5 Ways Brexit Could Be Good For The US.

Why «Brexit» Would Be Good News for Russia

We’ve all seen the short-term downsides of Brexit: the stock market nosedive, the crash of the pound to 30-year-lows and the political earthquakes in the United Kingdom — including the announced resignation of Prime Minister David Cameron, the flaring up of civil war in the opposition Labour Party and the threats by the leader of the Scottish National Party to hold another referendum on Scottish independence.

This flux will wax and wane as the U.K. and the European Union soon launch into a two-year period of disengagement that is likely to feature window-rattling Sturm und Drang from both sides. But then the deal will be done, and life will go on. And life post-Brexit might be good, not just for the U.K. but for the United States.

Five areas in particular could benefit — and open a path for a new geopolitical order that’s even friendlier to U.S. interests. 

1. Intelligence sharing

The U.K. is part of the Five Eyes intelligence alliance, along with the U.S., Canada, Australia and New Zealand. This global intelligence-sharing network has the highest penetration in the world. Traditionally, the U.K. and U.S. in particular cooperate very closely. That partnership contributes to the U.K. having the best intelligence capabilities in the EU (though the Germans and French are also very good, they don’t have the global network the U.K. has via Five Eyes).

The EU has been pushing hard for increased intelligence sharing among its 28 members, but at the same time other EU institutions are enacting policies under the rubric of human rights and immigration that undermine security and operations.

According to former CIA Director General Michael Hayden: “Because of some of the positions the Euro institutions have taken on surveillance and privacy, the capitals are finding it more difficult to provide for their own citizens’ safety. So to a degree, Brussels, as a Euro institution, keeps pushing these activities at the expense of security.”

Had the U.K. been pulled closer into the EU, it is likely the U.S. would have had increasing concerns about sensitive intelligence cooperation and sharing with the U.K. in case of Brussels interference or leakage to less secure members of the EU. With Brexit, the U.K. and U.S. can continue to deepen their relationship, while the U.K. can continue to work with EU members on well-defined files of mutual interest, without risking compromising Five Eyes partners. Brexit reassures the U.S. that intelligence cooperation with one of its key allies, the U.K., can not only continue but also grow, securely.

2. Defense

Similarly, there has been a growing push by Brussels for an EU military. The goals of that military risk being very different from the goals of Washington. The cracks have already appeared.

Recently, NATO held exercises in Poland and the Baltic states in order to reassure those countries that NATO took their concerns about Russia seriously.

Germany’s foreign minister responded by accusing NATO of “warmongering,” thereby showing Russia a NATO-undermining lack of unity in the Western response and discounting the real concerns of EU partners. What would the situation be like if the EU already had a military? Would the NATO exercise have been allowed?

With Brexit, the U.S. can be assured that the U.K. — a permanent member of the UN Security Council — will remain an unconflicted partner in NATO, not subject to divergent EU policies.

3. Trade and finance

During the campaign, President Obama told the British that if they voted for Brexit, a post-EU U.K. would be “in the back of the queue” for negotiating a trade agreement with the U.S.

First, the U.S. business sector is unlikely to want to wait to make a deal with the world’s fifth largest economy, especially at a time when it is most adaptable.

Second, with the stalling of the U.S.-EU Transatlantic Trade and Investment Partnership and the precarious state of the Trans-Pacific Partnership, that queue is getting rather short anyway.

Also, one of the main drivers of the U.K. economy is financial services. The current Conservative U.K. government has a strong relationship with the City, as the home financial sector in London is called, and is likely to work closely with it to ensure that a post-Brexit regulatory regime favors the sector.

The City has a long (if dubious) tradition of working with, and leveraging, political sovereignty to create market exploits, which is why so many of the world’s tax havens are in U.K. possessions, like the Cayman Islands. Stripped of EU oversight, and with a likely compliant national government, the City will actively look to use its new position to try to create adaptable, dynamic and attractive products and services. Wall Street is going to want in.

Overall, the chances of the U.S. being able to do a mutually beneficial, relatively fast, bilateral deal with a close defense partner that has a relatively friendly regulatory regime are much better than the chances of quickly completing a U.S.-EU deal.

4. Geopolitics: The Anglosphere opportunity

The possibility of a reinvigorated U.S.-U.K. relationship creates an opening for the development of a potentially beneficial new geopolitical construct: the Anglosphere. Latticed with English-speaking countries (for example the Five Eyes) and anchored by the U.S., U.K. and India (which has its own accomplished intelligence network), the idea is to facilitate trade, strategic partnerships and more between like-minded nations. It would also act, implicitly, as a competing center of gravity for Chinese influence.

Brexit could fast track the operationalization of an Anglosphere structure. The U.S. is already actively working on developing a strategic relationship with India, and Brexit campaigners have repeatedly said the goal is not to be locked into the anemic growth of Europe, but to go global and build ties with dynamic countries like India. There is a natural compatibility that goes beyond the English language.

Already, the U.K. is a favorite destination for well-heeled Indian students, accomplished Indian professionals, Mumbai bankers and more. If the U.K. approaches India like the 21st century power it is, an Anglosphere might take shape, offering the U.S. another set of allies in a time of geopolitical flux.

5. A wake-up call for the EU

There is a (small) chance Brexit might actually help save the EU. The EU is becoming increasingly addicted to an out-of-touch bureaucracy.

Brexit may be the intervention it needs to break its habit and become more alert to ground realities. Brexit showed very clearly that, in its current form, the EU is deeply unpopular.

Ideally, the concern over exit contagion would spur Eurocrats to get back to the original goals of the union — a mutually beneficial trade zone — and to curb some of its political overreach, creating more popular support.

A more stable EU would be a good thing not just for Europe, but for the U.S. and the world. But habits are hard to break.

There is a post-Brexit path for the U.K. to become more economically nimble and geopolitically relevant, both things that would benefit the U.S. It will take leadership and vision. And time.

Ignore the sound and fury. It will take at least three years to discover the real meaning of Brexit.

Cleo Paskal is associate fellow, Chatham House, London.

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