06.16.10

The Downside of Brit-Bashing

Obama may be spanking BP’s brass today. But the other crisis—Europe’s economic mess—reminds us why it’s important that the U.S. and U.K. stick together.

President Obama announced on Wednesday that BP has agreed to create a $20 billion escrow fund, calling the move “an important step toward making the people of the Gulf Coast whole again." BP's board chairman also announced that the company will suspend paying out dividends to its shareholders for the rest of the year. 

The controversy over the BP spill threatens to drive U.S.-U.K. relations to a historic low point. When recently in London, several people worried that the president may be engaging in “Brit-bashing” at the expense of our historically close ties. This theme has been widely picked up in the U.K. press.

“It’s the gushing geyser of Obama's anti-British rhetoric,” screams Melanie Phillips this week in the Daily Mail, "that now urgently needs to be capped.” Indeed, however much President Obama wants to beat up the Tony Hayward, who certainly deserves to be both tarred and feathered, he might want to consider how “Brit-bashing” may not be in our long-term interest. This is particularly true at a time that the world’s other big crisis—the collapse of the euro—offers a unique opportunity to shore up our now beleaguered “special relationship.”

You don’t have to be an unreconstructed Thatcherite to resist tying the country to the future feeding of widely irresponsible “Club Med” countries.

The British Empire may be little more than a historical relic, but the current euro crash could make those old ties between mother country and her scattered former colonies, including America, more alluring. After a decade marked by sputtering movement toward greater integration with Europe, the United Kingdom, particularly its beating heart—London—might be ready to drift away from the continent and back toward America and Canada and the rest of the world beyond.

This process will be accentuated by the fact that while Europe’s population and economy, particularly on its southern and eastern tiers, seems set to decline even further, the future of North America—largely due to mass immigration and its large resource base—continues to appeal to British investors and companies. In addition, the rise of other parts of the world, notably Russia, India and China, suggests that Britain’s future, like that of North America, rests increasingly outside of Europe.

Social forces in Britain today will accentuate these trends. In London today you do hear many European languages, but the big money you see around posh places in Mayfair more often speaks not Italian or French, or even German, but Hindi, Arabic, Russian and, increasingly, Chinese. London today is not so much a British city as a global one, with a percentage of foreign-born residents—roughly one-third—equivalent to that of such prominent American multi-racial capitals as New York or Los Angeles.

Just take a look at the over 200,000 people who became U.K. citizens last year, up from barely 50,000 annually a decade earlier. The EU accounted for barely 3 percent of the total; all of Europe, including the former Soviet bloc, represented 8 percent. In contrast, the biggest source of new subjects was from the Indian subcontinent—roughly 30 percent—and Africa, which provided another 27 percent.

This ethnic transformation—much like the one taking place and widely celebrated by Obamanians in the United States—helps tie Britain, despite its proximity to the continent, more to the rest of the world. The U.K. may not be ready for its own version of Barack Obama, but a post-European future seems increasingly likely through ties of both blood and money. To be sure, in the coming year the level of immigration may decline under the Tories, whose party competes for voters with nativist groups. But economics—and the disastrous state of the euro—may prove an even larger factor in the country’s transformation.

Already there is growing concern that the sovereign debt issues of places like Greece, Spain, Italy and Portugal—the so-called swilling PIGS—could force Britain, with its already weak economy, to raise interest rates and cut its budgets more than might be advisable. Last month London’s FTSE 100 has lost 15 percent of its value as a result of the euro crisis, a steep fall made only marginally tolerable by the even worse results on the continent. Future euro-moves could prove even more threatening. Wide-ranging attacks on financial speculation, so popular in an increasingly hegemonic Germany, are like a gun aimed at Britain’s economic core. After all, the U.K.’s exports are built not around cars, steel or fashion but its role as the world’s banker, consultant and business media center. “The euro zone,” complains one columnist in the right-leading Daily Telegraph, “may be leading us into a double-dip recession.”

But declining euro-enthusiasm is not limited to those considered conservative “nutters” by Britain’s continentally minded sophisticates. You don’t have to be an unreconstructed Thatcherite to resist tying the country to the future feeding of widely irresponsible “Club Med” countries or kowtowing to Berlin. Rather than the Germans and their PIGS, Britain may be better off linking with both the BRIC countries—Brazil, Russia, India and China—as well as a rebounding North America.

As the ultimate capitalist entrepot, Britain’s trump lies in being hugely attractive to Americans. In this respect, beating up BP, however justified, may also be squandering an opportunity to solidify a relationship that is needed on so many fronts from battling Islamic extremism—the Brits and the Canadians are our only strong reliable allies—to preventing German-style controls over the global entrepreneurial economy.

Herein lies our opportunity. Although not “anti-European,” Britons tend to be “deeply skeptical about the institutions of the European Union,” notes Steve Norris, a former MP, onetime chairman of the ruling Conservative party and two times that party’s candidate for Mayor of London. As he puts it: “The British do not want a federal Europe in which significant powers pass from sovereign parliaments to Brussels.”

Although Labour also resisted rapid integration into Europe, the current government under the new Prime Minister David Cameron, Norris notes, has made it clear that it is even more resistant to this trend. This may prove an embarrassment to Cameron’s historically Europhile deputy prime minister, the Liberal Independent’s Nick Clegg, but the movement away from Europe seems increasingly inevitable.

For one thing, the future of the euro may depend on expanding Brussels’ control of member nation’s budgets, something few British MPs of any party are likely to embrace. Attempts by France and Germany to expand the power of Brussels to save the euro are likely to chase away even the most devoted Europhiles in Britain.

All this is good news for a strengthened U.S.-U.K. alliance—something that should not be threatened by excessive “Brit bashing.” For all its many shortcomings, Great Britain remains one of the globe’s great outposts of both civilization and dynamic market capitalism. Its economic power may be a shadow of what it once was, but its cultural, political and role as a transactional center keep the place globally relevant.

A Britain both more Atlanticist and global also can play a more positive role by adding its weight to ours in slowing a shift to protectionism, battling terrorism and in resisting the now ballyhooed trend toward state-based capitalism. And that would bode well for Britain itself, allowing the country to play to fundamental strengths that derive from its unique historical legacy.

Joel Kotkin is a Distinguished Presidential Fellow in Urban Futures at Chapman University in Orange California and adjunct fellow with the Legatum Institute in London. His latest book, from which this selection was adapted, The Next Hundred Million: America in 2050, was recently published by Penguin Press.