U.S. Races to Contain Fallout From Europe’s Brexit Turmoil

Kerry: U.S. Cares About a Strong European Union
  • Kerry to gauge leaders’ reaction in Brussels, London Monday
  • Strategy to exit the EU unclear as government crisis roars

The Obama administration is rushing to help contain the political and economic turmoil roiling Europe in the aftermath of the U.K.’s surprise decision to leave the European Union, with top U.S. officials seeking to ease tensions between European and British leaders over the timing of the divorce.

As the U.K.’s main political parties struggled to address a leadership crisis, U.S. Secretary of State John Kerry visited Brussels on Monday and also planned a stop in London in an effort to gauge, and potentially tamp down, reactions among leaders across the world’s largest trading bloc. The trip is an opportunity to understand how the transition will occur -- something U.K. officials are still figuring out --and stress U.S. commitments to the U.K. and EU, a senior administration official said.

In Brussels, Kerry met with NATO Secretary General Jens Stoltenberg and predicted “an even stronger NATO going forward.” He said results from a meeting of the U.S.-European military alliance on July 8-9 “will not change one iota as a consequence of the vote that has taken place.”

A blitz from U.S. officials come amid new uncertainty over the mechanics of Brexit, which has roiled global financial markets. European leaders sent new signals over the weekend that they’re eager to consummate the departure of the U.K. as a way to consolidate support for the union and ward off similar populist uprisings in their own countries.

Among those working the phones have been Treasury Secretary Jacob J. Lew, who spoke with British Chancellor of the Exchequer George Osborne, Chinese Vice Premier Wang Yang, and other financial market participants, the administration official said. Secretary of Defense Ashton Carter‎ spoke to his U.K. counterpart Michael Fallon, and Deputy National Security Advisor for International Economics, Wally Adeyemo, has been in contact with G7 and G20 officials. U.S. Trade Representative Michael Froman and Cecilia Malmstrom, the European Commissioner for Trade, will meet in Washington.

Mass Resignations

In London, leadership challenges in the Conservative and Labor parties have created new doubts about the capacity of the U.K. government to execute the departure in an orderly way, even as some European officials push for “divorce” proceedings to begin without delay. U.K. Prime Minister David Cameron said a two-year process would begin with a new government by October.

Infighting within the Labour Party triggered a wave of resignations on Sunday among leader Jeremy Corbyn’s shadow cabinet. Meanwhile, outgoing Prime Minister David Cameron’s allies were reportedly attempting to stop former London Mayor Boris Johnson, who supported the U.K. exit, from taking over.

U.S. officials were, like many of their European counterparts and analysts globally, surprised by the outcome of Thursday’s referendum. They struggled to calibrate their response amid the U.K.’s rapidly deteriorating political climate.

Keeping the Calm

The Obama administration knows it must appear responsive to a vote that plunged the pound to its lowest level since 1985 and hammered stock markets across the globe. At the same time, the U.S. wants to be careful not to feed the chaos by appearing alarmed. The deep political uncertainty rising up in London and other European capitals have only increased the degree of difficulty for that high-wire act.

“The majority of people -- both within government and outside of government-- weren’t expecting the Leave campaign to come out ahead,” Rachel Rizzo, a research associate for strategy and statecraft, focusing on EU and NATO, at the Center for a New American Security, said in an e-mail. “That’s left governments scrambling to determine next steps.”

Kerry, speaking in Rome on Sunday, stressed that European leaders needed to work together despite the acrimony and disarray caused by the referendum.

‘Minimize Disruption’

“The most important thing is that all of us, as leaders, work together to provide as much continuity, as much stability, as much certainty as possible,” Kerry said. That, he said, would help the marketplace “understand there are ways to minimize disruption, there are ways to smartly move ahead in order to protect the values and interests that we share.”

Still, some question what impact Kerry, representing a lame-duck president who traveled to London in April to campaign against the Brexit, can have. At the time, President Barack Obama said the U.K. would be at “the back of the queue” to negotiate a trade agreement if Brexit were approved.

“The U.S. is trying to get its arms around what is actually going to happen,” Ian Bremmer, president of Eurasia Group, said in an e-mail on Sunday. “This is a fact-finding mission, not damage control. Washington wasn’t ready for this.”

William Galston, a senior fellow at the Brookings Institution and a former policy adviser to President Bill Clinton, said Kerry will take the temperature of all parties during his visit, and may offer private suggestions on how to make the best of a bad situation.

‘Move Prudently’

“This is no occasion, no opportunity for the U.S. to throw its weight around, but we can, as a friend to all, as an ally to all, we can try to do our best to encourage everybody to move prudently and not punitively in this situation,” Galston said.

The administration hopes to amplify the efforts of German Chancellor Angela Merkel, who spoke with Obama by the phone on Friday and on Saturday said she wouldn’t push to expedite the U.K.’s exit. Merkel and Obama have developed a close rapport.

“The negotiations must take place in a businesslike, good climate,” Merkel said in a press conference.“Britain will remain a close partner, with which we are linked economically.”

Sebastian Mallaby, a senior fellow at the Council on Foreign Relations, said Friday that a full exit from the European Union and a renegotiation of major trade deals by Britain could require five or six years.

“The uncertainty engendered by this vote is not only going to be prolonged, it’s going to be deep,” Mallaby said.

Merkel’s comments contrasted with other European leaders, who have urged speed in the withdrawal as a way to contain anti-establishment uprisings across the continent. On Friday, Slovakia’s far-right People’s Party launched its own petition for a referendum on the country’s future in the EU. Slovakia assumes the rotating presidency of the EU in July.

“Nobody has a stake in allowing this unfortunate set of events to spin out of control and inflict even more damage,” Galston said. “It’s clear that serious European leaders such as Angel Merkel understand that there are better and worse ways of dealing with this new reality.”

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