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Brexit Hangover: A Field Guide for Americans

This post was originally published on

The political and financial impact of yesterday’s “Brexit” vote will have long-lasting and profound implications for the U.S. presidential campaign, for the U.S. – European relationship, and for Europe itself. Once the Brexit proponents finish downing their champagne, the hangovers will settle in, for certain. They know not what they doneth.

Shockingly, the Brexit tally vote defied the sure money touted by London’s bookies. They were long and wrong on the odds, but the sure loser was Prime Minister Cameron; his bet was fatal—both to his political career and to a once united United Kingdom. After all, the Brexit referendum was Cameron’s political miscalculation, who in a desperate moment of political lunacy succumbed to demands to appease rebellious Tory Euro-skeptic back-benchers and agreed to hold this ill-conceived referendum. Before his nation in front of 10 Downing Street, Cameron, his lips quivering, emotionally threw in the towel and spitefully resigned his office. Why? No one knows. Was his resignation really necessary in the heat of the moment?

As a result of the vote, the grave consequences to Britain’s political system and economy will reverberate for years – all in the name of abiding anti-immigration sentiment in England and throttling the pesky, red-tape laden Brussels bureaucrats in the European Union’s redoubt. Revelers are rejoicing over the hopeful return of British sovereignty, but the end of 40 years of EU membership does not come without a price – and not just for the Brits.

Make no mistake about it, Britain’s departure from an already gravely wounded European Union, whose member states are at odds on every manner of issue; namely immigration, Euro policy, defense, foreign policy, and fiscal bail-outs force-fed to down-and-out member states, is a severe blow to the edifice of the post-World-War II European unity experiment. It resurrects the ever-present vestiges of Scottish and Northern Ireland nationalism, and adds further impetus to Europe’s nation-tearing forces (e.g., Catalonia in Spain) and neo-fascist ultra-nationalistic political parties throughout Europe.

Indeed, the last votes had been barely counted before Nicola Sturgeon—leader of the Scottish Nationalist Party—signaled her intention to wage another referendum fight to gain Scotland’s independence from the UK.

Britain is not the only nation in Europe confronting anti-EU sentiment. Both the governments of Denmark and the Netherlands have lost major votes on matters relating to the EU. France faces unrelenting social unrest due, in part, to EU regulations. And let us not forget what the torrent of Syrian migrants have done to Europe’s political cohesion and touted humanitarian values. To Brexit proponents, the only thing standing in the way of a torrent of more Muslim refugees was the English Channel, and the EU was trying to build a bridge of refugees across it!

What then, will come of the European Union?

In Chris Bickerton’s new book: “The European Union – A Citizen’s Guide” European federalism has faced crises and challenges from the start of the Euro experiment. Dissension on foreign policies, battles over monetary policies, and arguments over debt relief have sown the seeds of secession. But the Brexit may prove to be a fatal blow to the goal of a powerful, unified Europe. Let us not also forget that Vladimir Putin is enjoying this unraveling more than anyone. The lights will be on late in the Kremlin to conspire how to benefit from the EU’s carcass as it helplessly moans. NATO, after all, is not a trans-Atlantic defense organization that is completely immunized from the potential unraveling of the EU.

All the more reason why a united Europe with the United Kingdom in it has been good for America – for defense, for a real definition of what constitutes free and fair trade, and for our multilateral values and goals ever under challenge in the global system of security. We need, therefore, need to refrain from rejoicing over this outcome.

However, in Scotland this morning, Donald Trump hit a couple of mulligans on his new Turnberry golf course while turning the Brexit vote to his scurrilous political benefit. It won’t be long before his spin meisters feed him the best slogans to leverage Brexit for his anti-immigrant/anti-Washington audiences.

The economic nationalism that is tearing the EU apart and fueled the Brexit win—primarily energized by anti-immigrant forces, is manna for his presidential campaign. The Brexit vote is a bumper-sticker made in heaven. Trump has a knack for caricaturing a complex issue into a simple-innocuous sounding slogan that sounds like a breakfast slogan (start your day with a healthy bowl of “Brexit!”). And by the then, the Democratic Party’s forces of reason and substance have already lost.

If the Clinton campaign allows Trump to define the Brexit vote, wavering voters in key mid-west battleground states will lean further toward him because of the same forces that prevailed in the UK. After all, our British cousins just validated the grimy gears of his political message – God Save the Queen!

For the United Kingdom, sovereignty after Brussels will return, but the price will be huge. Britain is likely to end up more parochial as the nationalistic aftershocks preoccupy Westminster and confuse the future of both the Conservative Party and Labor Party directions and choice of leaders. When will that dust really settle? Even if the Tories quickly choose a replacement to Cameron (former London mayor Boris Johnson comes to mind), dissension in the ranks will be rampant. “Who lost Europe” will soon be the slogan of the hour as the economic downturn from Brexit’s consequences set in. Mark my word.

The aftershocks are just beginning. For starters, the UK is party to dozens of European Union trade pacts. It will have to try to convert them from multilateral to bilateral ones. How do you do this at a time when trade liberalization is a dirty word. How will foreign investment flows be affected? No one knows yet? The unraveling from Brussels will take a lot of time and a lot of negotiation – at least two years’ worth. In the meantime, financial markets despise uncertainty, and the City – center of London’s financial empire, is about to make uncertainty a two year certainty.

The average American hardly knows what the European Union is all about, let alone why Britain decided to cut its ties to it. After all, to the average Yank, traveling from Paris to London requires two currency conversions from the Euro to the Pound Sterling. So what’s the big deal? If the U.K. was not using the Euro, was it really then, part of the EU?

For American companies who already face headaches navigating the EU’s challenging trade and investment regulations, Britain’s loss only makes life tougher. The pace of negotiations for the Trans-Atlantic Trade & Investment Partnership (TTIP) will be slowed to a crawl, in part because national elections in France and Germany in 2017 will be contaminated by anti-trade sentiment which helped drive the Brexit vote. British influence in Brussels was also essential to moderating the worst instincts of Brussels bureaucrats from their most protectionist positions. It is going to be harder to deal with Brussels without our British cousins intervening assistance, that’s for sure.

The big deal on this side of the pond is we need a strong, unified United Kingdom, with whom we share a very sacred “Special Relationship.” The financial uncertainty from the Brexit directly impacts our financial markets and soothsayers predict the ripples will last for months. A more inward-looking, smaller un-unified Great Britain means less burden sharing on the world stage (think Afghanistan, for starters). Perhaps the Brexit vote may not lead to long-term dire Trans-Atlantic consequences my Washington colleagues fear, but anything that is good for Trump cannot be good for the home team.

I rest my case.

Amb. Marc Ginsberg is a Managing Director at LEVICK and a contributing author to Tomorrow.

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