war on the rocks

How Washington and London Can Seize the Brexit Opportunity

July 7, 2016

All Americans share links with our allies in the United Kingdom; some peripheral, some core.  My family’s links are at the heart of our heritage and culture.

The Seays are Normans, Angles, Saxons, Celts, Picts, and Scots. Every tribe that settled Great Britain is represented to some degree. On my mother’s side, there are Black Scots, Scotch-Irish, and English. The Black Scots emigrated to Ulster, Virginia, Kentucky, and eventually Texas. On my father’s side, the roots are predominantly English and Scottish. One ancestor was Secretary of State for Scotland, another lived in the same castle where Gwyneth Paltrow earned her best actress Oscar for Shakespeare in Love. The family roots are diverse, but centered on the British Isles and its various tribes and peoples.

I like to joke with my Australian friends that we Texans, Aussies, Kiwis, Canadians, and South Africans are the mongrels of the old British Empire.

Of course, America is a much more diverse place today, being home to many peoples from beyond British and continental European ancestry, but many things bind us to the United Kingdom other than blood – namely a century of partnership in defending freedom and upholding the pillars of the international system.

My first contact with the United Kingdom was when I was a year old, and my parents moved us to London. My father worked as a young solicitor for a London-based firm, Trowers and Hamlins, through a fellowship he won. I’d like to say my memories of those times are pleasant, but I was too small. Until a decade ago, my U.K. experiences were of the light, tourist on holiday sort — predominantly non-substantive.

In the past decade, however, my investment management company Annandale Capital has done extensive business in London, sourcing and deploying money in multiple investments, establishing significant business contacts, and becoming very familiar with the British people and investment community. Accordingly, I have a higher level of interest in Brexit than the average Joe.

The mood surrounding Brexit was somber with strong notes of hysteria. And the global financial and political establishment has provided many of the shriller voices in a deafening cacophony that has alarmed financial markets and citizens of the Europe, the United Kingdom, and beyond.  It is bad enough enduring the panic of the establishment. It’s worse watching speculators take advantage of the turmoil to add to their mountainous fortunes and fan the fires of volatility and unrest.

But that’s the reality of where we are. Most of the post-vote commentary seems to center on Brexit being a ludicrously unwise and self-destructive development for the British people. However, when a country as significant as Great Britain votes in such large numbers and the outcome is so close, there is clearly a material issue at hand upon which rational minds can differ. We simply cannot know what the long-term effect of Brexit will be; nothing like this has happened before.It is too large and complicated a process for accurate prediction. Those who claim to know that this will be an unmitigated disaster have no real basis for their certainty.

Regardless, the British people have made their choice, and despite the unmerited hopes by many in the Leave camp that the referendum might somehow be ignored or reversed, it would be wise for those of us to discuss how the United States and United Kingdom might make the best of this outcome economically. How may the United States improve its commercial situation and that of the British people post-Brexit? I offer four courses of action that appear to further these aims. Taken together, these items form a full, ambitious portfolio with great potential benefit for the United States and Great Britain:

1. Within the confines of current diplomatic constraints, Washington and London should move immediately to construct key attributes of a U.S.-U.K. bilateral free trade agreement, so whenever Brexit becomes reality, the time required to finalize an agreement is reduced. Rather than sending the United Kingdom to the “back of the queue,” as President Obama suggested, the United States should take immediate steps to bring our long-standing closest ally to the front. We already have a free trade agreement with the Canadians through NAFTA. Once a bilateral deal with Great Britain is reached, concrete steps should be taken to expand it to the rest of the former British Empire, including India, Australia, New Zealand, and South Africa.

2. Americans with links overseas should develop a detailed plan to reach out to the political, cultural, and grassroots leaders of Wales, Northern Ireland, and Scotland to encourage them to remain in Great Britain. If some or all of them exit, England will be diminished, and the other three will become largely irrelevant actors on the global stage. The United Kingdom must hold together to maintain its key role in global affairs in the aftermath of a Brexit. Losing chunks of its territory is in no one’s interests, save for Scottish and Irish nationalists. And those interests are more abstract, theoretical, and emotional than practical. Make no mistake: Keeping this kingdom united in the coming years may be the most difficult task of all. America may be in a better position to influence British unity than England itself, due to all we can offer economically and geopolitically to the smaller components of Great Britain. Unlike President Obama’s very public, and condescending, effort to influence Brexit, the United States should try to maintain British unity with quiet, persistent back channel lobbying and influence.

3. We must all work to mitigate the protectionist tendencies in American politics personified in candidate Trump. Protectionism promises lower economic growth, more volatility in global markets and commerce, and less prosperity. Certainly, there are “better deals” to be had for America through clever negotiation, but we should avoid shrinking from our customary leadership role in the expansion of global trade. Anyone claiming protectionism benefits the United States has probably never heard of Smoot-Hawley, and is unaware of what the Pax Americana, post-World War II, did for economic growth, prosperity, and American job creation.

4. Finally, it is time for us to recognize that recent criticisms of NATO and its mission as outdated, by both Trump and others, are resonating. Washington should work with the United Kingdom and the leading joint E.U.-NATO members to — first — ensure all members are meeting their defense spending commitments, and second, refresh the alliance’s mission to include more effective coordinated action against global terrorist actors. Re-energizing and re-purposing NATO is common ground for the United States, Great Britain, and E.U. member states who are also in NATO.

But this will require an effective agenda that increases economic and security ties between the United States and United Kingdom rather than an unwise banishment of our closest allies to the back of the queue. The Obama administration should move in that direction immediately, and hopefully the next occupant of the Oval Office will continue that path. Time will tell. This confessed Anglophile would welcome enhanced ties and the preservation of the United Kingdom’s key role as an effective champion of global prosperity and security.

 

George Seay is the Executive Chairman of Annandale Capital, a money management firm headquartered in Dallas, Texas he founded in 1998.  Mr. Seay is also Chairman and Co-Founder of the Clements Center for National Security at the University of Texas at Austin, Chairman of the 7th Generation Foundation, and Co-Founder of Sky Ranch Ute Trail, a non-sectarian faith-based family and youth ministry in Lake City, Colorado.