United Kingdom

Coauthored with James Resnick, former intern in the International Institutions and Global Governance program at the Council on Foreign Relations. There is a common—and understandable—comparison made between the results of the Brexit referendum and the presidential election victory of Donald J. Trump. Beyond anti-establishment sentiments, both surprise results were driven in part by the electorate’s perceived loss of national identity and sovereignty. The corollary is that both countries now appear globally isolated. As one way out of this isolation, both governments have focused on a potential U.S.-UK trade deal. While such an accord is attractive for both sides, the United Kingdom has a greater priority: signing a trade deal with the European Union (EU). Neither deal will be easy to finalize, but Theresa May’s government would be better served by directing its already stretched diplomatic resources toward the EU. Hopefully this will be what May signals when she unveils further details on her Brexit negotiations plans, including a possible transitional period on EU-UK trade, in her speech in Florence this Friday. For the United States, global isolation is a self-inflicted wound, the natural result of an “America First” policy skeptical of multilateral institutions and cooperation. President Trump withdrew the United States from the Trans-Pacific Partnership (TPP) on his first day in office, and he has consistently supported protectionism. Achieving “better” bilateral trade deals, like the one envisioned with the UK, will allow Trump to show not only that he is a superior “dealmaker” but also that “America First” does not equal America last and alone. The UK government is divided over its future trading status, as well as political relationship, toward the European Union. Already, the recent EU-Japan trade deal suggests that the UK risks being left behind and detached from other important global players. At the same time, the May government is intent on proving that it can secure trade deals after Brexit. A renewal of the Anglo-American “special relationship” by way of a bilateral trade agreement would be ideal. Winston Churchill first coined the term “special relationship” in 1946, and successive prime ministers and presidents have largely repeated the mantra to capture the unique Anglo-American friendship. At a practical level, however, tensions have often complicated trilateral relations between the UK, the United States, and the EU. In April 2016, President Barack Obama warned that a post-Brexit UK would find itself at the “back of the queue” in any future trade negotiations. Still, May and Trump wasted no time in reviving the relationship, with the prime minister visiting the Oval Office within a week of the new president’s inauguration. Beyond reaffirming the special relationship, a U.S.-UK trade deal would give both countries a needed economic lift. Liam Fox, the UK Secretary of State for International Trade, estimated in July that removal of existing U.S. and UK trade barriers would increase the value of bilateral commerce by as much as $50 billion (£40 billion) by 2030. The United States is already Britain’s second largest trading partner outside of the EU with bilateral trade worth over $200 billion (£156 billion) a year. The United States is also the single biggest source of inward investment into the UK. Without a post-Brexit bilateral deal, moreover, the United Kingdom and the United States will both suffer, as they revert to the more onerous rules of the World Trade Organization (WTO), which could entail more burdensome customs checks, tariffs, and other nontariff barriers. Any U.S.-UK trade deal, however, faces major challenges. First, the UK can only begin official trade negotiations with non-EU countries after 2019, when the UK formally leaves the EU. Even if it were allowed to do so, the UK presently lacks the expertise to negotiate both deals simultaneously, having ceded expertise in trade negotiations to the European Commission over the past several decades. On average, it takes approximately eighteen months to negotiate a trade deal with the United States, and another three years for full implementation—meaning that any U.S.-UK trade deal wouldn’t be effective until at least 2024. Although, negotiating a deal with the entire EU can take even longer—the EU-Canada deal has taken seven years to negotiate—UK Trade Secretary Fox claims that an EU-UK trade deal should be “one of the easiest in human history,” since they both share the same tariffs and regulations. Second, the U.S.-UK special relationship is currently strained. By strong margins, UK citizens disapprove of President Trump, which could undermine any trade negotiations with his administration. Third, some UK groups worry that any deal would lower British food standards, for instance by permitting chlorinated chicken imports into the UK—a topic which has already ruffled the feathers of many UK citizens. The UK might also need to lift restrictions on the use of genetically modified organisms (GMOs), as well as growth promoting hormones in beef fodder, to match what is currently practiced in the United States. Fourth, some worry that a future trade deal may allow U.S. corporations entry into the National Health Service (NHS) system. Perhaps most important, Prime Minister May is in a precarious position to lead any politically contentious negotiations with the United States. Having weakened her hand in June’s snap election, she presides over a fragile governing coalition. While a deal with the United States would be attractive, it would not begin to compensate for the overwhelming void that would be created if the UK fails to reach a deal with the EU. In 2016, 48 percent of UK goods exports went to the EU, and 53 percent of UK imports came from the EU. The corresponding figures for UK trade with the United States were 16 percent and 8 percent. If no trade deal is reached between the EU and the UK, and the two sides revert to WTO rules, the damage to the UK economy would be catastrophic. The WTO outcome (which is not even guaranteed) would impose tight quotas on UK agricultural exports and a 10 percent tariff on UK car exports to the EU. Changes in tariffs and regulations would also impact automotive supply chains, which could increase the cost of assembling a car in Britain by £2,370. The latest EU-UK negotiations in July and August focused relatively little on trade relations, but the urgency of achieving an EU-UK trade deal will surely grow. Philip Hammond, Chancellor of the Exchequer, rightly argues that the UK should prioritize EU trade during the transitional period until 2019. The UK government’s recent proposal that it will seek to negotiate an interim “close association” with the customs union for up to two years after Brexit should help ease some of the trade adjustments to Brexit. Although, any transition policy will likely run into some opposition from the EU. A bilateral UK-U.S. trade agreement sounds attractive since it would signal that neither country is alone in the world. But bolstering the special relationship should take a backseat to UK efforts to finalize a critical trade deal, or even a transition agreement, with the EU by 2019.

This week: data sharing between the UK and EU post Brexit, the right to privacy in India, and an Indian-Chinese spat over tech.

As the United Kingdom recovers from a string of terror attacks, the country’s parliamentary elections could determine the course of its Brexit negotiations, trade and economic policy, internal borders, and foreign relations.

This week: new rules for online publishers in China, a ban on social media in Kashmir, phishing Gmail users, and UK MPs wagging their fingers at Facebook.

In a boost to President Muhammadu Buhari’s anti-corruption crusade, Bolaji Owosanoyu, Executive Secretary of the Presidential Advisory Committee Against Corruption has announced that the British government will release to the Nigerian government information about Nigerians who own property in the United Kingdom (UK). According to Owosanoyu, “Britain has promised that by 2018, she will provide Nigeria with the information about who owns what and where; that’s very helpful. These include all the houses that have been bought by public officials or accounts that are held by public officials on which they are right now not paying taxes or which they cannot explain the sources.” It is conventional wisdom that rich Nigerians buy expensive apartments in London’s Mayfair neighborhood, and that the acquisition of expensive property is a form of laundering ill-gotten gains. However, many other Nigerians of more modest means have acquired property in the UK, the number of which is unknown. Such a move from the British government appears to be a concrete and practical means of assisting the Buhari administration’s anti-corruption efforts. It is a step that should be seriously considered by Nigeria’s other friends and partners, including the United States. Wealthy Nigerians have a history of designating New York, Los Angeles, and Washington DC real estate as a place to invest their money.

Intelligence agencies love working in the shadows. However, in a post-Snowden world, they will have to get used to working in the spotlight.

Former Nigerian Minister of Petroleum Resources Diezani Allison Madueke will be tried for money laundering in the United Kingdom in June. For many observers,  Maduekwe is the face of high-level corruption in Nigeria. A former minister of transport, she served as petroleum minister in the government of Goodluck Jonathan. During her days of flying high, she collected “firsts,” she was the first female minister of transport, the first female minister of petroleum, and the first female secretary general of the Organization of the Petroleum Exporting Countries (OPEC). She was also the first female appointed to the board of the Shell Petroleum Development Corporation. Her extravagant lifestyle – ranging from multiple hotel suites in the same city on the same trip to private planes to private palaces costing millions (if not billions) of naira was notorious. The rumor mill had her “close” to then-President Goodluck Jonathan, rivaling his wife, Patience (also popularly excoriated for her conspicuous consumption). Seemingly arrogant, greedy, and vain, Diezani’s public persona in a poor country evokes disdain. However her culpability in stealing hundreds of millions of dollars from the Nigerian state remains to be proven. Nigerian agencies, notably the Economic and Financial crimes Commission (EFC), has been cooperating with the UK authorities. According to one spokesman, “We have taken more evidence to the UK… We have a huge pile of documents.” Diezani will be tried with her two brothers. Ostensibly she went to the UK where her mother lives following Jonathan’s defeat in the 2015 presidential elections for treatment for breast cancer. She denies any charges of wrongdoing and that she “fled” Nigeria. Central to Muhammadu Buhari’s victory in the 2015 presidential elections over Goodluck Jonathan was public revulsion over the scale of official corruption. In response to public outcry, Buhari campaigned on an anti-corruption platform. Since his election he has made the fight against corruption one of the two centerpieces of his administration. The other has been the defeat of the radical jihadist movement called Boko Haram.

The decision by British voters last June to leave the European Union (EU) has thrown that bloc into turmoil. But its implications for Great Britain could be even more profound, portending the dissolution of the United Kingdom. Prime Minister Theresa May could trigger Article 50 of the Lisbon Treaty as early as March 15, starting the two-year timetable for negotiating the terms of the UK’s divorce from the EU. The prime minister should beware the Ides of March: It seems all but inevitable that Scotland’s government will respond by calling for a second referendum on Scottish independence. The ultimate result could be the reemergence of a sovereign Scotland, more than three hundred years after the Acts of Union (1706–1707) united the cross of St. Andrew and the cross of St. George. When Scots rejected independence by a 55-45 percent margin in a September 2014 referendum, most assumed the matter had been put to bed for at least a generation. The shocking Brexit vote upended that expectation. As Scotland’s sovereigntist-minded First Minister Nicola Sturgeon observes, Scots who voted for “union” less than three years ago assumed that the (still) United Kingdom would remain in the EU. And in the more recent “Brexit” vote, they overwhelmingly (62 percent) supported the “Remain” camp. Given the dramatically altered landscape, Scots deserve the opportunity to reconsider their ties with the United Kingdom. As Sturgeon sees it, the Brexit outcome revealed “a wider democratic deficit within the UK, where decisions about Scotland are too often taken against the wishes of the people who live here.” Her Scottish National Party (SNP) has been cheered by the comments of no less than former UK Prime Minister Tony Blair, who says Brexit makes the case for Scottish independence much more credible. In October, the Scottish government published a draft bill that would (if approved by the Scottish Parliament at Holyrood) launch consultations to authorize a second referendum. Wittingly or not, Prime Minister May has bolstered Scotland’s independence movement by insisting on a “hard exit” from the EU. Scottish members of the UK Parliament in Westminster worry about losing access to the EU’s single market. True, trade between the UK and Scotland (worth £49.8 billion in 2015) is four times the value of Scottish exports to the rest of the EU. But the benefits of the single market are substantial—and many Scots are not willing to risk them in return for greater UK restrictions on migration. On February 7, the Scottish Parliament voted 90 to 34 in favor of a motion that the European Union (Notification of Withdrawal) Bill should not proceed. Although purely symbolic, it sent a clear message that Scotland opposes a hard Brexit. In an effort to preserve Scottish access to the continental market, Sturgeon’s SNP government in December released Scotland’s Place in Europe. The paper set out “compromise proposals” designed to allow a post–Brexit Scotland to maintain as many links with the EU as possible. The complex, and probably unworkable, scheme would require the UK Parliament to devolve additional powers to the Scottish Parliament—including control over immigration, business regulations, and international trade negotiations, among others. But the UK government has still not formally responded to the SNP paper, and SNP officials have accused the May government of attempting to hide documents setting out its views. More generally, Scottish officials are increasingly annoyed that their concerns are being ignored as the UK government proceeds with its Article 50 plans. Disentangling Britain from the EU will have enormous implications for the UK’s devolution settlement with Scotland (as well as with Wales and Northern Ireland), the London-based think tank Chatham House explains. As numerous laws and powers are repatriated from Brussels, UK and Scottish officials will bicker over the division of authorities on matters ranging from immigration to agriculture to trade. Sturgeon complains about the lack of consultation between London and Edinburgh. “Scotland’s voice is simply not being heard or listened to within the UK,” she says. May is on firm legal ground in deciding to go it alone. On January 24, the UK Supreme Court ruled that the UK Parliament had to approve any Article 50 negotiations. But that same decision also declared that May was under no legal obligation to consult with Scotland on Brexit. The political terrain is trickier, however. The court’s decision angered Scottish politicians, exposed fissures in the UK’s constitutional structure, and renewed momentum for Scottish independence. To be sure, the outcome of any second referendum is hardly preordained. Support for independence is up several points from a month ago, but, according to a recent BMG poll for The Herald, Scots remain nearly equally divided, with a narrow majority (51 to 49 percent) favoring remaining in the UK. Such numbers should be taken with a pinch of salt, of course. The same polling firm undercounted support for Brexit by four points last June, wrongly forecasting a 52-48 victory for the “Remain” camp. More substantively, the situation is fluid and volatile. Actual Brexit negotiations have yet to begin, and the harder a break that May pushes for, the more ignored and isolated Scots will feel, likely causing opinion to swing toward independence. Alienation from Westminster and disillusionment are already riding high in Scotland. Following the failed 2014 independence referendum, Prime Minister David Cameron’s government sought to win over Scots by passing the Scotland Act of 2016. Intended as a new and improved devolution settlement, it stated that the UK Parliament would normally legislate certain matters only with the express agreement of elected members from Scotland. Cameron promised that Scotland would have the “strongest devolved parliament in the world.” One of the act’s selling points was the argument that continued membership in the UK was the only way for Scotland to stay in the EU (something it might have trouble doing as an independent state). The outcome of the Brexit vote turned that logic on its head. Scotland stayed in the United Kingdom but suddenly stands to lose the EU. Brexit has shown devolution to be “worthless,” declares Scotland’s Brexit Minister Michael Russell. It has “exposed statements” by British officials “that the UK government and Scotland are equal partners” to be “empty, diversionary rhetoric.” Prime Minister May has offered to consult Scotland (as well as Wales and Northern Ireland) on the Article 50 negotiations, but has also made clear that the devolved administrations will play no decisive role in Brexit. Given this context, SNP officials argue, Scotland has no choice but to vote again on independence. Many observers expect a major announcement from the emboldened Sturgeon on March 17, when the SNP holds its Spring conference in Aberdeen. This could include naming a target date for the second independence referendum (which would likely to be held in autumn 2018). Here is where things could get tricky—and could spark a constitutional crisis. Under the Scotland Act of 1998, which established the devolved Scottish Parliament, the British Parliament must consent to any new Scottish referendum. Sturgeon has declared that it is “inconceivable” that the UK government, in the wake of Brexit, would try to block Scots from exercising their right to self-determination. This may be wishful thinking. On February 2, Michael Fallon, the UK Defense Secretary predicted that the House of Commons would veto any such a referendum. Other British officials, while avoiding the term “veto,” confirm that May’s government intends to do just that. Although, sources are now suggesting May could agree to a referendum vote as long as it was after Brexit. Meanwhile, Conservative Scottish MPs are accusing the SNP of "weaponizing" the Brexit debate, “cranking up the grievance machine” in Scotland to ensure Britain’s disintegration. But if Theresa May has plenty to worry about, so does Nicola Sturgeon. Among the many uncertainties in the Brexit/”Scexit” dance is whether an independent, sovereign Scotland would actually be welcomed into the EU—and, if so, how soon and on what terms. Some experts argue that an independent Scotland could be fast-tracked into the EU, potentially by 2023. However, this relies on generous assumptions about the likely reactions of the bloc’s member states. Some EU countries (not least Spain) may be reluctant to ratify Scotland’s EU accession, for fear of emboldening their own restive regions (Catalonia and the Basque country, in this case). Scotland also faces a £15 billion deficit, higher than every EU member state as a percentage of GDP, including Greece, which itself has caused such turmoil for the eurozone. One thing is clear. March 2017 is shaping up to be a momentous month in the histories of the European Union, the United Kingdom, and Scotland, as leaders try to strike new bargains over how political power and sovereignty should be allocated at the supranational, national, and subnational levels.

Is the Indian economy now bigger than that of the United Kingdom (UK)? Despite what you may have read, the answer to that, right now, is no. Over the past few days, the Indian press has been brimming with articles proudly proclaiming this new “fact.” The Times of India, the Indian Express and the Economic Times, among others, have hailed the milestone of India overtaking its former colonial ruler for the first time in 150 years. India’s minister of state for home affairs tweeted the story as fact. A national vice president of the ruling Bharatiya Janata Party retweeted the story with a photo of Prime Minister Narendra Modi as evidence of his government’s success. Not to be outdone, a whole slew of global outlets ran with it: Sputnik International, Irish Independent, the Daily Mail, the Independent. A similar story even made it to the U.S.-based Foreign Policy magazine. “India Overtakes Britain as the World’s Sixth-Largest Economy,” declared the headline. In all of these stories, nowhere did anyone question the basis of the “news” or where the underlying data originated—except for one paper, The Hindu. How this meme spread illustrates a failure in the most basic function of reporting: fact-checking. Here’s the anatomy of the media failure. Nearly a week ago, Forbes.com (to which I occasionally contribute opinion pieces) ran an opinion piece titled, “India’s Economy Surpasses That of Great Britain.” The author reasoned that the decline in the value of the British pound post-Brexit had reduced the size of the UK’s gross domestic product (GDP) in dollars at market exchange rates to around USD 2.29 trillion. The author then provided back-of-the-envelope calculations to show that the Indian economy, assumed to be INR 153 trillion for 2016, would be larger than the UK’s using an exchange rate of INR 66.6 to USD 1, delivering a projected size of the Indian economy of USD 2.30 trillion. This conclusion, which appears never to have been anything other than a rough comparison to make a point, is extremely sensitive to exchange rate fluctuation. On the actual date the Forbes.com opinion piece ran, the INR to USD exchange rate was not 66.6 but rather 67.8, so the conclusion was wrong even as it was published, since India’s GDP would not be larger than the UK’s at that rate. This would have been a very easy fact to check. Secondly, as TCA Sharad Raghavan uncovered through appropriate fact-checking, it is not entirely clear that the figure of INR 153 trillion as the size of India’s GDP for 2016 is correct. Sharad Raghavan reports that IMF estimates from the most recent World Economic Outlook database update (as of October 2016) for the size of the Indian economy at constant prices, and Indian government half-year statistics for 2016, would put the Indian economy between INR 122 and 143 trillion. As importantly, these are all moving targets. No one knows what the actual effect of the November 8 demonetization will do to the Indian economy for 2016. Signs clearly point to a dampening effect, but actual metrics are not yet available. As far as I can tell, the Forbes.com opinion piece, with its proclamation that the Indian economy had overtaken the UK’s, morphed into a “report” in the Indian press articles. Then India’s minister of state for home tweeted one of these. Some international news outlets ran the story on the basis of the Indian minister’s tweet. Foreign Policy ran their story based on the Indian press reports. Some more international news outlets ran the story based on the Foreign Policy contribution to this fact-free meme. In this way, one thought experiment turned into an international story divorced from any firm basis in fact. Kudos go to two media outlets that did their jobs. Two days ago I was contacted by Peter Holley of the Washington Post. He sought to fact-check the “India overtakes the UK” claim. Neither of us could identify any underlying data beyond the Forbes.com opinion piece. Holley concluded that the proclamation could not be verified, so dropped the story. Today I was heartened to read Sharad Raghavan’s fine reporting in The Hindu, in which he dug into this claim further through Indian ministry of statistics data and interviews with economic analysts. The Hindu’s story ran as a “Reality Check.” This is the job of reporting: to check claims, dig a little deeper, and look for truth. Now, I understand why the story caught fire. There’s a just-rewards aspect to the notion that the once-colonized India has overtaken the once-colonial power. And that is going to happen, very soon, just based on differential growth rates. The standard IMF estimate sees this taking place in 2020; who knows, it could happen sooner. As I argue in my forthcoming book, Our Time Has Come: How India is Making Its Place in the World, the Indian economy has grown much larger than many people realize or acknowledge, and it still has terrific headroom for further growth. At market exchange rates, India is already the world’s seventh largest economy, ahead of Canada, Brazil, and Italy. (Russia isn’t even in the top ten.) In purchasing power parity terms, India became the world’s third largest economy in 2011, behind the United States and China. So India is a major global economic force and appears poised to grow even further into that role. But as of today, the Indian economy hasn’t overtaken the UK’s. Sorry, Indian media, you will have to wait a bit longer for that. Follow me on Twitter: @AyresAlyssa. Or like me on Facebook (fb.me/ayresalyssa) or Instagram (instagr.am/ayresalyssa).

A survey by IRIN, an independent, non-profit news agency now separate from the UN, lists the top twenty recipients and donors of emergency aid. Citing the OECD, it reports that total emergency aid spending in 2016 was $22 billion, about 16 percent of the $131.6 billion in total international aid spending. Syria and Iraq top the list of twenty emergency aid recipients. The ten African states are: South Sudan (4), Ethiopia (6), Somalia (10), Sudan (11), Democratic Republic of the Congo (12), Nigeria (14), Chad (16), Central African Republic (18), Zimbabwe (19), and Uganda (20). The others are in the Middle East (Yemen, Lebanon, Turkey, Jordan, and Palestine) or south Asia (Afghanistan and Pakistan). For the first time, an EU-member state is on the list: Greece. IRIN ranks donor countries by the size of their contributions to emergency aid and also by percentage of their national income. The United States is by far the largest donor in absolute terms, about $6 billion. The European Union (EU) is number two. However, in addition to contributions through the EU, certain members made additional, substantial contributions directly from their own national budgets: Germany (3), the UK (4), Sweden (8), Netherlands (12), and Denmark (14). Adding the contributions of EU-member states to that of the EU collectively makes them the largest donor. Other major non-EU donors were Japan (5), Norway (6), the United Arab Emirates (7), Canada (9), Saudi Arabia (11), and Switzerland (13). If the criteria is percentage of donor national income devoted to emergency aid, the list looks different. Norway (1), Luxembourg (2), United Arab Emirates (3), Sweden (4), Denmark (5), Germany (6), Kuwait (7), UK (8), Ireland (9), and Saudi Arabia (10). The United States is only sixteen. It is no surprise that emergency assistance donations are mostly from the United States and the EU, plus Japan, Canada and the rich Gulf States. Emergency assistance recipients are found in war zones, essentially in the Middle East and Africa.

The manipulation of interbank lending rates by a host of global financial institutions could have significant repercussions for financial markets, consumer loans, and regulatory policy.