August 1, 2016 By FTI Consulting
It is hard to ignore the flurry of diplomatic activity emanating from the United States following the Brexit decision. Even by his own well-traveled standards (Secretary Kerry was already expected to exceed former Secretary of State Condoleezza Rice’s travel record before his tenure ends) U.S. Secretary of State John Kerry has racked up noticeable, additional frequent flyer miles and engaged in heightened shuttle diplomacy in an effort to soothe the world’s throbbing post-Brexit hangover.
All of this begs the question – why? What are the interests the United States is working to protect, what is the U.S. strategy, and what more can we expect to see over the remaining months of this U.S. Administration? What is the end-game for the United States and how are they trying to achieve it?
What did senior American policy-makers make of Brexit? Diplomacy often demands restraint on what can be said publicly, but suffice to say many in the United States felt that Brexit happened in part because Prime Minister Cameron overestimated his ability to control events and get his way. Was the United States surprised by the outcome? No. The United States looked at the results with some measure of resignation and even humility: from government shut-downs, improbable Tea Party surprise victories in the U.S. Congress, and the rise of Donald Trump, all the way to Asia and the elections in the Philippines, the U.S. understands that this is an unpredictable and volatile time in the world where democratic institutions are regularly producing strange results. This is why the U.S. Administration avoids putting most issues to a vote in Congress whenever possible. While not entirely surprised, American policymakers were deeply troubled by the outcome of the U.K. referendum and even more concerned about its potential consequences for the United States and all of Europe economically and politically.
The stakes were enormous for the United States on a range of issues and the U.S. needed to engage quickly to help manage the aftermath and mitigate the fall-out. Simply put, the United States needs the United Kingdom to recover from this moment – quickly. The U.K. played an outsized role in Europe’s economy and security long before the concept of a European Union was even a glint in Churchillian eyes. This role won’t change – and the United States doesn’t want it to. The U.S. believes that personal pique and pride in shaming the UK and new Prime Minister May should never become anyone’s unintentional gift to those like President Putin most poised to benefit from a perception that the U.K. has lost its influence.
The United States sees a number of interrelated interests at stake because of Brexit. Specifically, the United States aims to:
Memories of the Great Recession of 2007-2009 are fresh – as is a deep and pervasive awareness of the interconnectedness – particularly in the banking and financial sectors – of the American economy with the economy in the United Kingdom and across Europe. The most immediate goal for the United States was to help mitigate economic anxiety and create an atmosphere of normality wherever possible, to underscore that vital relationships remained intact.
The immediate aftermath of Brexit included rampant and fevered speculation about potential impacts in Scotland and Northern Ireland, where forces that have long favored breaking away from the United Kingdom might finally seize the moment of opportunity. The United States does not want to see the U.K. diminished in this way – because it would hurt U.K. prestige to lose Scotland, and because it would create political instability in Northern Ireland.
The United States believes in the importance of the European Union, both for the way it extends the reach and influence of Europe, allowing Europe to “punch above its weight,” but also because its perceived failure would empower autocrats or authoritarians across the world.
Given the range of issues in which the U.S. and the U.K. are so closely aligned – from Syria, Libya, ISIL, the Middle East peace process, Iran, and Ukraine – the United States counts on a strong United Kingdom politically.
On issues like Iran and Ukraine, the United States has long counted on the United Kingdom to be an influential voice for strength within Europe – particularly on issues where other European countries prefer a softer approach, such as sanctions on Russia due to its actions towards Ukraine. The dissolution of European unity on such issues would only empower those like President Putin of Russia who would benefit from the situation to avoid accountability on Ukraine; or Iran, where hardliners might begin to test the boundaries of compliance on the nuclear accord; or President Erdogan of Turkey who would be happy to see a distracted and disorganized Europe at a time when, in the wake of a failed coup, is taking steps to limit internal opposition that are incompatible with E.U. principles.
The United States will continue to privately express to the E.U. that if the instinct for vengeance drives decisions, E.U. countries will end up damaging themselves – including their economies – in the process because regardless of whether the U.K. is in the European Union, no one can opt out of an interconnected world. The United States will stress privately that it is in no one’s interests to let those like President Putin be the real beneficiaries of Brexit – European unity is bigger than the decision of one country to leave the E.U.
The State Department scrambled the schedule and sent Secretary Kerry — America’s top diplomat –to London and Brussels right away. He has since returned to London to meet new Foreign Secretary Boris Johnson and Prime Minister Theresa May. Despite the difficult history of the United States with Foreign Secretary Johnson, Kerry was quick to stress that they are building a working relationship not unlike those he had with Foreign Secretaries Hague and Hammond. Expect the United States to ensure that Kerry and Johnson remain as coordinated on issues as possible, but perhaps more importantly to ensure that new Chancellor of the Exchequer Phillip Hammond and U.S. Treasury Secretary Jack Lew also remain in sync. Hammond is a particularly comfortable and reassuring interlocutor for the United States while the Johnson relationship is likely to require challenging handholding.
The United States will aim to be publicly supportive of the United Kingdom and stress the importance both of the bilateral relationship and the importance of a strong Europe, but the United States understands that it must never appear to be interfering in an internal E.U. process or prodding the U.K. given the hangover in some quarters from the portrayal of Prime Minister Tony Blair as “Bush’s poodle.” Expect the U.S. to take a “show don’t tell” approach to public diplomacy in this arena – letting actions speak for themselves rather than constant commentary about what the U.K. or the E.U. should do.
The U.S. will in some ways act as a behind the scenes mediator between a husband and wife in hopes of navigating a bloodless, amicable divorce: trying to help create a glide-path for a smooth, deliberate process. American policymakers know “process” is – after all – the relevant word: they want to see the U.K. and the E.U. do what David Cameron failed to do: planning and process are destiny so it is critical to get the process right. The biggest divide right now is over how fast all this must happen. The situation is an unusual one – in the U.K., Parliament is sovereign, whereas the referendum is advisory and non-binding; however, it would be very difficult for the U.K. government to ignore the outcome and Prime Minister May has made it clear her Government will implement it. Much of Europe’s initial proclivity to rush into negotiations, in a (likely misguided) quest for certainty, could create contagion and potentially trigger further referenda in the EU. The U.S. believes it is better for everyone to take a breath and do this right. There are two negotiations ahead (at least) not one: firstly, the U.K. must negotiate its exit from the E.U., starting when it triggers the official mechanism, the exact date of which is yet to be confirmed; secondly, there will be a major, and likely more consequential negotiation over what the U.K.’s future relationship will be with the E.U. and its members, and how to maintain, not sever, connectivity. With the U.S. having perceived that mistakes were made prior to the referendum, the U.S. believes we must all better collectively manage the aftermath.
The United States began the second term of the Obama Administration with ambitions of completing the Transatlantic Trade and Investment Partnership between the U.S. and the E.U. Given the already difficult negotiations – based on many parochial issues and a growing opposition in Congress to trade agreements — the United States has revised and downsized hopes of getting the agreement completed let alone through Congress during the remaining months of the Administration. Still, the Administration will work quietly to at least keep the notion of TTIP on “life support” so that the next U.S. Administration might be well-positioned to take advantage of a better political atmosphere should one develop. The current goal is to avoid a run of prognosticators declaring TTIP dead for the long term. If the hopes of TTIP can be kept alive for the second term of the next U.S. Administration, at this point many would consider that a victory.
We expect the United States to avoid any real public discussion about the prospect of a bi-lateral U.S.-U.K. trade agreement to the next Administration for four reasons:
Brexit, as well as the recent horrific extremist attacks in Paris, Brussels, Nice, and Germany have underscored the fragility of Europe. The United States can ill afford a “run” on other frayed European institutions and governments. American policymakers see this as a time to reassure NATO (hence the speedy rejoinders from Washington to Candidate Trump’s comments about leaving NATO) and stand by responsible leaders in Europe like Chancellor Merkel – particularly all those standing up to the continent’s nagging ultranationalist and anti-immigrant historic political forces looking to capitalize on moments of global uncertainty.
Ever mindful that the United States must respect that Europe will make its own decisions, expect the United States – certainly through the conclusion of an Obama Administration and into a prospective Clinton Administration – to remain especially diplomatically active trying to help its closest and most critical friends in the E.U. and the U.K. achieve as amicable a divorce as possible – and hoping that with the passage of time the final arrangements will resemble – as closely as possible – the status quo ante. The United States will also work to ensure that mutual interests outside formal E.U. prerogatives are protected – in Syria, Libya, Ukraine, and elsewhere. No one can predict how a Trump Administration might alter this course, but certainly public indications suggest he would be more than comfortable with an abrupt Brexit – even if it empowered Russia and regional players aligned against America’s traditional interests.