A Government Adrift: Labour’s Strategic Myopia and the Erosion of Britain’s Overseas Territories

Whether in the Mediterranean, the Indian Ocean, or the South Atlantic, Sir Keir Starmer steers British foreign policy with a compass set to symbolism rather than strategic necessity. Each move concerning the British Overseas Territories appears motivated more by appeasement than by principle. The consequences of this approach are already visible.

Gibraltar: The Rock’s Unsteady Ground

Downing Street’s enthusiasm for a reset with the EU seems to have a hidden cost: Gibraltar. Long a symbol of British sovereignty and strategic permanence, the Rock now finds itself at the center of a quiet diplomatic recalibration.

This shift is not merely about mending ties with Brussels. It signals a deeper reorientation in how Britain treats its Overseas Territories—as bargaining chips rather than vital assets.

The dispute over Gibraltar dates back to the 1713 Treaty of Utrecht, which saw Spain cede the territory to Britain. Successive Spanish governments have sought its return, while the UK has defended the principle of self-determination. The people of Gibraltar have, through repeated referenda, confirmed their wish to remain British. Since Brexit, Gibraltar has become an external EU frontier. The European Union has consistently sided with Spain.

A draft UK-EU agreement on Gibraltar has reportedly been near final since late 2023, but negotiations stalled over issues of sovereignty. Spain insists its Guardia Civil should conduct border checks, while the U.K. prefers Frontex to act as a neutral authority. Talks have also touched on regulatory alignment, customs procedures, and tax matters, all central to Gibraltar’s self-governance.

Following the “Reset Agreement,” concessions appear inevitable. “Gibraltar negotiations are the next priority,” British Foreign Secretary David Lammy told El País. The new approach is markedly more accommodating. Spain’s latest demands include relocating entry checks inside Gibraltar’s port and airport. Madrid also insists on removing the land fence (the “Verja”) and placing Schengen border infrastructure under Spanish control.

Gibraltar’s Chief Minister, Fabian Picardo, has openly rejected Spain’s terms, branding them unacceptable. His stance underscores the divergence between the Rock’s clear commitment to British sovereignty and London’s ambiguous negotiation strategy. But Picardo is left fending off encroachments while Westminster projects ambiguity.

Labour’s posture is appeasing to the point of strategic negligence. Gibraltar’s strategic location has long made it a quiet asset for American power projection. Its U.K. status ensures reliable U.S. access to a vital maritime chokepoint and hosts key SIGINT infrastructure. It also provides logistical and refueling support to U.S. naval operations in the Mediterranean. Spanish influence could introduce EU political constraints, especially under Commissions less aligned with U.S. priorities. Politically, it could embolden other territorial revisionists, undermining U.S. strategic deterrence globally.

Chagos Islands: A Strategic Withdraw 

The pattern seen in Gibraltar finds a starker precedent in the Indian Ocean. The Starmer government’s handling of the Chagos Archipelago shows the same willingness to treat sovereignty not as a strategic asset to defend, but as a diplomatic token to trade away.

In October 2024, the U.K. reached an agreement to cede sovereignty of the Chagos Islands to Mauritius while retaining a 99-year lease on Diego Garcia, the strategic U.S.-U.K. military base at the heart of the archipelago. Though the lease preserves military operations in the short term, the broader arrangement is far from reassuring. The U.K. has reportedly committed to an annual payment of £101 million, amounting to over £10 billion over the term of the lease, as part of the deal. There are also non-monetary incentives, including maritime cooperation and fisheries access, all designed to sweeten what effectively constitutes a transactional forfeiture of British territory.

In effect, Britain pays to give away sovereign land—a financial outlay not to build capacity or extend influence, but to exit responsibility. It is not a strategic repositioning; it is strategic liquidation. And the terms reinforce the perception that sovereignty, once treated as indivisible, is now subject to means-testing.

The Chagos handover to Mauritius runs counter to U.S. strategic interests, creating complications that extend far beyond Britain’s withdrawal. The move threatens to entangle the U.S. in the African Nuclear-Weapon-Free Zone, as Mauritius is a signatory of the Treaty of Pelindaba, potentially impinging on basing rights at Diego Garcia, a critical Indo-Pacific hub, and signals to adversaries that even vital security assets can be compromised to appease post-colonial sentiment.

This is not a one-off misstep, however. It reflects a deeper logic that now seems to drive Labour’s foreign policy. From the Mediterranean to the Indian Ocean, the pattern is consistent: symbols of British sovereignty are being softened, diluted, or traded outright, not for strategic advantage but for short-term diplomatic gains. It is the behaviour of a government that confuses placation with statecraft and seems determined to leave behind a Britain that commands less, holds less, and stands for less.

Falkland Islands: The Southern Sentinel

In the South Atlantic, the Falkland Islands represent another test. They are Britain’s gateway to the Antarctic, a region of growing geopolitical interest due to resource competition and newly opening shipping routes. But there is growing unease in Stanley.​

While ministers have publicly affirmed their commitment to the Falklanders’ right to self-determination, budget signals suggest reduced long-term commitment to overseas defence posture, leading local officials to express concerns about the U.K.’s dedication to their security. For instance, the Falkland Islands 2024/25 budget, totalling £733.1m, focuses on domestic spending, such as health, education, environmental protection, and infrastructure, without explicit allocations for enhancing defence capabilities. Notably, a £120 million port project, initially awarded to Harland & Wolff, was halted in August 2024, pushing the 163-year-old Belfast’s shipbuilding and fabrication company into bankruptcy.

Any perception of wavering resolve could embolden Argentina and weaken the U.K.’s regional standing. The Islanders remember 1982. They have not forgotten the price of strategic ambivalence. Nor should the Labour government.

Washington is on high alert mode. The Falklands provide the U.S. with crucial access for signals intelligence and long-range maritime patrols across the South Atlantic. They also offer logistical support for contingency operations, reinforcing U.S. power projection in a region vulnerable to Chinese and Russian encroachment.

Navigation Without a Compass

From Gibraltar to Chagos to the Falklands, Labour’s foreign policy is marked by incoherence and a willingness to surrender leverage for ephemeral diplomatic goodwill. This is not realism. It is policy adrift.

In an increasingly competitive world, where geopolitical fault lines are hardening, Britain cannot afford to treat its strategic assets as bargaining counters. Symbolism may win applause in Brussels or Port Louis. It does not secure sea lanes, project deterrence, nor it protects allies.

Sir Keir Starmer’s government claims to be restoring Britain’s credibility abroad. If current policy continues, the only thing it will restore is the illusion of influence—while forfeiting the reality.

Bepi Pezzulli is a Solicitor of the Senior Courts of England and Wales specialising in governance and a Councillor of the Great British PAC. He tweets at @bepipezzulli

Image from X.

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