Brexit Spawned by Tensions Over Globalization, Obama Says

Obama: Special Relationship With U.K. Despite Brexit
  • U.S. leader’s plea to stay fails to sway outcome of U.K. vote
  • Clinton says uncertainty requires ‘calm, steady’ leadership

The U.K.’s vote to exit the European Union shows the challenge posed by globalization, President Barack Obama said Friday, while promising that the “special relationship” between the U.S. and Britain would endure.

Obama said he respected the decision of British voters, and spoke with Prime Minister David Cameron -- who announced he will resign -- about ensuring the country’s“orderly transition” from the EU.

“I’m confident that Britain is committed to an orderly transition out of the EU,” Obama said at Stanford University in Palo Alto, California. Earlier, he said in a statement that “the United Kingdom and the European Union will remain indispensable partners of the United States.”

In deciding to quit the European Union, British voters spurned Obama’s plea in April to stay and put new strains on their nation’s relationship with the U.S. on issues from trade to defense.

“Obama, with his great status in Europe -- if he couldn’t sway it, it’s an indication things have changed,” said Conor McCann, a Dublin-based political affairs analyst with Massif Global.

Market Turmoil

Global markets were in turmoil over the so-called Brexit. The S&P 500 index closed down about 3.6 percent Friday after gaining earlier in the week. The pound plunged by a record, taking the euro with it. U.S. Treasuries rose as investors sought safer bets.

“The world has shrunk,” Obama said, as he explained the Brexit vote to people attending a summit for entrepreneurs. “It is interconnected; all of you represent that interconnection. Many of you are catalyzing it and accelerating it. It promises to bring extraordinary benefits. But it also has its challenges. And it also evokes concerns and fears.”

‘Ties That Bind’

The American president, who remains more popular in Europe than at home, drew praise for helping and criticism for meddling when he traveled to London in April to help Cameron in his campaign for a “remain” vote. Obama said then that he hoped “the ties that bind Europe together are ultimately much stronger than the forces that are trying to pull it apart.”

Obama praised Cameron on Friday as an “outstanding friend and partner on the global stage.” He said he had also spoken with German Chancellor Angela Merkel.

Now that British voters have rejected Obama’s arguments, it will fall largely to his successor to cope with the results because it’s expected to take two years for the U.K. to extricate itself from the EU.

Presumptive Democratic nominee Hillary Clinton echoed Obama’s call for a continuation of the U.S. commitment to the U.K. and Europe in a statement Friday, but she added that economic uncertainty spawned by Brexit may hurt working families and requires a U.S. president with experience.

Clinton Reaction

“This time of uncertainty only underscores the need for calm, steady, experienced leadership in the White House to protect Americans’ pocketbooks and livelihoods, to support our friends and allies, to stand up to our adversaries, and to defend our interests,” Clinton said. “It also underscores the need for us to pull together to solve our challenges as a country, not tear each other down.”

In Scotland, presumptive Republican nominee Donald Trump praised the Brexit vote while promoting his Trump Turnberry golf resort. The falling value of the pound might mean more visitors to the resort, he said.

“You know, when the pound goes down, more people are coming to Turnberry, frankly,” he said. Britons have “taken back their independence. And that’s a very, very important thing.”

House Speaker Paul Ryan said that markets “will eventually stabilize” and that the U.K. remains “an indispensable ally.”

Contingency Planning

As a result of the vote, the British may have less influence in shaping European policies, from the future direction of the economic bloc that is America’s largest trading partner to military affairs.

“The political alliance the U.K. has with the U.S. is really important,” said Mary Nugent, who teaches U.K. politics at Rutgers University in New Jersey and previously worked for a Labour Party member of the British parliament. “The fact that the U.K. is no longer going to be at the table in the European Union is going to be a big blow to U.S. diplomacy and trade negotiation.”

Obama raised the risks of declining British influence in sharp terms during his London visit. He warned that the U.K. would fall to the “back of the queue” for future U.S. trade deals and said “if you start seeing divisions in Europe, that weakens NATO. That’ll have an impact on our collective security.”

Those dire predictions had little impact on the referendum results.

‘Egg on His Face’

“President Obama clearly has egg on his face,” said Nile Gardiner, director of the Heritage Foundation’s Margaret Thatcher Center for Freedom.

Eric Schultz, a White House deputy press secretary, told reporters traveling with Obama on Friday that the president had always insisted the decision was up to British voters.

Schultz said Obama wanted to speak up on Brexit “because he thought this was in the United States’ interest.”

“One could imagine the blowback that might happen if the president hadn’t taken that opportunity to speak out,” he said.

Obama stands by his warning that the U.K. would be at the back of the line for U.S. trade deals, Schultz said.

Cameron on Friday said he will leave office by October, and Obama is unlikely to have as close a relationship with his successor -- especially if it’s Boris Johnson. The voluble former London mayor, who was a leading campaigner for Brexit, said in April that Obama’s intervention on the other side may stem from an “ancestral dislike of the British empire” because of his Kenyan roots. The remarks were widely condemned in the U.K.

New British Reality

Now, the U.S. will begin the long process of adjusting to the new British reality, including the fallout for business and finance.

That will include an assessment of what the referendum results mean for U.S. financial services companies that conduct euro-denominated business in London, McCann said. If it’s determined they should move to another European financial hub, such as Frankfurt or Dublin, the effect would be disruptive, he said.

The change could be positive for U.S. businesses because it could free those operating in the City, London’s financial center, from EU financial regulations, Gardiner said in an interview from London.

National Security Adviser Susan Rice said the U.S. has “every interest” in maintaining its strong security relationship with the North Atlantic Treaty Organization. “The security implications need not be particularly significant” assuming British and European Union cooperation continues under the umbrella of NATO, she said in an interview with Bloomberg Television. “I don’t see it impacting NATO.”

The U.S. will continue to support the stability of Europe and maintain strong security ties with European member states as well as the U.K., helping with issues such as refugee flows and counterterrorism, but will only assist in the transition as needed, she said.

“We won’t play a direct role,” Rice said. “We will help them to the extent that we can.”

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