Time and again Britain has been badly misjudged. Napoleon derided it as a “nation of shopkeepers.” Adolf Hitler was sure it would knuckle under after Dunkirk. The Argentines were sure it would readily cede the Falkland Islands. And Saddam Hussein never gave it a thought. All of them lost their wars with Britain.

The British defense review, announced this week, has given critics an opportunity to misjudge the U.K. again, and many have made the most of it. But even if the cuts are carried out in full, Britain will still be a major military power. The review isn’t flawless, but it represents continuity, not change.

The U.K.’s oversized place in world history makes it easy to forget how small an island the nation of 61 million actually is. It is home to less than 1 percent of the global population and accounts for barely 3 percent of the world’s output. Yet the review will leave Britain with the world’s fourth-largest military budget, behind only the U.S., China and Russia. That is the definition of a nation punching above its weight.

Britain today faces the same problem it has had for hundreds of years: It has worldwide interests that it can’t defend on its own. Any effort to do so would bankrupt the nation. As always, the country must balance its need to maintain fiscal stability -- the true source of its historic power -- with its need to defend its interests.

Coalition of Willing

The review emphasizes that Britain in the future expects to fight as part of a coalition. That is hardly new. Contrary to popular myth, Britain has rarely stood alone against its enemies. It has normally fought as part of a coalition. The Battle of Britain was a glorious victory, but fighting without allies, as Winston Churchill recognized, was profoundly undesirable. The important question is not whether Britain needs allies. It is whether Britain is preparing in the right way for the right kinds of war.

The defense review is the work of the Conservative-Liberal Democrat coalition, but it was shaped by the grim realities they inherited from 13 years of Labour government. Tony Blair’s foreign policy was muscular; his defense budgets were anything but. After announcing in 1998, in the last defense review, that Britain had taken its post-Cold War “peace dividend,” Labour took another and spent it on social services.

Second Greece

The result was that, by 2010, Britain was close to becoming a second Greece. This failure of fiscal discipline, a common feature of postwar Labour governments, made it essential for the incoming administration to scrutinize public spending. What was true when Churchill was prime minister remains true today: A bankrupt Britain can’t be a major military power.

We have now seen the results of that scrutiny, in the form of Chancellor George Osborne’s cuts. The government’s failure to ring-fence defense was a serious error, and Britain will be lucky to escape its consequences. But given that the cuts had to come, Defense Secretary Liam Fox has done well to protect the forces from the worst of it. Compared with other departments, whose budgets will drop by almost 20 percent, defense’s 8 percent drop is modest.

The critics are focusing their fire on the fate of Britain’s aircraft carriers, which are scheduled for completion in 2014 and 2016, only for one of them to be sold off. The other will have no planes until 2020 until it is equipped with the Anglo-American Joint Strike Fighter. Coupled with the scrapping of the Ark Royal, that will leave Britain without a carrier- borne strike force for almost a decade.

Boots on Ground

This decision, too, is unwise. But it points to the broader problems that have bedeviled British defense planning for decades. Procuring military equipment is an expensive and long- run business, and the U.K. has repeatedly locked itself into contracts for weapons that escalated in price and fell behind on delivery dates. The result is that it has increasingly looked to the U.S. to take care of buying the heavy equipment, while Britain focuses on putting boots on the ground. The latest review only continues that trend.

In a world of counter-insurgency wars, combat-ready troops are about the most valuable thing to have. Britain, like the U.S., has had to relearn a lot of painful lessons about how to fight insurgencies, and the learning process isn’t over. But if Britain and the U.S., which is proceeding under the same assumption, are right that Afghanistan is the future of war, the direction Britain has moved makes sense.

The problem is that Britain and the U.S. are probably wrong. Efforts to predict the future of war are necessary, but they are also usually incorrect. The problem with the defense review isn’t, fundamentally, with what it does. It is with what it does not do: make the case for armed forces that can deter enemies more technologically advanced than the Taliban. That would be costly. But both Britain and America need to remember the cheapest war of all is the one you don’t have to fight.

Theodore Bromund is a senior research fellow at the Heritage Foundation’s Margaret Thatcher Center for Freedom.