Is Britain Moving Away From America Or Just Hedging Its Bets?


It is hard to imagine a more loyal American ally than Britain. Britain has joined America in every major venture America has undertaken at least for the past seventy years. Britain has benefited greatly from its “special relationship” with America. America rescued Britain militarily in the two world wars of the 20th century. America helped Britain’s economy recover and flourish after WWII. But for America today’s Britain would be like Iran, a relic of a once great empire. 

That brings up a question. Is Britain truly a friend of America or is Britain’s friendship only because of the benefits that have accrued to Britain from America? Stratfor reminded its readers this week of the famous quote from Britain’s 1848 foreign secretary Palmerston:

  • “We have no eternal allies and we have no perpetual friends … [only] our interests are eternal and perpetual.”

In the article titled The Golden Age of Sino-British Relations Is Now, Ian Morris of Stratfor wrote this week:

  • “British interests remain focused, as they have been for centuries, on balancing between Europe and the wider world, but Britain’s special relationship with the United States is just one vehicle for pursuing that balance. There are no eternal allies.” [emphasis ours]

There are changes afoot that have real implications for Britain and its “special relationship” with USA. The biggest potential change is “Brexit”, the exit of Britain from EU. The Obama Administration has made it clear to Britain that the so-called “special relationship” will be in serious jeopardy if Britain leaves the Euro. A non-European Britain will then lose the benefits of the massive trade relationship between America & Europe.

Frankly, Britain began pondering its future away from America back in 2010 as the Stratfor article points out:

  • Since about 2010, British governments have begun wondering whether the American alliance is still the best way to maintain their nation’s position in the world. Their interest in becoming “China’s strongest partner in the West,” as Osborne has put it, need not mean that Britain is drawing further away from Europe, since both U.S. President Barack Obama and his Chinese counterpart insist that they want to see Britain remain within the European Union. Nor does it need to mean that Britain is turning its back on the United States. But it does, nevertheless, represent a significant rebalancing. Britain, with the world’s fifth-biggest economy (in nominal terms) and, by many judgments, its fifth-strongest military, is by any reckoning an important ally of the United States. [emphasis ours]

While that is true, we contend that Britain’s moves simply parallel global moves to diversify away from the empire of the U.S. Dollar. This has been our worry since March 2012 when we first raised concerns about the intensely emotional & rhetoric-based regime of financial sanctions on Iran. Iran sanctions worked because no country in the world wanted Iran to build nukes and no country in the world, except Israel, wanted America to attack Iran militarily.

Then the Obama Administration went nuts in its use of financial sanctions against Russia. No question the US financial sanctions hurt Russia badly. Our worry was that the global blowback of these sanctions will be much greater on America. After all, the global reserve status of the U.S. Dollar is a major factor in America’s control of the global financial system. As we wrote in April 2014,

  • “China has witnessed America’s financial war against Iran. If they see America using its massive financial arsenal against Russia, they have to wonder whether China will be next. So we could easily see China taking steps to insulate its financial system from an American attack by creating a Yuan bloc. They are already beginning to do so and those efforts will be accelerated to include countries in Latin America that live on exports to China.” 

This is already underway as we see in the new “special relationship” between China and Britain. China has been resolute in taking steps to ensure that the Yuan, its currency, gets accepted by the IMF as a reserve currency. That will make the Yuan acceptable to world markets. But China is woefully unable to build credible foreign currency and bond markets for the Yuan. Enter Britain with London’s important financial markets. As the Stratfor article points out:

  • “Britain’s leaders have enthusiastically embraced China. Two years ago, Chancellor George Osborne announced that London would become the first Western hub for trading renminbi and that Chinese banks would be allowed to open branches there. Then in June, Britain ignored U.S. objections and signed the Articles of Agreement of the Asian Infrastructure Investment Bank, widely regarded as a Chinese rival to the International Monetary Fund, the World Bank and the Asian Development Bank.” [emphasis ours].

Frankly, this move by Britain is driven as much by panic as by smarts. If Britain leaves the Euro, then much of Euro & European markets trading is likely to migrate from London to Frankfurt. This could be a major problem for a British economy that is desperately dependent on London’s financial markets. The Russian money has already exited London and Saudi Arabia is withdrawing their monies to keep their social funding afloat in the face of falling oil prices. So Britain has nowhere to go except China.

But that doesn’t change the fact that Britain remains astutely sensitive to prevailing winds. And the prevailing winds are against the unbridled primacy of the US Dollar. As we wrote in April 2014,

  • “The core bulwark of America’s financial prosperity is the U.S. Dollar and its status as the World’s Reserve Currency. That would not change tomorrow or in the next few years. But that can easily change in the ten years if other large economies decide they need an alternative global currency or a separate financial system.”

Britain’s dalliance with China  is an example of this change. The Stratfor article not only agrees but goes much farther:

  • “The United States has been the world’s greatest power for nearly a century, and for more than a quarter of that time it has dominated the international order more completely than any power in history. But there are growing signs that the ground is shifting under our feet, and few are more revealing than the banners with which London welcomed China’s president in October.”

#WADR, Ian Morris is neither George Friedman nor Robert Kaplan. And we think he protests too much. Nothing has happened that is permanent or even material. The simplest step America can take is the ending of financial sanctions on Russia either via Germany’s active involvement or via a tactical joint venture  against ISIS.

But what about Britain? We do think America needs an alternative to Britain in Europe, an English-language partner with deep ethnic & emotional ties to America, a country that is already a member of the EU, a country whose capital can realistically become a second London, a more Europe-integrated London. In case you haven’t guessed already, Ireland, the land to whom US companies are already migrating because of the stupidity of US tax laws.  

We love Ireland not just because of its many charms but for what it can mean to a smart America. Read what we proposed on September 3, 2011:

  • “Without much ado, we propose that America offer a … merger to Ireland. … Irish-Americans are the largest and most integrated ethnic minority in America. This makes the Irish culturally, ethnically and linguistically closer to Americans than virtually any other society. About 36 million Americans claim Irish heritage. In contrast, the entire population of Ireland is about 6 million. The GDP of Ireland is about $220 billion, about 2% of America’s GDP.”
  • “America’s corporations constitute a large portion of Ireland’s economy. Their involvement will grow once Ireland merges with America. The merged Ireland will then become the growth economy of Europe.
  • That brings us to the long term benefit of this merger. We propose that the “merged” Ireland should remain a member of the EU, but with the US Dollar as its currency. This will be sort of like Britain being a part of the EU with the Pound as its currency.”
  • “This will make America a de facto “member” of the EU. What a huge step would this be? Instantly, France, the PIIGS and central European countries will ally themselves with Irish-America sidelining Germany. American exports out of EU member Irish-America will create a much larger market for American companies than they have today.”

So let Britain run to China in search of a new “special relationship”. We would rather have Ireland with us. Can America make Dublin into a greater financial center than London? You Bet. 


  • #WADR is our new hash tag for With All Due Respect


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  1. Unlike America, where people can be kept behind bars for decades, that too without trial (reference Guantanamo Bay), there is a much higher degree of accountability in Britain. Uncomfortable questions have being asked about the invasion of Iraq and the faulty US-planted intelligence that lead to it. No wonder, politicians do not want to be fooled into another mis-adventure based on half-truths. The US has driven the UK away!

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