Read the other installments in this series:
 
The CRF Files, Introduction
CRF Files, Part I: The Future of Korea
The Cutting Room Files, Part 2: The Future of Mexico
The Cutting Room Files, Part 3: The Future of Canada
The Cutting Room Files, Part 4: The Future of Japan
The Cutting Room Files, Part 6: The Future of China
The Cutting Room Files, Part 7: Europe
The Cutting Room Files, Part 8: American Politics

This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on IndieBound, Apple Books, Hudson Booksellers, Barnes & Noble, Amazon, Google Play, or Kobo. 

I’m not going to more than obliquely address the UK elections coming this Thursday (December 12). Polls at this time point to a strong Conservative showing, largely because British Labour leader Jeremy Corbyn is a sexist, anti-Semitic, anti-Western, authoritarian, unrepentant Stalinesque bigot whose main message to lifelong Labor members is “vote for me because I’m not a Conservative.” Not exactly a winning program, and that’s before you take a look at his economic proposals. Corbyn is also personally for Brexit even if his party is semi-officially opposed.

I’m far more concerned with what will happen in the United Kingdom in the weeks and months to follow. Barring some truly impressive political gymnastics, the UK’s divorce from the European Union has been baked in for some time. And while it has been dizzily entertaining to watch British politics contort in its attempt to alternatively operationalize or deny that basic fact, this particular chapter is almost over and Brexit is about to happen.

As seems to be the case with me these days, looking forward first requires a look back.

Only a century ago, the British Royal Navy was the greatest the world had yet seen. The Brits used that incredible navy and their capable (if small) contingent of land forces to maintain an empire where the sun never set. That isn’t a metaphor, but instead quite literal.

But the ravages of the World Wars shattered the world’s navies and shattered right along with them the British Empire. The British were so desperate at times for war materiel that they signed away to the Americans the rights to many of the bases that made their empire.

What did they get in exchange? Fifty destroyers that were far shy of substandard when they had been built a quarter-century previous, along with a fistful of loans on terms that could best be described as usurious. This was Lend-Lease, the policy discussed in American history textbooks as a gesture of “goodwill.” The near-eradication of British power from the Western Hemisphere and the welding of British fortunes to American strategic desires was the first step in the creation of the American-led international system. Britain didn’t claw its way out from under the debts until the 2000s, and it still hasn’t gotten most of its bases back.

The issue with London from the American perspective is harsh in its simplicity. Only three countries have ever threatened the U.S. mainland directly. The Soviet Union aimed nukes at the United States, and so Washington will typically take steps overt and covert to whittle away at Russian power. Mexico and the United States fought a land war, that ended with the Americans taking half of Mexico’s territory.

The third country to threaten the American mainland is the Americans’ former colonial master, the United Kingdom, and Washington will always – at a minimum – keep an eye open for opportunities to ensure that the balance of power in the bilateral relationship never again tips against the United States. Are the two countries allies and family? Certainly. But as we all know, family drama trumps pretty much everything else. 

Which brings us to the current day: Brexit is providing Americans with the biggest opportunity to lock the Brits into strategic enslavement since Lend-Lease.

The first aspect of the opportunity is institutional:

Big decisions in the European Union require unanimity, and there is no version of a British divorce from the EU that would have satisfied the Irish on border issues and France on nationalist issues and Spain on Gibraltar and the Netherlands on EU rules and Germany on market access and Luxembourg on financial issues and still be able to make it through the British Parliament.

There was never going to be a divorce deal, and in prolonging the Brexit talks from a few weeks to now over three years the Brits have had to sacrifice nearly every bit of financial, political, economic and strategic leverage they could have used to chart an independent path. Strategically and economically, the British are now weak and vulnerable, and their eventual post-EU membership trading partner will be able to pick them clean.

The second aspect of the opportunity is about economic centers of gravity:

Half the UK’s trade portfolio today is with the EU. In perfect conditions it takes the EU over a decade to negotiate a trade deal with countries they like (think Canada). Add in some Brexit-related bad-blood, the never-far-below-the-surface geopolitical competition with the French, the Dutch insistence that anyone who gains access to EU markets also follow EU rules in full, an Irish penchant for knife-twisting, Germany’s iron-clad demand that the UK pay Europe in cash for EU market access, and Spain’s never-ending bitching about Gibraltar, and ten years will barely be enough time to decide the shape of the negotiating table. That flat-out rules out meaningful re-integration with the Continent on the sort of time frame the EU likely has left (which in and of itself will be a topic for later in this series of newsletters).

Turkey is often mooted in the British press as a replacement, but its current imports from the UK are less than 1/30^th the amount they would need to be to replace the UK’s exports to the EU. In fact, to replace EU trade, Turkey would have to import from the UK exclusively. And the country has dropped into narcissistic nationalism. So let’s just stop pretending anyone is interested in that deal, shall we?

China is simply too far away to be the Brits dominant trading partner, even if you buy into the “rising China” propaganda. (Incidentally, much China-UK trade today is gateway trade to the EU. Post-Brexit that’ll go pbbbbbt.) The combined Commonwealth is both too scattered and insufficiently wealthy. Even worse, the most significant piece of the Commonwealth – India – is notoriously opposed to free trade deals on principle. Canada is willing, but just isn’t big enough. Nor does Canada boast enough young people to serve as a meaningful sink for British goods.

The only market with the proximity, size, institutional capacity, and complementary needs and capabilities to be a meaningful trade partner is the United States itself.

The third aspect is political:

Like the United States, the UK is experiencing one of its once-a-generation political reshufflings with both the Conservatives and Labour shattering along economic and populist fault lines. Neither Boris Johnson nor Jeremy Corbyn are the sorts of blokes you would introduce to your mom, and the pair are now deliberately, hilariously, tragically mis-running Parliament. Makes it difficult to have a meaningful conversation about the future, much less build consensus, much less get anything done. Post-EU domestic economic regeneration was always a near-impossibility, but with this sort of political chaos the post-Brexit Brits will be desperate for any sort of lifeline. Only an American lifeline will be on offer, but that comes with conditions. Many conditions.

The fourth aspect of the opportunity is strategic:

Post-Order America won’t be in the business of supporting allies that cannot support themselves. To that end Britain has location and hardware arguing for it. Great Britain’s position just off the European mainland has made London the European arbiter for the bulk of the past four centuries. Britain’s geography couldn’t be better designed to drive the French mad. It acts as both effective barrier to large-scale attack while also giving the English a redoubt from which to interfere on the mainland. Close enough to participate in Eurovision, separate enough that armies marching across Europe isn’t reason enough to leave tea early. That’s useful to America.

Just as important, the Brits are in the process of floating two of the four biggest aircraft carriers in history that are not U.S. flagged. That’s useful to America. But in the post-Cold War era the British tried to do three things simultaneously: downsize their military while also building those supercarriers while also increasing the size of their ground forces to assist the Americans in places like Afghanistan and Iraq. As such the British navy was forced to decommission a huge swathe of their ships. As venturing out with a supercarrier that doesn’t have an escort ring is a great way to lose a supercarrier, the only way the British navy can now function is hand-in-hand with the American Navy. Moreover, carriers are crap for defending trade. That takes a lot of smaller ships – smaller ships the Brits currently do not float…but the Americans do.

The Americans are certainly willing to de facto merge navies for Britain’s strategic and economic benefit, but only in exchange for considerations on other things. Lots of other things. Most notably in the bilateral trade deal the Brits so desperately need.

Which brings us to the nitty gritty.

Within British politics there has always been a small but vocal group – most notably but hardly exclusively within Labour – who is annoyed that the United States plays such a loud role in internal British…everything. Of late most of the British political spectrum has come to the conclusion that if there is a future for the UK in the wider world, it will involve a trade deal with Washington. Which means we’re starting to see some linkage between some latent anti-Americanism and some raw-nerve British political issues. This was unavoidable, but that doesn’t mean it is pleasant, much less focused on the right things.

The item that’s getting the most press at present are Jeremy Corbyn’s recent comments on the National Health Service. Most in Europe and Anglo-America look at the NHS as…a bit of a disaster. Middling-quality, high-cost health care permeates the British system, but the Brits adore the NHS and really that’s all that matters. Corbyn has postulated that a trade deal with the Americans will force American-style prices for prescription drugs onto the NHS (apparently the American inclination for pill-popping is something else we got from our cultural parents).

Honestly, it is a perfectly reasonable concern, but it is also almost comically small fry. If one wants to be afraid of getting in bed with the American elephant, one needs to think bigger than drug prices.

Much bigger.

First, agriculture.

It probably comes as no surprise that British food isn’t…good. A big piece of the explanation is geographic. The UK is a short-summer, cool-temperature, low-sun country with mediocre soil quality. Those aren’t the sorts of conditions that generate a wild diversity of high-quality foodstuffs. What improvements to British agriculture and rural prosperity that have occurred during the past four decades are largely due to EU exposure.

On the production side, the few things the Brits do well – certain types of meat, dairy and especially fish – are exported to the EU market, a market that soon will be largely closed. On the financial side, the EU’s agricultural subsidy program is among the world’s most lavish. It has slowed technological uptake and consolidation that has defined global agriculture since the 1970s. With Brexit those subsidies will vanish in a day.

Like it or not, low-cost, high-quality American agriculture is about to swamp the British market, and American trade negotiators will blast away whatever protectionist measures the Brits will want to erect to protect their own farmers. Phytosanitary requirements, hormones, tariffs, quotas, you name it. It will all vanish and 66 million UK consumers will soon be American fed.

Second, manufacturing.

Even after seven decades of integration, most European countries take great pains to protect their manufacturing networks from foreign involvement. The UK included. For the Americans, who have already integrated with Canada and (to a greater extent) Mexico, that won’t fly. The Brits will have to join the American manufacturing supply chain system based on the NAFTA model.

If the Brits thought that tussling with the French over aerospace or the Germans over automotive was a frustrating experience, its nothing compared to dealing with the colossal, tangled networks of North America where mammoth economies of scale can drown the Brits out. What will likely hurt the most is sudden exposure to Mexican manufacturers. US and Canadian manufacturers have had decades to adjust to the ever-more-skilled but always-less-expensive Mexican work force. UK manufacturers will have to do so nearly overnight.

Third, finance.

London has been the world’s second-most important financial center for decades, a position it solidified with its membership in the EU. Put simply, the Brits penchant for low taxes and lower regulations has long encouraged many Europeans to handle their finances in London rather than at home. This is doubly true for any pass-through monies that sought to escape the bloc for greener pastures.

The agony of endless Brextensions has taken the shine off that system. With the specifics of the UK’s future in doubt, the UK is no longer the holder of value it once was, and pass-through money is more likely to skip London altogether. The wildly gyrating pound only underlines both weakenings. U.S. trade talks will end both roles altogether. The Americans will demand the relocation of the bulk of the London financial district to New York City.

(Don’t think for a moment that the Europeans will get more than one-quarter of London. Every time the Continental Europeans float the idea that all euro-clearing must be handled in the eurozone, the Americans remind them that should that occur the U.S. will require that all dollar-clearing would then need to be handled in the United States. As the USD is more important to European trade than the euro, such reminders tend to convince the Europeans to pipe down for a bit.)

Most of the pro-Brexit crowd voted the way they did because they don’t like faceless European bureaucrats deciding issues for Britain. The reality is that Britain’s only way forward post-Brexit is to assign even greater levels of authority to American bureaucrats.

The Brits could always say no. They could try to fly solo against a more insular and prickly America, an unleashed France, a rapidly rearming Germany, a resurgent Turkey, and a desperate Russia in an environment of wildly higher energy prices and food prices. (Spoiler alert: There’s a full chapter in Disunited Nations on each of these countries’ pasts and futures.) The Brits could choose to slip into permanent military irrelevance and strategic vulnerability. They could choose to suffer an economic disconnect as bad as the Great Depression that would include dramatic reductions in standards of living and employment and energy availability and health care. Some countries, when faced with the choice between pride in poverty vs relative wealth and security, go with the former.

But I doubt it. The Brits tend to be pretty pragmatic. Stiff upper lip and all that.

Early in the Order era, the Brits attempted to restart their empire by seizing the Suez Canal from the Egyptians. The Americans gave them a hard f**k-no, started to cut the British economy out of global finance, and made some not-very-veiled threats that they’d eject British troops from Egypt by force of arms. The Brits – shocked and chagrined – made the conscious decision to never again be on the Americans’ bad side. In the 2020s that means strategic subjugation, by doing a deal on America’s terms.

While this forecast may seem as cheery as a London winter morning, it could be a lot worse.

In a post-Order world, these British economic sectors are going crash anyway. At least a deal with the United States holds out the hope for something better down the line. Even more importantly, the Brits have something few others could hope for: the Americans have saved them a seat at the table.

The Americans spent the last seven decades paying the world to be on their side. Those days are over. The only countries that will be able to enjoy U.S. market access and strategic cover are those who either pay the U.S. a lot of money, or bring something exceedingly shiny to trade. Supercarriers, being the gold standard of strategic assets, count. Islands off major continents, being the gold standard of strategic positions, count.

Simply put, the United Kingdom has an in so long as it cow-tows appropriately. Japan is in a strikingly similar position for similar reasons. Mexico gets an invitation because it is an entangled neighbor with a dynamic economy. Canada (barely) squeaks over the threshold largely out of habit. South Korea (so far) is paying its way.

And that’s…everyone.

Those five countries are the only five major countries likely to make the final cut before the end of 2020. They collectively account for nearly half of the American trade portfolio, and they will comprise nearly the entire American Friends & Family plan. With the exception of the UK, everyone else’s deals are already in the can. Whoever wins the election on Thursday will need to seal a deal with the Americans before the Americans lose interest in…everything. Beyond these five countries, everyone else will have to defend their own territory and trade, and there are less than a handful of states that have the strategic and economic capacity to even attempt such a feat.

Dark? Dreary? Even depressing? Sure. But in a world of full American disengagement, having any relationship with the Americans at all is about as good as it gets.

Pre-order Disunited Nations: The Scramble for Power in an Ungoverned World

Early April 3 United Kingdom Prime Minister Theresa May met with the leader of the Labor opposition, Jeremy Corbyn, to discuss a common way forward on the UK’s impending divorce from the European Union.

Drama ensued. Markets and media immediately swooned that a softer Brexit, in which the UK retains significant links to the EU, was in the offing. One of May’s ministers quit her cabinet in fury over the very idea that the prime minister would speak to an elected representative from across the aisle. In recent days protestors in the hundreds of thousands have descended upon London to protest Brexit, while millions have signed a petition hoping to overturn, stop, or at least delay the process. A particularly fun resolution circulated in Parliament intending to dock May’s pay.

(Yes, I’m having an unabashedly good time here.)

The May-Corbyn is less “too little too late” and instead “not relevant at all”. It isn’t so much that a softer Brexit is no longer an option, but instead that it was never an option.

The first step of the Brexit process has always been not to determine what the British might be happy with, but what the remaining 27 members of the EU might tolerate. Under EU law each and every member state must sign off on the big issues — such as divorce agreements. It only takes one EU member to force the UK into a no-deal Brexit.

Any “soft” deal that grants the UK some of the EU’s benefits without all the EU’s costs and responsibilities is one the Union ruled out from the very beginning. Moreover, the UK’s firmest allies within the Union — most notably the Netherlands — have repeatedly and explicitly ruled such deals out for the simple reason that if the UK can get such a deal, so will everyone else, which would render the idea of the EU rather pointless. And since it only takes one country to veto any deal, the idea that the UK has any leverage in these talks is silly.

The result has been the “deal” Theresa May managed to negotiate. It obliges the UK to pay into the EU budget and abide by all EU regulations but forfeits any ability to influence what those regulations are. The Brexiteers have a point when they say the deal is worse than membership, but that deal is the only way the UK retains trade access at all. Unsurprisingly, Parliament has voted it down three times.

Anything shy of a no-deal/hard Brexit requires EU unanimity, UK government approval and Parliamentary ratification. A no-deal Brexit requires none of that. A no-deal Brexit is the default. So, a no-deal Brexit is where this ends. In nine days.

Everything else isn’t simply beside the point, it has always been beside the point.

Still, the Brits have obsessed over setting up a bunch of political dominos. It’d be rude to not knock them down.

• May isn’t going anywhere. Normally when a British political leader proves unpopular within her caucus, a vote of no confidence is held within the party to eject him or her. May was subjected to just such a vote back in December. She survived it. According to the Conservative Party’s rules, she need not fear another vote until December 2019.
• Nor is May’s government going anywhere. Normally when a government proves unpopular a vote of no confidence is held within the Parliament to eject it. May’s government was subjected to just such a vote back in January. She survived it. While another no-confidence vote is always a risk, its passage would trigger general elections. Not only is this something the Tories want to avoid desperately but resolving elections would take (a lot) more than the nine days remaining before the Brexit crash-out.
• Nor can May negotiate a new deal. Parliament reclaimed her power to do that back in March. May is still prime minister, but she no longer has any legal or political influence over the issue of the day.
• Nor can Parliament negotiate a new deal, or at least not competently. No party has a majority in Parliament, and that was before the parties started fracturing. Because the government has been stripped of negotiating power, any new negotiating team would have to come from Parliament, but not from the factions of the Conservative party that supports the government. Instead the negotiators would need to come from the anti-government Tory faction as well as the opposition. The leaders of these two groups are Boris Johnson — the leader of the Brexiteers — and Jeremy Corbyn, who also supports exit from the EU despite much hemming and hawing. So that option has a bullet in its head right from the get-go.
• Nor will the EU shift its position. The April 12 date is already the EU’s second delay, this most recent delay was only of two weeks, and there is no longer anyone in London for the EU to negotiate with. May doesn’t even retain the legal standing to request an additional delay.

Nor will there be a new referendum. May is opposed to asking the population the same question twice (and she has a point), while Parliament is split on the topic. The Tories are majority against a new referendum, while Labor favors a new election instead of a consultation on the narrow topic of Brexit. And again, a referendum couldn’t be held within nine days anyway.

Which means those hoping for an outcome that is anything other than a hard Brexit must pray for one of two exceedingly unlikely outcomes:

Option A: May herself decides to go back on everything she has felt she had no choice but to try to achieve and unilaterally roll back the Article 50 process. Considering that Parliament initiated the Article 50 process it is unclear if May has such authority; she would immediately find her decision in court. Lawsuits move faster in the United Kingdom than they do in the United States, but getting constitutional law sorted out in less than two weeks is not in the cards. Chance of this both happening and ending in Brexit delay, stall or revocation? Less than 1%.

Option B: Queen Elizabeth II skips tea, sashays out of Buckingham, mounts a fabulously over-decorated horse, trots to Parliament, declares her royal non-confidence in the government, flourishes a gleaming sword in an attempt to rally the crowds to dismiss the government. (Ironically — hilariously — until recently the Queen had the power to dismiss the government without first summoning the people, but in 2011 the Brits updated some of their laws for the 19th-century and revoked that specific power.) Chance of this both happening and ending in Brexit delay, stall or revocation? Slightly more than Option A.

(Of course, this is the United Kingdom. Unlike every other country in the world, the British couldn’t be bothered to write their constitution down. So much in this newsletter as well as much of everything you have ever read anywhere else about the British constitutional system of government is based on interpretation of tradition.)

It is time to start thinking about something completely different, about life beyond a (hard) Brexit. To be blunt, the British government has a lot of other things they need to get cracking on.

First, they need to overhaul forty years of regulation and legal structures to function in a world beyond the European Union. Once a country joins the EU nearly every aspect of their domestic economies along with every aspect of their import and export systems becomes integrated into EU law. That now all needs unwound and reset to the new reality. Under normal circumstances I’d estimate that’s a half-decade process.
Second, the UK needs to negotiate replacement trade deals. One should probably be pursued with the EU itself, but that is — minimum — a decade process. In my estimation the EU doesn’t have that much road left so probably best to go just through the motions. Far more important are deals to be made with every member of the Commonwealth — where London still holds considerable strategic and political sway. Bilateral agreements with Turkey, Japan, Korea, Taiwan, and Brazil would probably be a good idea as well.

Third, NAFTA looms large, and is more important than all other potential deals combined. The Brits were already eyeing bilateral agreements with the United States and Canada, but since the new NAFTA has not yet been ratified, now would be an ideal time to shoehorn the UK in.

Fourth, time to figure out how to work without global capital. London serves as the financial bridge between the United States and the European Union. Or at least it did. With the UK out of the EU, that role has ended. Add in the general chaos and pretty much the entire financial district of London will liquidate or decamp. Some will go to the EU, while most will go to the United States. (The terms of any UK-US trade negotiations will force that issue). Expect four-fifths of the City’s financial business to relocate. The Brits need a fundamental economic overhaul.

Fifth, as the Americans back away from providing global maritime security, countries are going to discover that guns are at least as important as butter. The Brits have a fairly respectable gun collection, and a fairly robust reputation for using gun policy to complement butter policy. Call it gunboat diplomacy. Call it neo-imperialism. Call it a creative use of special forces. I call it a historical propensity to be a trendsetter in the application of security policy to diplomatic and trade affairs. Very few other countries will think that’s a good idea, but very few other countries liked dealing with the British Empire back in the day either. Just because it isn’t popular doesn’t mean it can’t work. (How the world’s former naval superpower interfaces with the world’s current naval superpower on issues like this will be particularly interesting.)

Which brings us to one final issue: the Brits need to move on.

All the above requires leadership, and while I may personally have great respect for May’s tenacity and endurance, I am not the person whose respect she needs to earn. Whoever was responsible for negotiating Britain through the thankless Brexit process knew from the beginning it would consume them. May was always going to be a transitional leader, and today she is a spent force. It is time for someone else, and that requires an election.

It is a heady time. The global Order is collapsing as the Americans back away. The EU now must confront all the issues that they faced back before the Brits started the Brexit process. Whether the issue is debt or banks or refugees or demographics or trade each and every one of them has the capacity to utterly wreck the Union. Turkey is on the rise. China is wobbling like a spinning plate. Russia is on the warpath. Everything is in motion and the United Kingdom, despite its hang-ups and challenges, is one of the few countries with a capacity for independent action.

Whoever rules the United Kingdom next will make the decisions that will shape its role in the world for at least the next half century. Based on your read of the British political environment that is either the most encouraging or most terrifying thing you’ve ever heard.

It looks like the Brits are in trouble. In the past 48 hours two major UK government ministers resigned: Brexit Secretary David Davis, and Foreign Minister Boris Johnson. It’s not hard to see why they’re gone. Brexit is really the only foreign policy issue that matters to most Brits, and the Davis-Johnson duo have been at it for nearly two years with zero results.

First, the least important outcome. The government of Prime Minister Theresa May is probably fine. It is no secret that May brought major Brexit supporters such as Davis and Johnson into the government to deal with the Brexit issue in part to discredit them. That has now – thoroughly – been done. While May still may face a backbencher rebellion (she leads a minority government so that’s always a concern), breaking the Brexit leadership’s back should give her more room to maneuver (domestically at least).

Second, this does not mean that the Brits are going back on Brexit. General sentiment among the sort of people who supported Brexit during the referendum two years ago has, if anything, hardened. Moreover, Labor leader Jeremy Corbyn is a semi-stealth Brexit supporter, so even if there were new elections and even if Corbyn became prime minister, Brexit would still be on the menu… albeit likely with a less impressive negotiating team.

Third, with the Brexiteers on the outside of London’s negotiating team, they are guaranteed to vote against any version of Brexit that they don’t care for. A hard Brexit is now the only reality.

A “hard” Brexit is one where the UK crashes out of the EU with no deal whatsoever. Any deal the UK has struck with the EU – for health and sanitation, tariff reduction, capital repatriation, or any of a thousand other topics – will be affected or restricted. Any UK supply chain that begins, ends or passes through any other country will become sticky, with many of them simply breaking. That impacts – conservatively – two-thirds of the UK’s external trade which itself accounts for roughly one-sixth of the UK’s GDP.

In every instance for every good and every transaction, the UK will need to decide whether to unilaterally retain EU rules or unilaterally adopt the rules of the target market in the hopes that the other side – also on a case-by-case basis – decides to allow the trade to flow without a legal understanding in place. The bureaucratic drag alone may well double the cost of doing business in the Kingdom before the political issues are even considered. London will try to establish trade deals with other players to make up for lost EU trade, but the EU is close and big and trade deals take months to years to negotiate.

Financial flows will be hit most of all. The Brit’s proclivity to let capital ebb and flow to wherever it wants to go have made London one of the world’s three largest financial centers. That is now over. Financial centers need a low-regulatory environment and access to a large market and political and market certainty. There will be no deal with the EU on finance, meaning there will be no unrestricted access to the EU, and with the uncertainty of a no-deal scenario, London’s financial industry will now decamp en masse.

Maybe one-quarter to one-third will relocate across the EU with Frankfurt and Paris doing fairly well. After all, at least some of the relocating bankers and financiers will need access to the EU from within. But most will go to New York which has a larger labor pool, similar regulatory format and global reach.

The EU will attempt to claim that financial clearing for euro-denominated transactions must be done from within the eurozone to prevent the Americans from gobbling up the lion’s share of the business. The Americans will disabuse the Europeans of that notion by threatening to force all dollar clearing to occur within the United States’ borders. Since Europe’s external trade is dollar-driven and not euro-driven it will be a fun conversation to watch but it’ll be pretty short. Regardless, London will not be a participant in the discussions. Regardless, London will hollow out.

All in all, the UK faces the greatest economic disruption since World War II. The Brits are looking down the maw of a minimum of a three-year depression where GDP falls by at least a fifth.

But all that was baked in before Davis and Johnson left. All that has been baked in since the Brexit vote. As the Greeks discovered at the beginning of their crisis, you cannot vote yourself rich… but you can totally vote yourself poor. There was zero chance the EU was ever going to grant the Brits the benefits of membership without the costs. Brexiteers like Davis and Johnson who claimed otherwise were either lying, stupid, or suffering from head injuries. The only options before the Brits now are reneging on Brexit (not politically possible), and a hard Brexit. And so a hard Brexit is the only road forward.

This is not a condemnation of the Brexit vote. I see the entire global system crashing down in the next one to four years. The Bretton Woods Order – the basis for that system – is an artificial construct the Americans designed, created, maintained and subsidized to fight the Cold War. They’ve been backing away from the Order for three decades, and they are now abandoning it wholesale. It would have happened without Trump, although probably a bit more slowly and without the…flair.

That means that everything in the global system that was predicated upon the Order will need to find a new basis for existence. Europe has two big Order-dependent things. NATO – which may well formally collapse at this week’s summit – and the European Union. There is no way that an export-based union of mutually antagonistic countries whose security is guaranteed by an outside power can survive in an environment in which those exports are impossible and the security guarantor leaves. The EU was going down anyway which means the Brits had to figure out their way in the world anyway. Brexit means they get a head start on the rest of Europe. Recent developments haven’t brought disaster, they’ve brought clarity.

Yes folks, a hard Brexit is the best-case scenario for the United Kingdom because it forces the Brits to move on now. So yes folks, a three-year depression that knocks a country’s GDP down by one-fifth is probably the best-case scenario for anyone dependent upon the Order as the world slides into Disorder.

I expect the Brits to come out of this better than nearly everyone. For two centuries they ran a globe-spanning empire that was the largest economic entity ever (at least until the Americans came of age). If there is one country that knows how to operate in a disorderly world, without continent-spanning trade pacts, where military and economic power are often fused, that has already stitched together a strategic security plan, it is the United Kingdom.

But that doesn’t mean the road from here to there won’t royally suck.