In the five months since the last extension of the Brexit deadline, the questions about the UK’s trading relationship with the EU remain as open as before, as do those about what sort of relationship it should seek with other partners.

The world has not stood still, however, and so the UKTPO is convening another panel to consider constructive ways of moving forward. The panel will discuss potential trajectories for UK trade policy, followed by a question and answer session.

The UK Trade Policy Observatory (UKTPO) is a partnership between Chatham House and the University of Sussex which provides independent expert comment on, and analysis of, trade policy proposals for the UK as well as training for British policymakers through tailored training packages.

There has been a stark contrast between messaging coming from the international community and trends on the ground as Libya’s latest bout of civil war enters its eighth month.

Led by Germany, some states have been trying to build consensus for a ceasefire ahead of a summit that is expected to be held in Berlin in the next few months. Today marks the date of one of the final planning meetings for the summit.

The increasing use of drone technology, airstrikes and further influxes of fighters trend points in the opposite direction. Warring groups in Libya continue to receive support from external states, undermining international efforts to de-escalate the conflict. A UN arms embargo goes largely unenforced. As the Berlin process unfolds, there is little evidence to suggest that these external states will shift their positions.

The launch of Field Marshal Khalifa Haftar’s Libyan Arab Armed Forces (LAAF) offensive on Tripoli in April sunk a UN-planned ‘national conference’, intended to be held less than two weeks later, to negotiate a framework for transition out of Libya’s governance crisis. Yet, Haftar has so far failed in his objective of capturing Tripoli. While his offensive continues, had he the capacity to capture the city, he would have done so already.

This has created a conundrum for peace talks: there appears to be little chance of negotiating a deal with Haftar, while it is also hard to see how a deal could be reached without him.

The field marshal has little interest in accepting a withdrawal, even a partial one, of his forces. His opponents – who have found unity in their shared efforts to defeat Haftar’s forces – will not accept a ceasefire that leaves the LAAF on the hinterlands of the capital. Similarly, a deal apparently agreed in Abu Dhabi between Haftar and Prime Minister Fayez al-Serraj in February is also dead in the water.

Amid this logjam, there has been an increasing interest in the economic content of the Berlin summit. Countries supportive of Haftar argue that his alliance has legitimate concerns over the management of Libya’s economy and, particularly, the dominant role of the Tripoli-based central bank and its governor in supporting armed groups.

For some within these countries, changing the leadership of the central bank and a finding means of limiting the dominance of the UN-backed Government of National Accord (GNA) over the state’s resources – thus reducing flows of funding to armed groups fighting Haftar – could present a point of agreement in Berlin.

But their focus on financial management in Tripoli is not mirrored by interest in holding the rival central bank in the eastern city of Bayda – an institution unrecognized by the international community – to account for its pursuit of its own monetary policy. This is built on approximately $23 billion of unsecured debt from commercial banks and $11 billion of currency supplied by Russia.

Indeed, very few of the conversations surrounding parameters for Berlin contain details of what would be asked of eastern-based actors beyond pursuit of an audit of the Tripoli and Bayda central banks (only the Tripoli bank is recognized by the international community).

Clearly, the GNA and its allies would have no incentive to accept provisions that limit their means to mobilize resources for the war while its opponents do not receive the same scrutiny. 

However, it is possible to capitalize on the broad interest in economic content to reach some points of agreement over the management of the economy and state institutions. Rather than seeking to replace individuals aligned with one faction for those aligned with another, or expecting asymmetrical concessions from the GNA and its allies, this effort must instead focus on structures and processes that exacerbate the conflict and represent major grievances for the warring parties.

Importantly, this would include the establishment of a system of transparency and accountability for the management of Libya’s finances.  The opacity of current processes enables the support of patronage-based networks with no effective oversight.

Linked to this, the development of effective processes for budgeting and allocating funds could help to reduce graft.

And, finally, rationalizing the role of state institutions to agree their roles and responsibilities, creating the room for reforms to Libya’s system of state employment and subsidies through provision of direct payments to Libyan citizens, is essential.  

An economic commission that comprises members from across political and institutional divides – receiving political support from international powers and technical support from international financial institutions – could be an effective approach. Such a commission could match an inclusive, Libyan-led process with international support to progressively harmonize economic and financial policy between rival authorities and develop consensus for a process of institutional reunification in Libya.

This would constitute a major element of an eventual political settlement and reduce the risk of a limited set of actors capturing the system at the expense of the others – an outcome which would likely result in future bouts of violence.

Such a commission would offer a means of addressing a key driver of the conflict by decentralizing aspects of Libya’s governance, moving away from the dominance of Tripoli and the current winner-take-all system. 

These issues cannot be put to one side, to follow progress on the security front. The remarkable resilience that Libya’s economy has shown over the last seven months should not be taken for granted. It has become increasingly difficult for Libya’s institutions to insulate themselves from the conflict as both sides seek to mobilize resources to sustain their war effort.

The LAAF is increasingly looking to sideline civilian authorities in eastern Libya. On the other side, the GNA has found means of routing funds to armed groups fighting Haftar.

In September, a dispute over the supply of jet fuel between the LAAF and the National Oil Corporation resulted in the establishment of a parallel Brega Petroleum Marketing Company, the state-owned company that possesses a monopoly over fuel distribution.

Meanwhile, other major problems lurk under the surface.  The banking sector is in an increasingly perilous state and debts continue to mount all around, with those in the east not accounted for by Tripoli’s official authorities.  

Through the establishment of an economic commission, the Berlin process provides an opportunity and – most importantly – a mechanism to address these problems while also helping to maintain the basic functionality of the state.  Even if a ceasefire deal does not materialize, initiating negotiations about the future shape of the state and its economy would be a significant step forward.

Summary

• China’s presence in the Maghreb has increased in recent years, raising concerns among Western powers. China has focused on bilateral relations with these countries while also working within the Forum on China–Africa Cooperation (FOCAC) and the China–Arab States Cooperation Forum (CASCF). However, this engagement has limited strategic value compared to relations China has with Saudi Arabia or the United Arab Emirates.
• Since the launch of the Belt and Road Initiative (BRI) in 2013, China has shown greater interest in the Maghreb as an entry point to European and African markets. China has pursued commercial relations over political influence in the region. Morocco and Tunisia are still dependent on France, their former colonial power, and the European Union, which exert great political, economic, security and cultural influence over the two countries.
• The Maghreb countries’ economic relations with China have grown exponentially, with Algeria forming the closest relationship. However, Morocco and Tunisia are keen to attract China’s investment and involvement in major construction and infrastructure projects to boost industrial and economic development. While China’s investments in Morocco and Tunisia remain at a low level, trade relations with both countries have grown steadily. Politically, China’s policy of noninterference in domestic affairs appeals to Maghreb states, which resent Western interference.
• China’s influence in the Maghreb remains minimal. Its soft power push has struggled to promote advantages of strong relations with China beyond economics. Furthermore, Morocco and Tunisia’s populations have generally scant knowledge about China’s politics and culture. China has tried to address this lack of familiarity through the establishment of Confucius Institutes and other cultural activities. However, language and cultural barriers still impede the development of close relations, compared to those China has with other countries in Africa.

Fifteen years ago it would be unthinkable for cyber security to top the list of priorities at the annual US-China Security and Economic Dialogue, as it did last week. But, in the intervening years, cyber technologies and the internet have become fundamental tools for everything from running critical infrastructure such as energy grids and satellite systems, to political, economic and social interactions. Given the pace of change, it should not surprise us that we have barely started to understand how to govern this new order and manage the global internet in ways that both empower and protect us.

In response, Chatham House and Routledge (part of the Taylor & Francis Group) are launching the Journal of Cyber Policy, addressing a rapidly changing situation and connecting creative, technical and policy experts.

Informing the growing security challenges of an interconnected digital world, this new peer-reviewed journal will provide a valuable resource to decision-makers in the public and private sectors grappling with the challenges of cyber security, online privacy, surveillance and internet access. The journal will offer informed and rigorous thinking, supported by the journal’s internationally renowned editorial board.

'The Journal of Cyber Policy will empower experts with new thinking and diverse ideas delivered in a way which is practically relevant as well as academically rigorous,' Dr Patricia Lewis, research director, International Security Department at Chatham House and co-editor of the journal, said. 'It will change the game for those working on cyber issues.' 

'As the preferred publisher for think tanks around the world, we are proud to be Chatham House’s partner on this new journal, which seeks to address issues that touch upon all our lives on a daily basis,' said Leon Heward-Mills, Global Publishing Director (Journals) at Taylor & Francis Group.

The Journal of Cyber Policy launches on the evening of 2 July at a reception at Chatham House.

Following the institute’s purchase of the ground floor of the adjoining building (Ames House) in 2013, this generous grant from SNF will enable Chatham House to occupy this space and undertake a significant renovation project to create the ‘Stavros Niarchos Foundation Floor’ at Chatham House.

This will help the institute meet the growing demand for its research and analysis and take full advantage of its location in central London, given the city’s exceptional international connectivity and status as a global hub.

The SNF Floor will contain state-of-the-art meeting facilities for the institute’s research staff and fellows of the Queen Elizabeth II Academy for Leadership in International Affairs, and will significantly enhance the institute’s convening and communication capacities. To this end, the renovated space will include a ‘simulation room’, the Asfari Centre and a media room, as well as new breakout and meeting areas. The SNF Floor will be directly accessible from the ground floor of 10 St James’s Square, the institute’s main building.

The SNF grant is an important step forward for the institute’s Second Century Initiative which aims to ensure the institute’s long-term financial independence. The initiative has three principal targets:

● to endow a number of Research Fellowships and interdisciplinary Research Centres;

● to secure endowments to support the Queen Elizabeth II Academy for Leadership in International Affairs in order to nurture independent thinking on international policy among a new generation from around the world; and

● to secure the necessary physical space and infrastructure here in London to meet the growing demand for and scope of the institute’s work.

Dr Robin Niblett, director of Chatham House said: ‘We are enormously grateful to the Stavros Niarchos Foundation for this transformational grant which will significantly enhance Chatham House’s capacity to serve as a trusted and creative space for addressing the most important challenges in international affairs.’

Andreas Dracopoulos, co-president of SNF’s board of directors, said: ‘We are delighted to support the growth of Chatham House, one of Europe’s leading independent, non partisan policy institutes, at a time when the risks to global prosperity and stability are expanding. Chatham House’s reputation for providing world-leading analysis needs to remain as strong as ever and I am confident that this grant will help the institute take its research and convening activities in new interactive and interdisciplinary directions.’

Is there a ‘crisis’ in the transatlantic relationship? Although the US and Europe are not irresistibly diverging, there are indications that governments and their populations on both sides of the Atlantic are becoming less aligned in their thinking and actions. And it is happening just when they need to become closer.

The ‘rise of the rest’, in which new emerging markets are coming to the fore, is creating a more competitive international environment. And the West is not putting on an adequate response. Unless the US and Europe want to relinquish leadership on building global norms and standards on key issues, their leaders once again need to work more collectively together.

Divides in the Atlantic community

The structures put together in the first half of the 20th century by the Atlantic community (such as NATO, the UN, the WTO/GATT, the IMF and the World Bank) provided the architecture and norms by which everyone functioned – and thereby primed the international context in their favour.

However, these institutions have become increasingly dysfunctional or unfit for purpose, and are increasingly ignored (like the UN) or replaced (as China’s new Asian Infrastructure Investment Bank [AIIB] is arguably attempting to do). That contextual advantage has gone. And there are many other good reasons to be concerned.

Shared values are a notable aspect of the strong and longstanding relationship between the US and Europe. But now, although the US does appear to be coming closer to Europe on some measures (Pew polling suggests America is becoming less religious and more liberal on gay rights and recreational drugs, for instance), there is clear evidence that differences of opinion are becoming more entrenched.

Policy divides between the US and Europe are commonplace, but recently the list of differences (and the degree of difference of opinion) appears to be growing. The split over joining the AIIB is the most recent of these, being a visible symptom of a larger fundamental difference of opinion on Asia. But other issues that divide include actions in Libya in 2011, Syria today, Russia, support for NATO, energy independence and what to do about climate change.

The study on elite perceptions conducted by Chatham House’s US Project in 2014 made clear how important Europeans perceived America’s traditional values to be, but also raised the concern that the US was losing sight of them (citing, for example, the lack of universal healthcare and attitudes towards the death penalty and gun laws). The visceral response of the German public to the Snowden revelations is a stark example of the divide in attitudes.

Special relationships

Anecdotally, the evidence is also not good. Over the past four years the general tone of conversations in Europe about the US has changed, due to huge uncertainty about whether the US is going to continue to play the same role it has in the past or whether it will leave Europe to face its challenges alone. Meanwhile, in the US the conversation around whether Europe will step up (particularly in security) has heightened tremendously. Four years ago, no one thought to question the transatlantic relationship. Today, on both sides, there is a lack of confidence.

The US-UK relationship has a special part in this – it has long been and still remains the centre-point of the transatlantic relationship. From a realpolitik perspective, the US sees the UK as valuable for three principal reasons: A) its role in the EU promoting common UK/US interests; B) the assets it brings to the table (particularly defence and intelligence); and C) its external perspective and its support internationally (ensuring the US is rarely alone). However, in the coming years A might go away and B is declining with falling defence spending, leaving only C. And a weak US-UK relationship could cause significant trouble for the wider US-Europe relationship.

It is all too easy to forget the importance of the transatlantic relationship. For many it is increasingly irrelevant – the emerging powers such as China and Brazil are far more interesting. And for others it is just an ever-present reality – the Atlantic allies have been so close and through so much that nothing can change it.

Neither of these is right. The transatlantic relationship is vital part of addressing global challenges and it is something that, if continued to be treated either with either contempt or ignorance, will be lost before we know it. For these reasons, the US Project is beginning new research that looks at the transatlantic relationship and asks whether there is a rift. If yes, we hope to explore what can be done to mitigate it – before it is too late.

To comment on this article, please contact Chatham House Feedback

The US−UK ‘Special Relationship’ is in decline, and a British decision to leave the EU would hasten its demise. As Great Britain increasingly becomes just one of America’s many strategic relationships, Brexit would speed the transfer of US attention and energy from the UK to the continent. This, however, does not need to be inevitable. The necessary ingredient to reverse this decline is stronger British leadership internationally.

The US government has made it abundantly clear that its preference is to see the UK remain in the European Union. In January 2013, when David Cameron had not yet committed to a referendum, Phil Gordon, the US assistant secretary of state for European affairs bluntly stated that it is in the American interest for the US ‘to see a strong British voice in that European Union.’ The fact that a senior US official would go so far – to be seen to intervene so early in a divisive domestic political issue – spoke volumes about how important this is to America. This week, President Obama will visit the UK to send an equally firm, if polite, message to the British public.

Why does the US want the UK to remain in Europe?

From the US perspective, there are three principal elements that the UK brings to the table in the bilateral relationship. The first stems from Britain’s capabilities, particularly in the military and intelligence arenas. US−UK intelligence sharing, the closest for both countries, has a long history dating back to the Second World War. For good or ill the UK has been among America’s leading allies in every major conflict the US has been involved in for the last quarter of a century – in the Gulf War, Bosnia and Kosovo, Afghanistan, the war in Iraq, the interventions in Libya as well as current operations against ISIS in Iraq and, belatedly, Syria.

The second relates to the political value of having a reliable partner in international engagements – and thereby avoiding the perception of acting unilaterally. Shared history and values, and thus often perspectives (as well as capabilities) have ensured that the UK has long been the first port of call for the US when seeking to solve international problems or build coalitions. At the same time, Britain’s historical global reach and diplomatic experience around the world (not least in areas of current concern such as Afghanistan, Pakistan, Israel and Palestine, and Iraq) have provided American policy-makers with valuable input on foreign policy issues that has contributed to their own internal decision making.

The third area of added value for the US is Britain’s place in the EU. While British and US policy preferences may at times diverge, as they have recently on the Israel−Palestine issue, for example, their common outlooks and interests mean that Britain is the closest thing that the United States has to having a voice in the EU. At the same time, the US also sees the UK as the country most likely to support an open trade and investment agenda and a more proactive approach to dealing with the challenges in Europe’s neighbourhood, policies that leaders in both countries agree are necessary to make the EU a more effective actor and better partner to the US on the international scene.

The transition from US−UK ties to US−European ties

In recent years, however, the US has begun to diversify its relationships within Europe, in part as the UK has become unable or unwilling to step up and fulfil these three elements of paramount importance to the US.

Defence and intelligence

With regards to defence capabilities, it is no longer the UK that the United States inevitably looks to first. In Libya, the operation that started with the defence of Benghazi from Gaddafi’s forces in March 2012 (that eventually came to remove Gaddafi himself) was jointly led by the French and the British, although then-French president Nicolas Sarkozy appeared to be the driving force. More recently, it was the French with whom the US partnered in responding to the terrorist activities in Mali and who were first to support the US in action in Syria (following a UK parliamentary vote to stay out in August 2013 and a belated vote to act in December 2015). But in recent years others have worked more closely with the United States militarily as well, including in particular Poland and Denmark (although with the new government in Poland, the relationship might wither again).

This trend towards more diversified military engagement with other European states looks set to continue in the near term. Despite taking a tough position in the 2014 NATO Summit to reinforce the NATO commitment of two per cent of GDP spending on defence, the Cameron government came very close to falling below this line in 2015 (after five years of real defence cuts). The eventual decision to commit to meet this target, along with the newly released Strategic Defence and Security Review (SDSR), have somewhat reassured American policy-makers of the UK’s continued ambition and capabilities. But there remains a lack of US confidence that this is only a temporary uptick in UK attention on defence. Meanwhile, America will continue to expand its horizons.

The story on intelligence sharing is slightly different, but here too obstacles have arisen in the close US-UK exchange of information. Since the end of the Second World War, the US and UK have been part of the ‘Five Eyes’ alliance – with Australia, New Zealand and Canada – that allows the close sharing of intelligence. And arguably, within the Five Eyes, the links between the US and UK are the closest of all. However, more recently, tensions have emerged. Over the past five or so years, the British judicial system in particular has pushed back on US confidentiality rules in ways that make the US intelligence services nervous of continuing to share information; given the current close relationship, this could be more of an obstacle than it is for other countries sharing intel with the US.

At the same time, with the ISIS-inspired resurgence in the terrorist threat in both Europe and the US, it is becoming increasingly clear that the close intelligence sharing between the US and UK must take place much more widely. The current systems – through NATO or INTERPOL – have proven too slow and ineffective, as the recent attacks in Paris and Brussels have made clear. Sharing among the US and UK, or even among the Five Eyes, is insufficient – increasingly the relationships will have to be broadened.

Partnership

The US is also looking elsewhere for partnership in its international engagements, including on some of the issues that are at the top of the inbox for the American president.

On responding to Russian actions in Ukraine, it is clear that German Chancellor Angela Merkel is in the lead, both in corralling Europeans to maintain the sanctions but also in negotiating with Russian President Vladimir Putin. This was highlighted in the creation of the Normandy format in the summer of 2014, a group encompassing Germany, France, Russia and Ukraine (but not the UK or the US), to resolve the situation in the east of Ukraine. On another issue of significant import to the United States, European economic prosperity and stability, Merkel is again the leading actor in Europe.

In the case of targeted bombing in Syria, it was not the British that were first to join the United States in the offensive against ISIS, but instead the French. President Francois Hollande also proved far more proactive after Syrian President Assad crossed the chemical weapons ‘redline’ in 2013, although in the end France was left hanging when President Obama decided to step back from military action after the failure of the British parliamentary vote to authorize UK involvement.

Finally, on at least one issue of great import to the US – China – the UK appears to be diverging meaningfully. The most recent case – the UK decision to join the Asian Infrastructure Investment Bank in March 2015 – is perhaps the starkest example of such differing policy positions that have caused significant frustration in the US.

Influence in the European Union

With regards to Europe, even before the referendum was formally announced, it was increasingly clear that the UK was less inclined to engage proactively in the EU. A number of factors have ensured that, particularly since 2010, the UK has become less influential there.

British influence has been diminished through actions by the Cameron government that have, perhaps unnecessarily, antagonized many across the Channel. Many European conservatives became frustrated early in Cameron’s tenure when he decided to take the Conservative Party out of the principal conservative group in the European parliament, the European People’s Party. This sentiment only worsened in recent years as, albeit for perhaps understandable domestic political reasons, Cameron conducted an adversarial negotiation with his European partners in an effort to secure reforms to the EU and changes in Britain’s terms of membership.

The UK also no longer sends its best and brightest to EU institutions. Many of the leading British officials who once occupied high offices there have left and been replaced by other continental Europeans. This deprives Britain of an important source of influence within the EU.

It is clear that if the US wants influence in the EU, it needs more partners there than just the UK. Britain is still important, and would be a strong driver to make the institution more efficient, but as its influence declines it is no longer sufficient. A Leave vote would immediately dispose of that influence entirely.

The UK is ‘one among many’ for the US

What is clear is that increasingly the UK is not ‘first among equals’ in Europe but ‘one among many’ for the United States. America is diversifying its relationships. More and more the US can find other allies and friends to fulfil the needs in which the UK no longer has interest.

If the UK leaves the European Union, the pace of this trend will only quicken. In addition to needing to find alternative partners to address these policy gaps, the UK will likely no longer have the time to devote to the United States that it does today. If Brexit takes place, Whitehall will find itself inundated with issues which had previously been managed by the EU, from trade deals with third parties to negotiating constant market access adjustments with the EU. Thus, very quickly, British resources are likely to be pulled from the US portfolio, and issues of common concern will get drowned out by other agendas. At least for a while, the US will likely get short shrift.

America’s response then can only be to hasten its search for other partners both in Europe and beyond. And there lies an inevitable negative spiral for the Special Relationship.

Can anything be done to save the Special Relationship?

There is no question that the US and UK will continue to have a strong and positive relationship, but it is clear that, without action, either in or out of Europe, its ‘specialness’ will decline. As the arguments above lay out, the only question is how fast this demise takes place. But there is something that could not only halt, but also reverse this trend.

As President Obama made starkly clear in his interviews with Jeffrey Goldberg in the Atlantic, what he wants most from partners and allies is for them to step up – to show more leadership (a sentiment that the Republican candidates for president would push even further). With the perceived failure of interventions over the last 15 years – from Afghanistan to Iraq to Libya –many politicians and publics have become wary of foreign military intervention. This is true in Europe and the US; but Americans have often felt that they have been left holding both the bag and the blame.  

It should be noted that more leadership does not necessarily mean more military engagement. Or even, necessarily, more spending on foreign policy tools (whether diplomatic, military or development). But it does mean a willingness to step up and take responsibility for trying to guide international events and for promoting common interests.

In the UK’s SDSR released towards the end of 2015, the government stated its intention to remain fully engaged globally; however, its actions belie this. Where Asia is concerned – an issue that is front and centre for the US – the UK joins other European powers in arguing that its lack of resources in the region makes it unable to contribute meaningfully to maintaining stability. Even closer to home, in the Middle East, the UK has been wary of leading.

It is understandable why the UK is hesitant to take such a leadership role, even as part of a coalition, in some of the larger strategic challenges the world faces. There are few benefits. Merely finding the human capital to coordinate an international response is difficult. The complexity of these problems ensures they rarely work out as hoped, and more often lead to international contempt rather than approbation. Thus it is no great surprise that the UK, along with much of the rest of the world, resists the temptation to be out in front. But there are opportunities – two issues that the US would likely welcome greater British leadership on would be building support in Europe for the Transatlantic Trade and Investment Partnership and taking a more active role in maintaining stability in Asia. Further, having a stronger European partner on issues in the Middle East (from Yemen to Syria) – Europe’s near abroad – is something that many American policy-makers have suggested. 

But the UK would not have to stand alone. With a little leadership from the UK, the US would provide support, as would many others currently loath to take the lead but with very strong interests in the outcomes. But someone has to start; as Obama made clear, there needs to be less ‘free riding’.

If the UK wants to reverse the decline of the Special Relationship, it will need to show more leadership internationally. This should not be as hard as it might seem. Not only does it conform to the government’s own strategy (as laid out in the SDSR) but public concern over further interventions is weaker than one might imagine. Such a leadership role would once again show to the United States the value of the Special Relationship.

This article has also been published by Real Clear World.

To comment on this article, please contact Chatham House Feedback

A British exit from the EU would add to growing strains on the United States’ relations with Britain and the rest of Europe, but by itself would not lead to a breakdown in transatlantic relations due to the scale of shared ideas and interests, institutional links, international pressures and commitments by individual leaders. It would, however, add to pressures on the US that could change the direction of the transatlantic relationship. From the perspective of Washington, Britain risks becoming an awkward inbetweener, beholden more than ever before to a wider transatlantic relationship where the US and EU are navigating the challenges of an emerging multipolar world. The article outlines developments in the UK, EU, Europe and the US in order to explain what Brexit could mean for the United States’ approaches to transatlantic relations. By doing so the article moves beyond a narrow view of Brexit and transatlantic relations that focuses on the future of UK–US relations. In the conclusion we map out several ways in which US views of the transatlantic relationship could be changed.

With Britain’s decision to leave the EU, the clouds of uncertainty hanging over the proposed US-EU free trade deal (known as the Transatlantic Trade and Investment Partnership or TTIP) have become darker. The negotiations were formally launched three years ago and have stalled because of transatlantic differences (for instance over issues of investor protections and public procurement) as well as growing public opposition. For now, both the US and the EU negotiators are determined to weather the storm and continue talks when they meet in Brussels from 11-15 July.

The result of the UK’s EU referendum will blow a strong wind into the face of TTIP negotiators on three fronts. First, the Brexit vote will delay the TTIP talks as EU officials will focus their attention and political capital on the future UK-EU relationship. Once the UK government triggers Article 50 of the Lisbon Treaty, both sides have two years to sort out the separation proceedings. Only after it has become clear what Britain’s relationship with the EU will look like will the European side stop navel-gazing. The TTIP negotiations will likely continue in the meantime, but will be put on the back-burner.

Second, any progress on TTIP will require clarity on what both sides are bringing to the negotiating table. But until the final nature of the UK-EU relationship is known, it will be difficult for the American side to assess exactly how valuable the access to the remaining EU market is. This raises the question of whether American negotiators will put forth their best offers if they don’t know what benefits they will obtain for making concessions.

Third, with Britain’s vote to leave the EU, TTIP has just lost one of its greatest cheerleaders. French and German officials are increasingly expressing concerns about TTIP. Within three days of the Brexit vote, French Prime Minister Manuel Valls dismissed the possibility of a US-EU trade deal, stating TTIP was against ‘EU interests’. In addition, 59 per cent of Germans oppose TTIP – up from 51 per cent – according to the most recent Eurobarometer survey. Britain’s voice for further trade liberalization will be sorely missed by American negotiators eager to strike a deal.

Despite the dark Brexit clouds on the TTIP horizon, there might be a silver lining. Britain’s decision to leave the EU could bring some benefits to the US-EU trade talks in two ways. First, financial services regulation might no longer be a sticking point in the TTIP negotiations. Given London’s role as a financial centre, the UK had insisted on including a financial services chapter in the trade deal. The US, however, has resisted this. The removal of this friction could help move the TTIP negotiations along.

Second, European trade negotiators will no longer have to address British fears that TTIP could put the National Health Service (NHS) at risk. Much of the TTIP-debate in Great Britain has focused on how this deal might impact the NHS. Opponents of TTIP have argued that including healthcare in the agreement could lead to privatization and ultimately the death of the NHS. EU Trade Commissioner Cecilia Malmström spent resources and energy in correcting these misconceptions. UK withdrawal from the EU means that she can now focus on fighting other myths surrounding TTIP, which could potentially help advance the trade deal.

For now and the immediate future, Britain will remain a member of the EU and the European Commission will continue to negotiate trade deals on behalf of all 28 member states. Both the US and EU negotiators are committed to advancing the trade deal despite Brexit. The British decision to leave the EU has not weakened the case for TTIP. Speaking on the outcome of the EU referendum, United States Trade Representative Michael Froman said ‘the economic and strategic rationale for TTIP remains strong’. And his counterpart Cecilia Malmström went even further, saying that the British decision to leave the EU creates more of an impetus for TTIP to be finished this year.

Though this timeline is unlikely to be met, TTIP is likely to survive the British decision to leave the EU. However, Brexit is a serious blow that will probably push back the conclusion of TTIP by at least two years. Any deal will need to take into account the future nature of the UK-EU trade deal, which may not be known before 2018. Meanwhile, elections in Germany and France (two countries with strong public opposition to TTIP) will take place in 2017. On the other side of the Atlantic, the US presidential election adds yet another layer of uncertainty as the trade policy of the next administration remains unknown. When US and EU trade negotiators meet again this week, they should not be too worried about the Brexit storm but rather the changing climate for TTIP in France, Germany and the US.

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The British vote to leave the EU is (and should be) seen as a wakeup call for political elites on both sides of the Atlantic. Under normal circumstances, the institutional support that crossed party lines for the Remain campaign should have ensured it a comfortable victory; instead, it lost by a not-insignificant 52−48 per cent margin. Similarly, Donald Trump has alienated the establishment of both American parties – while Democratic dislike is predictable, the extent of the Republican elite’s discomfort with Trump, clearly on display at the party’s convention in Cleveland this week, is extremely unusual at this point in an election campaign which is more typically a display of ‘rally around the candidate’. But as Brexit demonstrated, the conventional logic may not apply in 2016.

There are significant differences between the UK referendum and the US elections. Some of this is structural – a national referendum operates along very different lines than a US presidential election, after all, and the US electorate is much larger and more diverse than its British equivalent. Furthermore, American voters will be making a choice between individuals as well as ideas. This does not necessarily work to the advantage of either Donald Trump or Hillary Clinton (both of whom have the highest unfavourability ratings for presidential candidates seen in decades), but highly individualized questions of personality and temperament will impact voter behaviour in a way that they did not for British referendum voters. Finally, who wins the US election will depend in very large part on state politics and electoral college math – as the 2000 election showed, the candidate who wins the popular vote does not necessarily end up as president.

But there is a far more important message that politicians in the US, UK and, more broadly, Europe, should take away from the Brexit result. Regardless of what happens in the US elections, elites no longer necessarily hold the preponderance of power. The disenfranchised who have historically either not had the mass or the coherence to communicate it now do - at least on occasion.

This is not an ideological split – Brexit voters came together from all parts of the political spectrum. Equally, in the US, Sanders and Trump voters are bucking the system in both the Democratic and Republican parties.

There is a significant backlash under way in both countries towards aspects of globalization, going beyond the traditional right/left divide. Allowing for some differences in specifics, the American and British political establishments have, over the past few decades, broadly eased restrictions on the free movement of capital, goods and people across national borders. There have been notable benefits associated with this approach that have mostly been distributed inclusively, but the costs have typically hit those already less advantaged and without opportunities or skills to mitigate them. Those who have been left out or left behind from these changes are discovering their own political power.

Politicians are going to have to find ways not just to appeal to these voters who feel disenfranchised by existing structures, but also address their legitimate concerns. There will of course be partisan policy solutions put forward on both sides. But inevitably the political leadership is going to have to find ways to bridge party lines to realize solutions to those social and economic inequalities. Ignoring them, as many have in the past, is increasingly a quick path to losing power.

Unless the world wants to turn back to more isolationist and protectionist times, with the slower growth and inequalities that this includes, politicians are also going to have to do a better job of explaining the benefits of globalization. And, more importantly, they will have to ensure that these benefits reach their broader population more equitably and that the costs are better mitigated. 

So the Brexit vote does not necessarily presage a Trump victory on 8 November, but it shows in stark terms that the world has fundamentally changed – the time when elites alone could call the shots is gone. Politicians, including Hillary Clinton, will need to respond proactively to the causes of the dissatisfaction rather than waiting until the next time they need the public vote.

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Even though President Barack Obama cautioned that the UK would be at the ‘back of the queue’ for a trade agreement with the US if the country chose to leave the EU, in the post-Brexit world a deal might be struck more swiftly. Various ideas for bringing the UK and US into a formal trade arrangement have been floated – ranging from a bilateral UK-US trade deal, or the UK joining NAFTA (the North American Free Trade Agreement between the US, Canada and Mexico), to the UK becoming a part of the TPP (the Trans-Pacific Partnership that the US is pursuing with 11 other countries along the Pacific Rim). However, one option stands out: opening the Transatlantic Trade and Investment Partnership (TTIP), which the US and EU are currently negotiating, to the UK after Brexit.

Good reasons for Britain in TTIP

First, from the perspective of the UK, signing up to TTIP would mean a more comprehensive deal with the US than a bilateral UK−US trade agreement. For instance, Britain is very keen to include financial services regulation in any trade agreement with America, but given Washington’s reluctance, this ambition might only be achievable if other countries like France and Germany throw their financial weight into the negotiations.

Second, continuing involvement in the TTIP negotiations allows London to begin securing its trade position with the US now. Though its influence in the EU may weaken as it heads for the exit, Britain could make the best use of influencing the EU position on TTIP while it is still a member. It could then accept the terms of TTIP and accede as a third party relatively quickly after exiting the EU. Official negotiations on a UK−US-only deal would have to wait until the UK has left the EU, as trade talks fall under the exclusive competence of the EU.

Third, for the US and EU, having the UK as a party to TTIP would ensure the scale of the deal is not reduced, and thereby maintain the strategic appeal and ability to set global standards. At the moment, the UK is the EU’s second-largest economy, accounting for approximately 18 per cent of GDP. With Britain in TTIP, the sheer size of the transatlantic market space will have more pull for other countries to adopt the common transatlantic rules in order to gain market access.

Fourth, the UK joining TTIP as a third party would establish the agreement as an ‘open platform’ that is available for other countries to join. Michael Froman, the United States trade representative, has characterized TTIP as being such an open agreement. EU representatives have been more ambivalent, though this is starting to change in the wake of Brexit. David O’Sullivan, the current EU ambassador to the US, recently said that as ‘we’ve always seen TTIP as a potential open platform, [the] UK could still benefit [from it] even not as a member of the European Union’. While now might not be the right time to expand the TTIP bloc beyond its original participants given that negotiations are already complex and drawn out, it would be beneficial for the negotiating partners to send a strong message that countries that are willing and able to commit to the high TTIP standards will be welcomed later on.

Obstacles to Britain in TTIP

But before the UK could be added to TTIP after Brexit, major hurdles will have to be jumped and crucial questions answered. The first obstacle is actually getting a TTIP deal, which will require significant efforts by political leaders and negotiators on both sides of the Atlantic.

Second, selling the ‘UK in TTIP option’ to Brexiteers will not be an easy task. After all, Leave campaigners argued that the US−EU deal might undermine the NHS and was thus presented as one of the reasons to cut loose from Brussels. As the major rationale behind TTIP is regulatory harmonization, if the UK were to sign up to TTIP it would still have to apply many EU rules. This, however, would go counter to the arguments for leaving the EU in the first place.

Third, it will be a challenging job for the UK to untangle its trade relationship with the EU while at the same time negotiating TTIP together with the EU. It would be easiest if the UK decided to remain a member of the EU customs union. Britain would then be required to impose the EU’s external tariffs on countries like the US. This would fit seamlessly with the ‘UK in TTIP’ option. But as the UK will most likely pull out of the customs union, it will be more complicated than that.

Finally, the timing of Brexit and the TTIP negotiations could cause complications. In the unlikely event that a US-EU free trade deal is concluded and ratified while the UK is still a member of the EU, the agreement (or the parts of it that fall under national competence) would most likely continue to apply to Britain after Brexit without the need for accession. If the TTIP negotiations continue beyond Brexit, then the UK would move from negotiating as part of the EU bloc to becoming a third party. This raises the issue of whether the UK and EU continue to negotiate as one bloc vis-à-vis the US.

Special economic relationship

Still, the depth of the economic ties between the US and UK means that the TTIP option is likely to be welcomed favourably by both countries. The US is the most important single export market for the UK, with goods and services worth £45 billion shipped in 2015. Last year, the US ranked third (after Germany and China) as a source for UK imports. With nearly $1 trillion invested in each other’s economies, the US and the UK are also each other’s largest investors. Given this special economic relationship, Britain is unlikely to be at the ‘back of the queue’ in any event. But the TTIP option is the best path to preserving and strengthening the relationship post-Brexit while also realizing the wider strategic benefits of a transatlantic trade agreement.

A version of this article appeared on Real Clear World.

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