Analysis 07-01-2016


BREXIT – The American Ramifications

Although experts warned that the major fallout of the Brexit vote would be economic, it appears that the political waters have been roiled more. While British stock indexes recovered their losses within days, the political fallout is growing worse and there is every indication that the current European Union (EU) will spin apart.

Several other nations have indicated that they wish to hold referendums on remaining in the EU and EU leaders are threatening any nation that wants to leave – which could only hasten the exodus. Some of the issues that are of concern to many nations are Turkish membership – which adds to immigration concerns, a unified EU military, and a stronger EU state that would overwhelm the sovereignty of the current member nations.

Needless to say, the political damage in the UK is dramatic. The British Prime Minister has announced that he will resign, the leader of the Conservative Party has resigned, the leader of the Labor Party has lost a vote of “No Confidence” with his MPs, and Scotland has announced that it wants to vote for independence again.

It is quite likely that the United Kingdom of the past three centuries is about to fall apart.

However, the impact isn’t just in Great Britain or Europe. There will be an impact on America in terms of economy, foreign relations, national security, and the upcoming US election.

National Security

As Russia continues to make assertive military moves, the future of NATO is an obvious issue. According to a new foreign policy document to be handed to EU leaders next week, a “credible European defense is also essential to preserve good relations with the US.”

EU foreign policy chief Federica Mogherini’s Global Strategy document states that “as Europeans we must take greater responsibility for our security.”

The white paper adds, “While NATO exists to defend its members — most of which are European — from external attack, Europeans must be better equipped, trained and organized to contribute decisively to such collective efforts, as well as to act autonomously if and when necessary.”

“A more credible European defense is essential also for the sake of a healthy transatlantic partnership with the United States.”

The creation of an EU military was a critical issue in the Brexit vote and many voters were skeptical of a multinational army under EU command.

Obviously, if an EU army is created it will change the political balance within NATO, which is currently an extension of American policy as it is the largest force in the organization.

An EU military would counterbalance the US military in NATO and the existence of such a military would also mean that Europe could act outside NATO and without US permission or input.

Economic Impact

There is also the economic impact, although much of the financial impact of the Brexit vote has subsided this week.

First is the need to renegotiate the UK’s trade arrangements with over 50 countries which were established while the UK was part of the EU (with the UK having signed them as part of the EU, they no longer apply once they exit). Second, the UK’s membership of the World Trade Organization (WTO) has also been on the basis of its membership of the EU. The head of the WTO has stated that it is likely the UK will have to renegotiate the terms of its WTO membership, as at least some members will not be happy to simply allow UK membership to continue. Third, Brexit supporters argued that the UK would be able to strike its own trade deals with countries like the US, China and India upon leaving the EU, so there may be the beginnings of some effort in that direction.

All of the above issues are likely to prove intricate and time consuming. The simultaneous loss or scaling back of such a large number of trading relationships upon EU exit is likely to be a blow to UK exporters, meaning the need to get a successor deal is more urgent for the UK than for the EU.

However, not all is bad. The UK has many trade treaties signed before the EU that are still in force (In fact, the UK’s “Most Favored Nation” trade agreement with the US was instituted in the Treaty of London of 1794). It also allows it to move its trade towards some nations that have been rebuffed by the EU like India which has tried to ink a trade agreement with the EU for decades.

This may also allow more trade outside Europe towards Commonwealth and English speaking nations. This will also be helped by a cheaper Pound, which will make British exports more attractive.

In the end, the US may find itself importing more British goods.

Foreign Policy

The foreign policy implications are much more complex. The first impact will be that the Obama Administration will have to work with a new British Prime Minister – most likely one who favored Brexit. Since Obama came out strongly for remaining in the EU, that means relations with the new Prime Minister may not be cordial.

There is also the issue of trade. While Obama threatened to keep the UK at the back of the line for trade negotiations, the British Prime Minister may want to remind him of previous – and still valid – trade treaties.

However, Anglo-American relations can expect to remain close. There may even be a warming of the “Special Relationship” with a new president as Britain looks westward towards the US rather than Europe.

However, this close UK-US relationship may sour US relations with the rest of Europe as the rest of the EU takes a measure of revenge for Britain’s Brexit vote. In fact, the relations with German leader Merkel may cool as US-UK relations warm.

US relations with Europe may become more complex for the US. As EU influence wanes, relations with the various capitals of European nations will become more important. Dealing simply with the EU will not be as effective.

There is also the real chance that Europe may see a break up just as was seen in the 1989 – 1991 period as the Soviet Empire and the USSR broke up.

Scotland has indicated that they want another vote on Scottish independence and are already negotiating with the EU for special status. There is also talk that Northern Ireland may vote for union with Ireland.

However, there is a real danger with the EU talking to regions instead of nation states.

EU recognition of Scotland before it has broken its relationship with the UK would encourage many separatist regions like Catalonia, Basque, etc. to seek the same treatment. The result could be a devolution of Spain into several independent countries, the end of Belgium, and the rise of separatist movements in over a dozen EU nations.

Although the US has favored more unification, not separation, it would have to step carefully in order not to be seen as a block to self determination. It would also have to be careful that any break up doesn’t’ lead to the type of ethnic warfare that was seen in the former Yugoslavia in the 1990s.

American Politics

Just as Margaret Thatcher presaged the beginning of the “Reagan Revolution” – Brexit may be an indication of a shift in American politics that will help Donald Trump.

One of the problems is that many in the leadership don’t understand the issue or how the British or Americans feel. They feel that British politicians mistakenly allowed the people of Britain to exercise their free will. In fact, Foreign Policy’s James Traub wrote, “It’s time for the elites to rise up against the ignorant masses.”

That’s not an attitude that will win elections.

Trump isn’t the only one who thinks that way. Senator and Democratic presidential candidate Bernie Sanders is arguing that “the global economy is not working for the majority of people in our country and the world.” Sanders, who hasn’t yet abandoned his presidential campaign, writes in a New York Times op-ed Wednesday that Republican Donald Trump “could benefit from the same forces” that led Britain to vote to leave the European Union. He says that any political advantage flowing to Trump from this market-moving vote “should sound an alarm for the Democratic Party.”

In the conventional narrative, Brexit is about immigration, escaping the EU’s bureaucracy, and class warfare. It may be about all of these, but beneath these surface issues lie a deeper dynamic: a recognition that the entire system is broken and a new arrangement of power, responsibility and risk is required.

There is every indication that what happened in the UK with Brexit is happening here in the US. Americans are upset with the status quo leadership that ignores their problems and constantly leaves them falling farther behind. They also feel the American system of governance is responsive only to the rich and powerful. A staggering two out of every three Americans believe America is on the wrong track.

One of the things that stunned the experts is the huge turnout that led to Brexit. The same thing happened in the US during the Republican primary season. An enormous number of people voted for the outsider candidate – Trump. The previous record was 10.8 million votes for George W. Bush in 2000 – Trump blew past that record with over 13 million primary votes.

Recent polling by independent polling firms – not ones hired by media outlets – indicates that Trump is drawing closer. A Quinnipiac poll released Wednesday show Clinton and Trump within the margin of error – Clinton ahead by 2 points. At the beginning of June, even before Bernie Sanders had all but exited the race, Hillary led 45/41. Today, that lead is down to 42/40.

Some of the results of the poll:

1. 52 – 40 percent (52/41 previously) that Trump would be better creating jobs

2. 50 – 45 percent (51/43) that Clinton would be better handling immigration;

3. 52 – 39 percent (49/41) that Trump would be more effective handling ISIS;

4. 51 – 42 percent (53/40) that Clinton would better respond to an international crisis;

5. 46 percent would trust Clinton more on sending U.S. troops overseas, while 44 percent would trust Trump more (no change);

6. 54 – 35 percent (55/33) would trust Clinton more to make the right decisions regarding nuclear weapons;

7. 46 – 43 percent (48/45) that Clinton would do a better job getting things done in Washington.

In addition, polls in critical battleground states indicate it is equally close (with the exception of Florida, where Clinton is ahead by about 7 points). These polls were done before the Benghazi committee released its results, which only raise more questions about Clinton’s involvement in the affair and her ability to be Commander-in-Chief.

The closeness of the race is interesting in that Clinton is spending millions in battleground states while the Trump has spent nothing. And, as every terrorist attack only draws more American voters closer to Trump, the attack in Turkey could push Trump a few points higher.



NATO Summit 2016: Why the Alliance Cannot Afford to Ignore Turkey
By Luke Coffey
Heritage Foundation
June 24, 2016

With a focus on Russia’s actions in the Baltic region and Eastern Europe, the July NATO summit in Warsaw, Poland, offers an opportunity for NATO to re-focus on another area of recent Russian saber rattling, along Turkey’s borders. NATO needs to agree to a strategy that ensures that its southeastern flank remains secure and recognizes the vital role that Turkey plays for the security of the Alliance, notwithstanding the many domestic political problems under President Recep Tayyip Erdogan. Turkey has been an important NATO member since the earliest days of the Cold War when it joined in 1952. During the Cold War it was one of only two countries (the other being Norway) that shared a land border with the Soviet Union and served as the southern anchor of Europe’s defense.

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Erdoğan should resign
By Michael Rubin
American Enterprise Institute
June 29, 2016

The job of any national leader is first and foremost to provide security for the citizens of his or her country. Yesterday’s devastating terrorist attack on Istanbul’s main airport makes clear that President Recep Tayyip Erdoğan is not up to the task. After all, he has dominated his country for more than a decade and while the terrorists ultimately shoulder blame for their actions, Turkey’s vulnerability is a direct result of both Erdoğan’s policies and general incompetence. Turkey faces three terrorist challenges: Islamic State (ISIS, ISIL, Daesh), Kurdish, and radical leftists. ISIS recognizes no national borders and yet Erdoğan allowed both his own sectarianism and his animus toward Kurds to lead him to support and supply not only groups like the Al Qaeda-affiliated Nusra Front but also ISIS itself. Turkish security forces turned a blind eye to tens of thousands of foreign fighters transiting the same airport ISIS attacked. Erdoğan should have known Turkey would suffer blowback. After all, Saudi Arabia, Pakistan, and Syria had all struck the same devil’s bargain with Islamist extremists: conduct your attacks outside our country and you will have safe haven.

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Iran’s Supreme Leader signals possible enhanced role for Iran’s Armed Forces General Staff
By Marie Donovan
American Enterprise Institute
June 30, 2016

For those who thought the Islamic Republic of Iran was ready to turn over a new leaf and otherwise stop roiling the waters of the greater Middle East, bad news this week: After 25 years of incumbency, Major General Hassan Firouzabadi, leader of the Armed Forces General Staff (AFGS) — the body that oversees both Iran’s Artesh (conventional forces) and the Islamic Revolutionary Guards Corps (IRGC) — was handed his walking papers and replaced with IRGC Major General Mohammad Bagheri. Far from a simple shake-up, the move by Supreme Leader Ali Khamenei may signal his intention to give the AFGS a more significant role in coordinating the armed forces’ increasing joint activities abroad in places like Syria.

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A Threat-Based Strategy for NATO’s Southern Flank
By Sinan Ülgen and Can Kasapoğlu
Carnegie Endowment
June 10, 2016

NATO’s Southern flank poses a set of unique challenges to the alliance, with complex and diverse threats from both state and nonstate actors. This environment calls for a policy response framework that reflects the heterogeneity of the landscape. Achieving this aim will require building on existing foundations, adjusting domestic narratives, and revisiting the questions of priorities and burden sharing. NATO allies will need to reach a political consensus to overcome the threat of an introverted Western world accompanied by adverse consequences for global and regional security.
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Vigorous Verification in Iran
By Mark Hibbs
Carnegie Endowment
June 28, 2016

The nuclear deal forged with Iran traded Tehran’s nuclear restraint and transparency for nuclear sanctions relief provided by the other six parties to the agreement. If everything goes according to plan, Iran in 2025 will be free from most obligations that exceed routine International Atomic Energy Agency (IAEA) safeguards. Because the Joint Comprehensive Plan of Action (JCPOA) gives Iran a prospect to reestablish its nuclear program on an equal basis with the rest of the world, the chances are reasonable that Tehran will comply with it. At the end of the process, an Iran no longer sanctioned for nuclear transgressions may elect to resume or accelerate sensitive and provocative nuclear activities—or not.

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NATO Summit an Opportunity for Unity and Leadership after Brexit
By Karen Donfried
German Marshall Fund
June 29, 2016

The implications of the Brexit vote are stark, not only for the United Kingdom and for the European Union, but also for the United States. Since the end of World War II, successive U.S. administrations have strongly supported the project of European economic and political integration – initially, to ensure peace among the continent’s great powers; more recently, to enlarge the area of democratic stability and economic prosperity across the continent.  For seven decades, the U.S. security umbrella, represented by the NATO Alliance, helped defend our European allies and gave them the opportunity to concentrate on building the European Community and later the European Union (EU). With the U.K. poised to leave the EU, leadership from the United States is needed to keep the U.K. and its continental partners working closely together in NATO and beyond in the aftermath of last week’s referendum.

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Terrorist Spillover in Jordan
By David Schenker
Washington Institute
June 23, 2016

On June 6, five Jordanians were killed during an assault on a General Intelligence complex twelve miles north of Amman. The incident was Jordan’s largest terrorist attack in more than a decade. With its unabashedly pro-west, pro-peace orientation, King Abdullah’s Jordan has long been a target of Islamist militants, but the Islamic State (ISIS) constitutes an especially determined threat. Five years into the war in Syria, it increasingly appears that ISIS has established a base of support in the kingdom. This isn’t the first time Jordan has faced a persistent terrorist threat. Between 2002 and 2005, several al Qaeda attacks were perpetrated and interdicted in the kingdom, including the assassination of an American diplomat, the firing of missiles at U.S. warships docked in Aqaba port, and the simultaneous bombing of three Amman hotels. Since 2005, however, Jordan’s efficient security apparatus and a popular backlash against al Qaeda contributed to a decrease in local terrorist acts.

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