has not gone away. And the British government's position is not changed. They don't want chlorinated chicken. So, you know, the notion that somehow any of these deals are going to be easy to negotiate is, you know, for the birds or for the chlorinated chicken. We've talked about how King Charles, the letter from him was used and worked very well in terms of, you know, getting Trump on side from the start.

18:27The other thing which you just mentioned earlier was about this increase in defence spending. So we heard Trump talking about how four to five percent of GDP should be spent on defense spending. He congratulated our prime minister for the increase that he announced. That must have been pre-prepared as well. That must have been like Trump's obsessed with defense spending. Have we just done that to impress him again, to make him, to make us look serious? Because I mean, the cost of it, you know, we're going to come on to some of the kind of other elements of it in terms of cutting in here, the fact that Annalise Dodds has now quit because of it.

19:06But it's the thinking there, purely, we're going to put up defence spending to get the Americans on side. It was accelerated, the decision, because the meeting with Trump was looming. Look, it's been very clear ever since Putin invaded Ukraine three years ago that the global environment had become much more dangerous and that our defence spending was inadequate. and not only inadequate, but our defense resources weren't fit for a modern world. If we're at risk from, for example, cyber attacks, big, big issues around whether we've got the right kind of cyber defenses. So there's been enormous pressure from the military for more resources now for two or three years.

19:53Starmer knows this going into the general election, but he also has other priorities in terms of where he wants to spend money. And he knows that there's no money in the kitty. And so going into the election, he commits to increasing defence spending from the current 2.3 % of our national income to 2.5%, but won't put a date on when that will happen. Now, two weeks ago, or just over two weeks ago, he had a meeting with the chief of the defence staff who says to him, you know, this is now becoming a crisis, the lack of resource. Our defence capabilities are just not credible now to our enemies.

20:44and what Keir Starmer does at that point is he's the middle of February he brings one other senior minister into his confidence that is Rachel Reeves the chancellor talks to nobody else and he says to the chancellor look it's now absolutely clear to me the urgency of increasing defence spending. And by the way, I've got this meeting, we think, coming up with the President of the United States, Donald Trump, who's desperate for us and all of Europe to show that defence spending is going up so that we're taking in Europe more responsibility for our security. If I were to increase defence spending a few weeks after that meeting, we, I, would look weak, would look as though we're just responding to pressure from Trump in a rather weak way.

21:41Far better to find a way to pay for it before I see Trump. So in that sense, Trump was massively responsible for the timing of the announcement of the increase in defense spending. But, you know, my own assessment is that this would have happened within, you know, a window of, you know, a couple of months around now. But, you know, we should not understate the massive influence of Donald Trump, therefore, on this decision. And a decision that, you know, is very controversial because what they've done is they have sort of reduced our soft power in order to increase our hard power. And what I mean, you know, what I mean by that is they have significantly, by more than 40%, cut spending on overseas aid.

22:46that is the help we give to poorer nations and that's a way of sort of getting those poorer nations on side it's soft power in order to fund arms, guns, soldiers which is a version of hard power and there are many people who would agree that we need to increase our hard power but are very doubtful that you should fund that by reducing, as I say, soft power by aid to some of the most vulnerable people in the world. Obviously, off the back of that, Annalise Dodds, who was the International Development Minister, has quit. She's written a pretty powerful letter, hasn't she, to the Prime Minister on this, just about the fact that, as you describe, you're taking away money from a really important part of providing international aid, this overseas development assistance, and that's taking the entire burden, she's saying, in this, which means there's going to be a lot of people across the world who will suffer more as a result of it.

23:55And that in turn makes you question, is that not going to put more pressure on us in terms of our defence? Alison and I were talking about this. You can't take that. It's the wrong place it feels to take it from. Yeah, I mean, there are all sorts of ways in which you can argue that given that Keir Starmer wants to make the UK both more secure and more prosperous, cutting aid is the last thing he should be doing. We live in a world where there are very large numbers of people who mistrust the UK, a lot of it to do with our colonial history, but being seen to invest in projects that make them less poor, more secure, more able to be self-sufficient is a way of, in a sense, turning them into friends of the UK.

24:54If also those investments make their countries more stable and secure, then there is less likely to be the kind of crises in those countries that leads to the waves of immigration to these shores that are so politically difficult for the government. So there are all sorts of ways in which providing this aid makes this country both more influential globally and more secure. It was sort of, you know, and as I say, the immigration issue seems to me to be a particularly important aspect of all of this. So, as I said earlier, how limited were Keir Starmer's conversations about his plans to increase defence spending and to cut aid spending until literally last weekend?

25:52Now, when I was in Washington, I interviewed the Foreign Secretary, David Lammy, for the ITV Peston show. And exactly like Annalise Dodds, who has been a great supporter of overseas aid, David Lammy has devoted much of his career to talking about the importance of overseas aid. Indeed, only two or three weeks ago, he said that cutting overseas aid would be harmful to the UK. And also, and this is really important, I don't know if you did talk about this with Alistair, But the nation that currently invests most in developing countries is China. And China has increased its sway across the world absolutely massive because of these massive, these very significant investments.

26:43It's made throughout Africa, throughout South America, throughout Asia. And one of the things that David Lammy pointed out is that given that in many ways China is a competitor and many would say a hostile competitor, an increasingly dangerous competitor, simply vacating the international investment and aid field and leaving it all to China, again, looks like a pretty stupid decision. It's one of the reasons why, of course, people think that what America has done in apparently effectively closing down its equivalent USAID is equally stupid for America. Anyway, I thought there must have been a pretty good chance that given that David Lammy was kept out of the loop, the Foreign Secretary was supposed to be one of the great offices of state, kept totally out of the loop about this decision until it had been made.

27:40And, you know, so I said to him, look, you were only told a couple of days ago about this. Surely when you were told that so much of your resource was being taken away, surely you must have thought about resigning. Just as we now know, Annalisa Dodd not only did think about resigning, but she's just right. Anyway, he vehemently denied that was ever on his mind. And I've got to take him at his word. but I just think that's really odd because if you go back just a few weeks ago he devoted a whole speech to the importance of British soft power in elaborating his theory of how you conduct diplomacy in the modern age called progressive realism and he's now become a convert to the idea that in this kind of world it's all about hard power and very little about soft power It's so disappointing that, isn't it?

28:37It's quite hard to be persuaded by it don't you think? It then just makes you think they don't really mean what they say. And even though they can do this very convincing, passionate speech and support for something, if it means that the power that be then changes their mind on it and they say, oh yeah, no, I've changed my mind too. It just makes them look fickle and it makes them look like they don't really have any passion at all and they're only doing the job for the power. I just want to touch on one final aspect of the internal contradiction here, as I said before moving on. As I say, when you cut back aid, there is a risk, a greater risk of instability in vulnerable countries, which leads to waves of migration and then, you know, more asylum seekers turning up in your country.

29:24One of the most striking things, I don't know how many people are aware of this, but right now, something like a third of the overseas aid budget is allocated to housing asylum seekers in the UK. It is not, you know, it is not going to these vulnerable countries. It has been repurposed to house asylum seekers here. Now, one of the things David Lummi and others have said is if we can only get those asylum seekers numbers down, that will free up a bit of money to go into investment overseas and to grants overseas. but you know truthfully in the short term if you're helping these vulnerable places less there will actually be more asylum seekers coming here so what they're actually doing is self-defeating listen let's pause there for a minute and have a quick break but when we come back i do want to ask you about your question to trump in that presser which was obviously watched by millions of people across the world and i want to find out how that went so let's have a quick break.

30:30See you in a minute. Welcome back to The Rest is Money with me, Steph McGovern. And with me, Robert Perston. There's another element of this meeting that I wanted to ask you about, which is in relation to your question to Trump. Because you see, another of Starmer's goals from this trip to America was to try and get this kind of US backstop for European peacekeepers in Ukraine. Again, Alison, I talked about this whole minerals deal and the fact that Trump had called Zelensky a dictator and accused him of starting the war. And you put this to Trump, didn't you? You asked him, are you going to apologize for calling Zelensky a dictator?

31:13How did that go down? You got quite a lot of press in America for it, didn't you? Yeah, people sort of noticed my question. I mean, I just decided that there were two things I was interested in. One was asking Starmer whether it was absolutely critical to him, to his decision to put the boots of British soldiers on the ground in Ukraine, which he said he will do if there is a peace deal to maintain the peace. But he has also said that he needs a security guarantee from America so that if Putin were to breach the peace, it wouldn't just be our troops trying to see off Russian forces. We would have the protection of American planes, American missiles, American warships.

32:10And I mean, in his answer, he said, look, this is all to be negotiated. What I asked President Trump, because this question was asked on the eve of Zelensky's historic trip to Washington to sign this minerals deal. And I said to him, look, this minerals deal that you forced Ukraine to do, it's potentially worth enormous sums of money to America. So will you now take the opportunity to apologize to Zelensky for calling him a dictator while simultaneously praising Putin, who is a dictator. And interestingly, I thought, if I'm honest with you, on the basis of his recent performance, that Trump would just say next.

32:56But actually, what was quite interesting is even though he didn't want to engage, he's not the kind of man who apologises for anything, but he didn't engage in whether or not he would apologise. And as I said, I think it's because, I mean, has anybody ever known him apologised for anything? But he did use really warm words, I thought, for the first time about the bravery of the Ukrainians. And I thought that was quite an important shift. Which is interesting you say that, Robert, because before that point, before we got to the questions and answers, he had really been careful, I felt, when he was talking to not showing allegiance to either side in terms of Ukraine and Russians.

33:37Like he kept talking about so many young people, so many Russians, so many Ukrainians have been really hit by this war, this terrible, terrible war. And he never at any point suggested that it was, you know, it was Russia's fault or anything. Whereas when Key was talking about it, he was very much saying, you know, the aggressor, Russia, blah, blah, blah. But until he got to your question then, which is really interesting, that he maybe let his guard down a bit there when he answered it. Or maybe he was just trying to make sure that the talks with Zelensky weren't going to be an absolute car crash.

34:10Yeah, there was that. And actually, he also said earlier in the day, which I thought was materially important about this whole issue of whether America would provide a security backstop, a security guarantee to British soldiers who may be in Ukraine, along with French soldiers. And what he said, and this seems to me to be logically correct, is once this deal with Zelensky is signed, and once they start digging up all these precious minerals and the rare earth and indeed there's also energy in this deal, at that point when America has such a material commercial interest in the stability of Ukraine, truthfully I can't imagine a world in which if Putin invaded again you wouldn't get a retaliation from Trump because the one thing we know about Trump is he doesn't want his assets in inverted commas taken away by anybody else and so I actually he said and I think this is this is actually one of the sort of truer things that he has expressed recently he said this minerals deal is the backstop.

35:31And I think there's quite a lot of weight to that argument because one shouldn't also underestimate how difficult it is for him on the basis of the election campaign that he fought to say now that he is going to commit potentially greater American military resources to Ukraine given that so much of his election campaign was about reducing America's military interventions overseas. But truthfully, if they own a big chunk of Ukraine, you know, inevitably, they're going to want to defend it. There's one other sort of point about all of this, though, because we've sort of focused quite a lot on the negative.