Theresa May’s failed gamble, next Brexit moves, Qatar crisis, Tehran terror, Canada’s new foreign policy

G-zero, anyone? In this week’s no-Comey edition of Signal, Theresa May badly loses her election gamble, Saudi Arabia moves on Qatar, ISIS hits Iran, and Canada — Canada! — decides to go independent in foreign policy.

[Join us to discuss Signal and the week’s news live on Facebook at 9.30 am ET today (June 9). See you at facebook.com/eurasiagroup. If you miss it, you’ll be able to watch the recap video there afterward.]

Here we go.

The Noise This Week

Theresa May’s gamble has failed. Thursday’s election produced the least stable possible result: the Conservatives with the most seats but no majority (and fewer than in 2015), and Labour with a large minority. In the near term, May is expected to form a government supported by a small, pro-Brexit North Ireland party. But beyond that, her future as prime minister is uncertain. A leader who calls what is essentially a referendum on her strong leadership can’t be expected to stick around for long when it fails.

When it comes to Brexit, time is Britain’s enemy. May started the two-year exit countdown by triggering Article 50 in March, and then spent a significant portion of that time organizing the election. The clock is ticking, and any EU state can veto an effort to extend the timetable. Meanwhile, without a large majority, it will be difficult for May, or another leader, to build internal support for the kind of hard Brexit she had been expected to pursue. (Her Brexit secretary already suggested Single Market membership is back on the table.) That means both ends of the scenario have become more plausible: Britain could hit a cliff edge with no deal, and Britain could end up with a softer Brexit than expected. Either way, if a Tory prime minister offers you a bet any time soon, take it.

Also not strong and stable: relationships in Middle East, as the confrontation between Qatar and other regional states led by Saudi Arabia shows no signs of abating. Saudi Arabia borrowed a move from the American playbook Friday by putting Qatari entities on a terrorism black-list, while Qatar-sponsored Al Jazeera reported an ominously timed cyberattack. Structurally, Qatar is at an obvious disadvantage, since keeping its economy functioning in the long-run requires a working relationship with the Saudis. Still, Qatar has cards to play. (Vast wealth always helps.) It sells gas to Asia, for instance, and can continue to do so through Iran even if the Saudis amp up the blockade. Plus, Turkey has visibly backed Qatar by speeding up a troop deployment into its new base there. To be sure, Saudi Arabia has racked up some successes this week, having made it known that cracks in the anti-Iran front will not be tolerated. But Qatar is more likely to look elsewhere for help before capitulating to the Saudis outright on its support for the Muslim Brotherhood and relations with Iran. As Qatar’s foreign minister put it, “We can live forever like this.”

The terror attack in Iran won’t help matters. Hard-line Iranian officials were quick to blame the Saudis for the attacks on highly symbolic sites in Tehran. Whether or not the Iranians really believe the attack was Saudi-sponsored, they have incentives to ramp up their proxy confrontation with the Saudis in Yemen and Syria. And into the mix come the Iraqi Kurds, who have decided that, with the operation in Mosul nearing its bloody conclusion, this is the time to hold a referendum on statehood. (Don’t expect a Kurdish state any time soon, but there will be plenty of fireworks to celebrate the vote.)

Layer onto this a notably destabilizing contribution by the United States, which is now playing mediator in a crisis it enabled. The Saudi maneuvers show that other leaders have learned how to play off Trump’s penchant to govern through Twitter, making policy unilaterally and shooting from the hip. Trump’s key advisers, too, have been preparing for his unusual moves. In a speech over the weekend, Secretary of Defense James Mattis told U.S. allies, channeling Churchill, “Once we’ve exhausted all possible alternatives, the Americans will do the right thing.” The problem for the immediate future is that there seem to be an awful lot of alternatives.
 
Rounding out this G-Zero week where you’d least expect it, Canada is already realigning itself in reaction to the U.S. Foreign Affairs Minister Chrystia Freeland set out a liberal multilateralist doctrine that notably rejected the idea that anyone is “first” in foreign policy. A decision to turn inward that put “Canada first,” she said, “would be wrong.” Still, Canada’s approach includes elements that would appeal to Trump, such as a long-term increase in defense spending. Mattis liked that decision, but as the Qataris know all too well, he is not the president.

Self-Promotion Interlude: More on the Qatar crisis from Eurasia Group’s Middle East practice head, Hani Sabra.

Transition Time in Venezuela?

In Venezuela, the departure of President Nicolas Maduro has become primarily a question of when. There’s a small chance he will make it to the end of his term in January 2019. Here’s how we see the scenarios breaking down.

Your Weekly Bremmer

Watch the World in 60 Seconds from New Zealand.

Hard Numbers

60 percent of Canadians view themselves as “globalist” in orientation, according to a poll from Abacus Data.
 
280 German soldiers will be moved from Incirlik air base in southern Turkey as a result of a diplomatic dispute that restricted German lawmakers’ ability to travel to the base.
 
€1 was paid for Spain’s Banco Popular, purchased by its domestic rival Banco Santander after the European Central Bank warned it was “failing or likely to fail.” Technocrats everywhere cheered.
 
One-third of ministerial positions in the Venezuelan government are filled by current or former soldiers, giving the military strong control over key social services.

40 percent battle losses were suffered by Iraq’s elite Counter Terrorism Forces in the (still-ongoing) fight for Mosul, according to the U.S. military.

Words of Wisdom

“Don’t worry, I’m not going to commit suicide.”

Joseph Kabila, president of the Democratic Republic of the Congo, answering a question no one asked about what will happen if he ever leaves office.

Signal is written by Matt Peterson (@mattbpete) with editorial support from Gabe Lipton (@gflipton). Don’t like what you read? Feel free to yell at us on Twitter or just reply to this email.