The UK is, without a doubt, the United States’ single most important ally. It retains an ability to project power globally vastly in excess of its relative size. In both direct military operations and the hidden world of intelligence, the UK contributes more than its share to global peace and stability and the successful functioning of the NATO alliance.
So what does Brexit mean for this important relationship?
Brexit, assuming that the Parliament does not exercise its right to overrule the voters, seems likely to be one of the most consequential events for America and the world since the end of the Cold War.
To begin with, the vote makes the dissolution of the United Kingdom much more likely. The recent Scottish referendum on independence was a near-run thing, and Scottish support for remaining in the EU is simply overwhelming. Every single one of Scotland’s 32 Council Areas backed Remain. Scottish nationalist parties are likely to move as quickly as possible to present their voters with the choice between the EU or the UK, and it seems almost certain that given those options the people of Scotland will vote to leave the UK and retain EU membership (a possibility that only gets more likely if the economic pain of leaving the EU becomes worse than we currently anticipate).
From the American perspective, the strategic implications of a Scottish departure from the United Kingdom are enormous. A UK without Scotland is extremely unlikely to be able to continue to play the role described above. It will not have the economic or population base able to maintain a sufficiently large defense establishment, and it will have to pay considerable transition costs – for example, the British nuclear deterrent is currently based in Scotland and would have to be relocated to England or Wales, a process that will cost billions of pounds and take years, absorbing resources and attention that are sorely needed to upgrade the British military’s equipment and fund operations and training.
Without support from Great Britain, the ability of the United States to act all around the world – from deterring Russian aggression towards NATO allies to maintaining freedom of navigation in the South China Sea – is likely to be significantly curtailed.
Thus, attempts to estimate what Brexit will cost the UK in GDP terms don’t go far enough. To the world it doesn’t really matter whether it’s 2% of British GDP, as Paul Krugman has estimated, or slightly more or slightly less. And the pronounced market turmoil that greeted news of the vote is only a sign that markets are bad at assessing political events (since the pre-vote polling made a Brexit vote essentially a 50/50 proposition). The immediate economic impact of Brexit is likely to be relatively low. The long-term, broader economic impact is the much bigger story.
If you don’t focus on defense issues, it can be tough to appreciate just how much the modern world economy is underwritten by American (and, implicitly, British) command of the global commons, with American military pre-eminence suppressing security tensions, maintaining global trade routes, and allowing states too weak to stand against much more powerful neighbors on their own the security to pursue their own destinies. The general global opposition to the American invasion of Iraq has tended to obscure this vital function of the American military, but it remains an absolutely essential underpinning of the global economy. Without a strong ally in Great Britain, that task has become significantly more difficult.
Gautam Mukunda is an Assistant Professor in the Organizational Behavior Unit of Harvard Business School. He received his PhD from MIT in Political Science. His first book is Indispensable: When Leaders Really Matter.
