US Threatens UK over Brexit Vote

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The name of the game is fear.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Brexit poses a far greater threat to the European establishment than Grexit ever did. The UK may not be in the Eurozone, but it is Europe’s second largest economy. Hence the rabid fear-mongering about the potential consequences for the UK of a yes-vote in a future in-out referendum.

Millions of jobs will disappear, the doomsayers warn. Universities will lose their funding. The City of London will decamp to Frankfurt. British farmers will lose their subsidies. Human rights will vanish into thin air. Planes will fall out of the sky. And one day the lights will all go out.

Eternal Extortion

This endless parade of doom-and-gloom scenarios is an essential part of Europe’s eternal extortion game. The same extortion game has already played out in Greece. And before that, in Ireland. The name of the game is fear, and its ultimate aim is to ensure that no meaningful change is ever allowed to take place in Europe’s bankrupt political system.

The latest warning of Brexit doom and gloom did not come from London or Brussels; it came from across the Atlantic, from arguably Britain’s closest historic ally, the U.S. of A.

The chosen messenger was U.S. Trade Rep Michael Froman. The message he delivered was unequivocal: the US is “not in the market” to negotiate a bilateral trade deal with “individual nations” like Britain. Once out of the EU, the UK would be a nobody nation, a friendless state shunned by its erstwhile allies. No more special relationships, no more five-eye meetings, no more invites to White House black-tie dinners.

In a 2009 article for Rolling Stone, Matt Taibbi described Froman as one of the most egregious examples of the way the revolving door works between business and government. Like Larry Summers, Froman is a Bob Rubin protégé. Along with them, he helped lay the foundations for President Clinton’s deregulation of the U.S. financial system. And like them, he is just as comfortable in Wall Street C-suites as in Washington’s corridors of power.

In his current role as U.S. Trade Representative, Froman is negotiating on behalf of the U.S. government (and corporate and banking sectors) some of the most far-reaching trade agreements (TPP, TTIP and TiSA) of modern history. And according to Froman, if the people of Britain aren’t careful, they will be excluded from them (an outcome that some might actually view quite favorably).

“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” Froman told the news agency Reuters, adding that European Union membership gives the United Kingdom more leverage in negotiations.

Another BRIC in the Wall

Froman’s stark warnings are a slap in the face for campaigners in Britain who are making the case for leaving the EU, reports Politico. The “Better Off Out” campaign cites “freedom to make better trade deals with other nations” as the first reason to leave the EU.

Yet according to the man who negotiates trade deals on behalf of the government of the world’s most powerful nation, if Britain leaves the EU, it “would be subject to the same tariffs, and other trade-related measures, as China, or Brazil or India.” Ouch!

If we are to take Froman’s blustery words at face value, a post-Brexit Britain will be just another BRIC in the wall. To make sure the message sinks in, Standard & Poor’s followed up with its own analysis, warning that if Britain voted to exit the EU it may lose its triple-A credit rating, for the first time since 1978.

Why All the Fear?

It’s not hard to see why the US government might be concerned about the prospect of a British exit from the EU. As its biggest trading partner, the U.S. wants a strong, healthy Europe. Which means a Europe that is not in the process of disintegrating.

The UK accounts for one sixth of the EU economy. It is also an important source of external demand and is currently the second largest net contributor to the EU’s operating budget in absolute terms, behind Germany, and the fourth largest as a percentage of GNI, behind Sweden, Denmark and Germany. If Britain were to leave, the EU would need to either cut spending or increase contributions by other member states, up to a maximum of 5.8% of current levels, in order to make up the difference.

That is a big ask for a region that has spent years languishing in economic purgatory, with some governments already in virtual bankruptcy. Meanwhile the region’s sugar daddy, the German economy, is watching its largest bank and car manufacturer suffer their worst quarterly losses in decades. The last thing the EU needs right now is to lose its second biggest source of funds.

Crossing the Threshold

But it’s not just about money. Naturally the U.S. would much prefer to deal with just one partner – Brussels – in its convoluted trade negotiations with Europe. It also wants to safeguard Europe’s transition to a fully supranational system of governance, a project that the U.S. government has strongly supported and actively (and covertly) assisted since the creation, in 1951, of the European Coal and Steel Community. That’s over half a century worth of political capital.

And now that capital is at risk. The British government, largely in response to public pressure, has done the unthinkable: it has offered the people of Britain a democratic choice between continued membership or exit of the world’s most ambitious experiment of regional integration. If the people vote for the latter, they will force open a door that doesn’t yet exist. Once open, that door may prove difficult to shut. Others may be tempted to cross its threshold.

For that reason alone, the business and political establishment in Brussels, London, and now Washington will stop at nothing to make sure that when the big day comes, the British people, like the Irish before them (second time around, of course), vote the right way. By Don Quijones, Raging Bull-Shit.

It’s hard to find a more wretched hive of corporate lobbyists, law firms, and money-grubbing apparatchiks than Brussels. And now, following dieselgate, the automakers are flexing their big muscles. Read… Cheating, No Problem: Automakers Win Again in Europe

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  24 comments for “US Threatens UK over Brexit Vote

  1. Paulo
    Nov 1, 2015 at 1:53 pm

    Funny, the US likes to negotiate with willing individual states when they are looking for chumps to help them out with their middle east wars of destabilisation. They have no problem utilizing British Tornado fighter/bombers when it suits them, but now say they won’t be able to trade?

    The bully boy US needs to bend over and pound sand.

  2. Petunia
    Nov 1, 2015 at 2:06 pm

    Membership in the EU has diluted Britain’s finest export, British culture. When the Brits look across the pond they must see themselves a century earlier, an empire in decline. The Brits have survived shedding their empire, and I doubt that now they will fear shedding that special relationship, the one that’s not that great anymore.

  3. Nov 1, 2015 at 2:26 pm

    Bring it on. End of the “Special Relationship” between UK and USA? Please, bring it on.

    If only life were that simple. But as is already suggested in this article, the powers that be will be hard at work to ensure the UK does not vote to leave Europe.

    Like Scotland not leaving the UK. Like Catalonia struggling to leave Spain and the fear factor being widely distributed there.

    Catalonia out of Spain. UK out of Europe. Such sensational moves would be good for the peoples worldwide and good for the world.

    Not so good for the vile corporates.

    I am sick and tired of the UK lagging just behind the USA as the most hated country in the world. And all because the UK is the USA’s lapdog, at least those who run the country’s lapdog.

    The world is slowly changing for the better and if the British people can somehow get out of Europe, the momentum for the good of the world would quicken overnight.

    • desmond
      Nov 2, 2015 at 5:11 am

      spot on Andrew + 1

    • Mark
      Nov 2, 2015 at 9:26 am

      You got that dead right mate!

  4. MAS
    Nov 1, 2015 at 2:34 pm

    As the Grexit. It will never happen.

    If anything the UK WILL become part of the EU period.

    Did Scotland separate. Why No.
    Did Quebec Separate. Why No.
    Did Texas separate. Why No.
    Did Venice separate. Why No.

    • Nick
      Nov 1, 2015 at 4:11 pm

      Did Slovakia separate? Why Yes.
      Did Lithuania separate? Why Yes.
      Did South Sudan separate? Why Yes.
      Did Norway separate? Why Yes.
      Did Iceland separate? Why Yes.
      Did Slovenia separate? Why Yes.
      Did Kosovo separate? Why Yes.
      Did Montenegro separate? Why Yes.

      Thinking that political units are permanent is a bizarre fallacy — look at the European map at 30-year intervals, basically a single generation . . .

      1900 – 1930 – 1950 – 1980 – 2010 – 2040?

      There is only one interval where you don’t see massive political upheavals.

      Who here thinks the EU won’t have a single secession in the next 25 years? I bet more people would wager that the first secession sparks a rush to the exits, kind of like a housing co-op that slowly falls apart over time until the only people left are the one’s who can’t afford to live in it . . .

      • MC
        Nov 1, 2015 at 5:27 pm

        The treatment Greece got from the apparatchiks in Brussels opened a lot of eyes, possibly even more than the tyrannical approach to referendums in France, Poland and Ireland rejecting the Treaty of Lisboa. But it’s not enough.

        The concept of resisting the EU or even renegotiating its nature (from “a USSR with well stocked shops” to a much more harmless free trading zone) is not exactly new: Enoch Powell was warning against the EU even before Solzhenitsyn. But the idea of an organized political resistance to it is a novel concept.
        Syriza got literally slaughtered because, for all its good intentions, it was never a genuine anti-EU movement. Some coalition members were vocal supporters of a voluntary, negotiated Grexit, but their voices were quickly drowned by those who wanted to have the pie and eat it too.
        This was a lesson anti-EU movements appear to have picked up, at least by the tone of their rhetoric. Negotiating with Brussels is not only useless, but counterproductive as well.
        Firebrand Euroskeptics such as Italy’s M5S advocate nothing less than severing all contacts with the EU.
        Even France’s relatively moderate FN has introduced in its highly detailed program the need to completely renegotiate the underlying nature of the EU.

        Now, while these political movements continue to win new converts, they have been effectively marginalized: M5S is Italy’s first party by number of votes but it was completely excluded from any government position and effectively whitewashed from mainstream media.
        Portugal has gone one step further by barring the antiausterity Socialist Party from government because “it would send the wrong signals to financial institutions”.
        Pro-EU, pro-big business sock puppets like Mariano Rajoy of Spain and Matteo Renzi of Italy may feel safe now in their belief they are in control but their puppeteers’ attempts at whitewashing dissent and the open threats by sinister figures such Michael Froman betray growing desperation on their part.
        Sure, more parties will be barred from power, perhaps another country will be made an example of as Greece was, the threats and the propaganda will continue but it’s a historical inevitability (eh! eh!) the EU in its present form will fail.
        As someone once said “No government, no matter how tyrannical, can survive for long without at very least the silent consent of the majority”.
        Consent for the EU is not just waning: it’s quickly turning into open contempt if not downright hatred.

        Yet EU so called leaders continue to display the same infinite arrogance, forgetting Ho Chi Minh’s priceless advice “Always be humble, even in victory”.

        • Nick Kelly
          Nov 1, 2015 at 10:09 pm

          Oh for god’s sake! Read Micheal Lewis book ‘Boomerang’ where he describes the totally dis-functional Greek state.
          Civil servants paid more than their German equivalents- four times as many teachers per capita as Finland, which has the best results in the EU while Greece has the worst.
          No one has ever gone to jail for income tax evasion, no receipt is ever given for any service.
          About 140 occupations deemed arduous, allowing retirement at 55, e.g. disc jockey.
          Greece has been defaulting for a over a century- it got caught issuing debased silver coins in a thing called the Latin Union.
          When Greece was admitted to the LU in about 1890, people asked, “why admit Greece, it has a large amount of un-redeemable scrip’ (IOU’s or technically, bonds)
          Casting of Germany as the oppressor is great material for a comic book- actually a number of smaller EU members want Greece to stop milking the system- Latvia, Slovenia and Finland,
          with the latter wanting Greece out. The former asking ‘why should we contribute to Greek pensions that are double our own.
          And as for these referendums- “we decided you should give us money”- you can’t vote prosperity into existence.
          No doubt there is suffering in Greece- it has an enormously bloated public sector and with a scoff- law tax system, there isn’t much left.
          But that’s not Germany’s fault.

  5. J P Frogbottom
    Nov 1, 2015 at 4:34 pm

    Hey Brits! Do what is in YOUR best national interests, not those of the US or, anyone else.
    If I we’re there, I would opt to get out.
    From an is a “company man” selling a “company line” and, who would want his company?

  6. d'Cynic
    Nov 1, 2015 at 10:49 pm

    The US not supporting Brexit because of economic consideration is a smokescreen. In reality, Britain is the No.1 US poodle in Europe, both in EU and NATO. Britain leaving EU would mean:
    – US loosing leverage in Europe
    – Central European countries, and former soviet satellites might get ideas of their own, and follow suit.
    The current overbearing attitude of German leadership in the migrant crisis is not helping European unity at all.

    I will finish with a quote from Bismarck: “A statesman cannot create anything himself. He must wait and listen until he hears the steps of God sounding through events; then leap up and grasp the hem of his garment.”

    • Nick
      Nov 2, 2015 at 5:10 am

      Bismarck—-considering how things turned out for him, maybe not the best advice. ;)

  7. ML
    Nov 2, 2015 at 3:27 am

    Here in the UK, long ago I voted against joining the Common Market, EU as it is now, but now that we’re in I think it better to stay than come out, notwithstanding all the fiscal and socio- economic reasons to withdraw. Better to initiate and foster change from the inside than expect to be taken any notice of as an outsider.

    • David Webster
      Nov 3, 2015 at 11:48 am

      ML. That’s the British way, join the club and make changes from within. This does not work with the EU, we have no influence. Propose a change the French government does not like and they throw their toys out of the pram. We would have more influence on trade from outside the EU. Politics and law, we can look after these ourselves. You can probably count UK wins within the EU on something you only have one of. Can I recommend you read The Great Deception by Booker & North. That should make you angry enough to want to leave.

      • ML
        Nov 4, 2015 at 12:24 am

        Noted, thank you. I have ordered the book, it should arrive tomorrow. Although when i shall be able to get around to reading it I have no idea. I have piles of books waiting to be read as it is.

        I don’t get angry as such, a waste of time. Also I do not have much interest in politics, regarding it as a form of entertaining the troops. I went to a business conference (of directors) where Margaret Thatcher was the guest speaker before she became PM. At the end of her speech, she was given a standing ovation. I wondered why when what she said made sense the directors present hadn’t the confidence to implement the ideas in their companies without needing her encouragement. It wasn’t as though there wasn’t already a groundswell of public enthusiasm. All that Mrs T tried to do was offer help from a political standpoint. As if to squeeze from both ends (top and bottom) the resistance to change that is stuck in the middle.

        It doesn’t surprise me in the least that the US is concerned that the UK might withdraw from the EU. China is getting into bed with the UK and being welcomed with open arms.

  8. Dan Romig
    Nov 2, 2015 at 6:58 am

    The UK should assert its autonomy and independence by separating from Brussels.

    • MC
      Nov 2, 2015 at 7:37 am

      And there are many ways to do so.
      As Ron Paul said “A free trade treaty doesn’t need 600 pages”.

      Free trade doesn’t automatically imply a pervasive and obnoxious bureaucracy led by unaccountable for apparatchniks. Yet in our modern world it’s either the TTIP (whatever the contents: I doubt Doctor Paul’s 600 pages would be enough however) or crushing protective tariffs.

  9. Marcus Sefoy
    Nov 2, 2015 at 12:24 pm

    Europe is a U.S colony. The U.S drew the European map after WWI. Europe has been occupied since WWII. The EU supranational entity is a U.S construction that Europeans fought agaist, the same goes for the Euro. The U.S forced Europe to enter a sanctions war against Russia. The U.S threaten France with sanctions if they sold the Mistral ships to Russia. The U.S told Germany to open its gates to Muslim immigration… and they did… it goes on and on. GB will do as they are being told.

  10. David Webster
    Nov 2, 2015 at 3:50 pm

    The same mistake is being made here to equate the EU with Europe, with the single market. The EU is not Europe. The EU is not the single market, that is the EEA, and you do not need to be in the EU to be in the EEA; the EFTA countries for example. The UK needs to get out of the EU and rejoin EFTA so that is remains in the EEA (the single market) but is out of the political garbage. The EU was built on deceit. It is and always has been the intention to form a supranational government in Europe. We need to be able to make our own laws and recall our own representatives. We should do what’s best for the UK, not to upset anyone or to appease anyone, but because it is what the UK needs. If the US is concerned about loss of influence through the UK it should consider that the UK would have more influence on trade policy if it was outside the EU, as it would then have direct input on the formulation of policy, which it does not now as an EU member.

  11. Alex
    Nov 3, 2015 at 7:39 am

    “It’s hard to find a more wretched hive of corporate lobbyists, law firms, and money-grubbing apparatchiks than Brussels.” – HUH? I believe there is a serious type there, with “Washington, D.C.” mistakenly replaced by “Brussels”. For all the anti-EU sentiment, there are so many levels of progress you are ignoring. Also… if the people gave the EU audit division real power, then much of the waste would be gone. Just like the same idiotic situation in the US with the GAO.

  12. JT
    Nov 3, 2015 at 9:39 am

    Separation is the future. In the act of trying to make war obsolete, Brussels has made it increasingly likely. Brussels is UCC style corp vs actual Sovereigns in the hearts of the people. I just wish balkanization would come to the USA too. Cant wait. Buy some metals for a rainy day. You WILL need them. One way or the other.

  13. overtheedge
    Nov 3, 2015 at 12:16 pm

    Bureaucracies will always defend bureaucracies. It is a matter of promoting job security.

    All the Brits need to ask themselves is, “Do bureaucrats produce national wealth or do they consume it?”

    The market will continue to go on. Produce a good product, offer it at a good price and it will sell. Will it continue to be profitable if the bureaucrats continue to skim the profits? Does their skim increase your profits?

    Can England afford to foot the bills for a plethora of curious non-producers eager to saddle your economy with additional conditions and levies for supporting a vast and growing bureaucracy? All in the name of egalitarianism in the market. Think about it, the bureaucracy is against any country producing a better product because it will gain a competitive advantage. You can’t force garbage up to your level through bureaucratic mandates; you can only be reduced to the same level as garbage. That is, was and will always be the problem with egalitarianism.

    Your choice. Do as you inevitably will.
    I’m betting that you will continue to pay more and more for less and less market advantage. Bureaucracies always grow to consume all available monies. Just look back at the history.

    P.S. Froman’s threats have all the substance of weakly flavored gelatin. So, oooo, stand back as he is a fairly dangerous bureaucratic toad with a load. The USA has no options but to negotiate with a sovereign England over trade, mutual defense and just about everything else. What Froman needs is a good enema and a healthy dose of roughage as he is so full of it.

    Can we spell bureaucratic desperation?

  14. David Mac
    Nov 3, 2015 at 3:31 pm

    I suspect Mr Putin will have a big say in this.

    Russia invaded Ukraine and NATO did nothing. I expect the same inaction if Russia invades Poland.

    Then we’ll see how strong and united the EU really is…

  15. bh2
    Nov 3, 2015 at 5:32 pm

    I strongly suspect the UK government solicited this public show of “solidarity” from the US.

    The failure of Cameron’s shadow-show of pretended “negotiation” with the EU will only make more plainly visible to the British people that they are firmly stuck with a rotten deal with a declining economic entity — a deal they can only substantially alter by walking away from it.

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