Anarchy In The UK

A little Sex Pistols this morning in honor of Nigel Farage, Boris Johnson (who will most likely be the net PM) and the rest of the Brexit crew managing to convince the UK to leave the EU and wreck their own economy for a decade or so. 



I am an anarchist
Don't know what I want
But I know how to get it
I want to destroy the passerby

Apart from causing a sharp, short-term hit to Britain’s economy, the first consequence of Thursday’s vote to leave the EU will be a government crisis in London. David Cameron is now almost certain to resign as prime minister and Conservative party leader — most probably sooner rather than later. A new Conservative administration, distinctly more anti-EU in tone, would replace him.

Unless carefully managed, this process will damage relations between London and other EU capitals. The latter will interpret the Brexit vote as a hammer blow to Europe’s unity. For the sake of protecting that unity, they will be in no mood to offer generous post-Brexit deals for Britain. Negotiations will be in danger of turning into an acrimonious tug of war, distracting Europe from other urgent business.

Second, Brexit will make financial markets more sensitive to the vulnerabilities of the 19-nation eurozone. Sterling has already plunged to a 30-year low. Investors will ask whether, in the light of the Brexit shock, eurozone governments have the political will and public support to strengthen the architecture of European monetary union.

One test will be whether Europe’s banking union, including a plan for common deposit insurance, makes progress over the next 12 months. At present it is blocked. More ambitious proposals, such as an Italian plan for common EU “migration bonds” to finance the EU’s response to the refugee and migrant crisis, will have little chance of being turned into action.

Individual eurozone countries will be under intensified market scrutiny. Ahead of the British vote, yield spreads widened between German government bonds and those of less financially solid southern European countries.

The outlook for Portugal, which is ruled by a shaky coalition of the moderate and radical left, is unsettling investors. The deep-seated troubles of Greece have never gone away. In Spain, which holds a general election on Sunday, the prospects for stable government and economic reform are clouded by a fragmented political party system and Catalan separatism.

Not to mention the almost assured rise of Marine Le Pen and the French nationalists in Paris. Count on other countries to hold referendums as well, and it's not going to be pretty.

Now it's still possible that the next government will find a way to stay in and will not invoke Article 50 and leave the EU within two years, but the odds of that are pretty low.  We won't know the full damage from this for several years at the minimum, but this is a cautionary tale: fear of the other won an historic victory in the UK last night.  I'm thinking at some point it will win here in the US, too.  Maybe not Trump, but somebody far worse.

London Calling (Out Obama)

The inestimable Juan Cole handily sums up yesterday's UK House of Commons disaster as MPs voted down PM David Cameron's preliminary plan to use military force against Syria, and what it means for President Obama, the United States, Syria, and force as a tool.

The British members of parliament who debated whether to take action against Syria were obviously haunted by the mistakes of the Iraq War and determined not to repeat them.

The case of Obama and Cameron against the Syrian government has some holes, but it isn’t a bad case. But it involves murky allegations of weapons of mass destruction use by an Arab regime, and a unilateral Anglo-American shock and awe aerial attack. It looks way too much like Iraq, and there is no telling where it might lead. Britain is not very far from Syria and the repercussions of an attack could be significant. Britain also has a significant Muslim minority population that is die hard set against an attack on Syria.

The vote puts President Obama between a rock and a hard place. The formerly solid Anglo-American solidarity has been broken. Obama does not have the Arab League and he does not have the UN Security Council. He does not even have a consensus on the European continent.

Obama should pivot now and choose vigorous diplomacy over a military strike. The latter will now have no legitimacy in international law, and would not be supported even by the British parliament.

The duplicity of Bush and Blair has deeply injured faith in government, even on the part of members of government. Their use of the high-flown rhetoric of protecting helpless populations from tyrants and deflecting dire threats of WMD cheapened those endeavors and trivialized them They bent the sword of state and rendered it useless in any similar situation.

In a very real sense, the blown vote in the UK is the perfect excuse for the United States to reconsider action in Syria.  And yes, Bush and Blair made it now very difficult for future Presidents to deliver more than token military assistance, such as in Libya.  Here's hoping that President Obama considers the opportunity here to bring both sides to the table and end this war.