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Huge Uncertainty After Brexit Vote; World Markets Take Big Hits Over Brexit; After Brexit Vote: What Happens Now?; Brazil's One Doping Testing Lab Suspended; Scotland Votes Remain As U.K. Backs Brexit; CNN Speaks To "UKIP" Leader Nigel Farage; British Prime Minister Cameron Resigning After Brexit Vote; Obama: Our Special Relationship "Will Endure." Aired 3-4p ET

Aired June 24, 2016 - 15:00   ET



HALA GORANI, CNN INTERNATIONAL ANCHOR: Hello, everyone. I'm Hala Gorani. We're live at the Houses of Parliament in Central London on extraordinary

day in British history. As the country and the region continues to digest the results of this referendum. This country, of course, voted to leave

the European Union after decades of membership. Charting an unknown course at this stage.

The political repercussions have already hit 10 Downing Street and they're moving around the world. Let me walk you through some of the biggest

political and financial effects so far.

First of all, $2 trillion were wiped off of world markets as the shock and uncertainty of the vote hit investors pretty hard. Shock that clearly

struck hard at Downing Street, as well. An emotional British Prime Minister, David Cameron, said he will be stepping down.

And his loss could turn in to a big win for Scottish leaders. Most Scots, after all, chose to stay in the European Union. And they are looking to

grab another vote on independence from the U.K. Will they finally secede? Will the United Kingdom break up as a result of all of this?

Everything feels so up in the air in London and across the U.K. right now. There are way more questions than answers about what happens next. Let's

find out more with Nic Robertson. He's outside 10 Downing Street for us.

And Paul La Monica is watching markets in New York. Nic, let's start with you, so of course, the prime minister is saying that eventually he'll step

down. He hope the new prime minister will be in charge by the Tory Party Conference in October. What should we expect next politically in this


NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, next we're going to see David Cameron next week meeting with other European Union leaders.

There will be an informal dinner on Tuesday evening where he'll discuss with them what's happened.

There will also be on the Wednesday more informal discussions about, you know, the very beginnings of David Cameron talking with European

counterparts, about how to extricate Britain from the European Union. A process that's going to take several years. There's no way they're going

to be able to cover all of it. That's the first thing that's going to happen.

What we know of the conversation between President Obama, when he called David Cameron today, President Obama said David Cameron assured him that

there would be an orderly transition here, and that is why David Cameron, when he said today that he was going to step down, that he would be

resigning, he sort of postdated that check, if you will, putting it off until October.

Again to manage this period of transition, to stabilize the financial markets, to give Britain the best chance it can to not fall at the

potential economic hurdles that are going to be thrown up as Britain pulls itself out of the European Union. I think that's what we're going to see.

But, of course, there are other political dimensions to this. We've seen calls for the leader of the opposition Jeremy Corbyn to stand down. At the

same he's calling for unity. So there's a lot more to stay out. We're only beginning to see the leading edges of it right now -- Hala.

GORANI: Clearly this has never happened before. The only time a country decided to willingly leave the European Union was Greenland, that's only a

population of 50,000 people. Not at all on the same scale as the United Kingdom.

But of course what happened here in the United Kingdom has had an impact all around the world on financial markets. Overnight, we were monitoring

the pound that fell off a cliff, the FTSE 100. And now we are seeing the Dow Jones and other main indices in New York taking quite a big hit.

Paul La Monica is at the New York Stock Exchange. Paul, what's going on right now?

[15:05:08] PAUL R. LA MONICA, CNN MONEY CORRESPONDENT: You have tremendous uncertainty about what is going to happen next in the European Union as a

result of this historic vote. Stocks across the board are plunging. You're seeing companies that have significant exposure to the U.K.,

particularly travel companies, are really being hit hard. A lot of the banks have been pummeled today.

So there's not a lot of good news on Wall Street because so many people were expecting the vote to go the other way. I think everyone that I spoke

to on Wall Street, no one really seriously thought that the "leave" vote would defeat the "remain" vote.

GORANI: Now why did the markets get it so wrong? Because the pound was rallying, markets were really confident that they thought the "remain" vote

would win and in the end that's not at all what panned out. What were they basing that confidence on?

LA MONICA: I think a lot of investors were following the same polls that many in the media, of course, were keeping close tabs on. But also I think

there just was a sense that since we have been through so many crises in the past couple of years, of course, 2008, that no one would willingly

subject themselves to the possibility of more massive uncertainty. I think that really was something that many on Wall Street just weren't predicting.

GORANI: All right, Paul, I'm going to get back to Nic Robertson at 10 Downing Street. I mean essentially at this stage, what does it mean for

the future in terms of who might become prime minister? Are we looking at the types of candidates, those big leave campaigners, Boris Johnson, for

instance, the former mayor of London, is that the kind of leadership that the Tory Party is going to have to embrace now as a result of this


ROBERTSON: Well, interestingly the bookmakers earlier on today had Teresa May, who is the current home secretary and was, came out in favor of the

"remain" campaign, stayed more loyal, if you will, to David Cameron, they had Teresa May as sort of the three to one favorite to take over


There's obviously been a lot of talk about Boris Johnson. He, you know, went to the same school as David Cameron. They went to university together

with David Cameron. They've had sort of lifelong political careers in parallel.

But there's always been this assumption, and Boris hasn't hidden in, that he had aspirations to become prime minister. So I think his hat is

definitely in the ring. I think it's very unlikely that Nigel Farage who is on the right of the Brexit campaign, that has now won and succeeded,

it's unlikely that he could be a central enough figure to lead the country.

It would be inconceivable at this stage to imagine that. Who would have imagined where we are today. I think at the moment you have to look at it

and say Boris Johnson has the aspirations as others, Ian Duncan Smith, there are other ministers that people would judge perhaps capable, but

who's going to push hardest for it.

Teresa May maybe the type of centrist figure that it will be required to unify the party. Of course, this doesn't happen in a vacuum, because you

know the Labour Party is out there, the conservatives will be worried that Labour Party main opposition party here may make political capital about

any decisions, and wrong moves by the conservative party. It's really early to try to see this clearly at the moment.

GORANI: All right uncertainty all around, politically, economically, financially. Nic Robertson at 10 Downing Street. Paul La Monica, thanks

very much from New York. With so much uncertainty around the big question is simply, what now. CNN's Clarissa Ward takes us through how things are



CLARISSA WARD, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It is the biggest shock in the history of modern British politics, and possibly

one of the greatest political miscalculations ever made. Early on Friday morning, Britain voted to leave the E.U.

UNIDENTIFIED FEMALE: The total number of votes cast in favor of remain was 16,141,241. The total number of votes cast in favor of leave was

17,410,742. This means that the U.K. has voted to leave the European Union.

WARD: Hours later, the prime minister announced he would resign.

DAVID CAMERON, BRITISH PRIME MINISTER: I think the country requires fresh leadership to take it in this direction.

WARD: The people who masterminded the leave campaign were quick to praise the prime minister, but are convinced that their approach is the correct


BORIS JOHNSON, "LEAVE" CAMPAIGNER: There is simply no need in the 21st Century to be part of a federal system of government based in Brussels that

is imitated nowhere else on earth. It was a noble idea for its time, it is no longer right for this country.

[15:10:06]WARD: Londoners didn't appear to welcome Johnson's role in the campaign, yet there is much speculation that he will stand for prime

minister. While some celebrated the way the counts unfolded the result provoked widespread concern about the state of the economy and general

confusion about what the future holds.

President Obama, an early supporter of remaining in the E.U., said in a statement that the people have spoken, and that, quote, "the special

relationship between the United States and United Kingdom is enduring. And the United Kingdom's membership in NATO remains a vital cornerstone of U.S.

foreign security and economic policy."

The vote divided Britain. People in Scotland, Northern Ireland, and London wanted in. Everyone else wanted out. Immigration was the primary issue on

the campaign. How these differences are reconciled and what role Britain will now have on the world stage are issues that will likely take years to

resolve. Clarissa Ward, CNN, London.


GORANI: Well, European leaders have called it a sad day. Listen to what the French president had to say, followed by the German Chancellor Merkel.


FRANCOIS HOLLANDE, FRENCH PRESIDENT (through translator): This painful choice which I deeply regret for the United Kingdom and for Europe, this

choice is theirs, and we must respect it.

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): Today represents a watershed moment for Europe and for the process of European unity. Over

the coming weeks, months, and years, what exactly what watershed means will depend very much on whether we, the other 27 European Union members, are

willing and able to act.


GORANI: Angela Merkel and Francois Hollande. Let's get more now on the reaction across Europe. My colleague, Erin McLaughlin, is live in

Brussels. So they've had a few hours now to digest this seismic shock to the European Union. Tell us more about what you're hearing in Brussels.

ERIN MCLAUGHLIN, CNN CORRESPONDENT: Essentially what we've been hearing all day is European leaders trying to reassure the public. We've heard

messages of unity. We've heard messages of sorrow. We've also heard them say that they respect this decision. They respect the democratic process

and we've heard messages of resiliency.

E.U. Council President Donald Tusk saying what doesn't kill you makes you stronger. Take a listen to what else he had to say.


DONALD TUSK, EUROPEAN COUNCIL PRESIDENT: It is a historic moment, but for sure not the moment for historical reactions, I want to reassure everyone

that we are prepared also for this.


MCLAUGHLIN: So, I'm also hearing from E.U. officials, as well as diplomats, there is deep and growing concern here in Brussels about the

rise of euro skepticism across the continent. Today we heard for calls for referendums in countries such as France as well as the Netherlands.

And that is going to have an impact, I'm told, on the negotiations, potential negotiations, with the United Kingdom for an exit. One E.U.

diplomat telling me that there will be no niceties when it comes to these negotiations.

That there is no E.U. leader that wants to see a Brexit-type referendum being an attractive offer for another E.U. member state. And in terms of

timetables, we're hearing from E.U. leaders that they want to see the negotiations happen quickly -- Hala.

GORANI: Erin McLaughlin in Brussels. Let's get some analysis now. Charles Grant is the director of the Center for European Reform is here

with me now. Charles, first of all, we're still digesting this, because this is unprecedented. It's historic.

The European Union is now 27 members. It has shrunk for the first time really in its history with a significant member exiting. Talk to us about

the implications now that we've had a little more time to think about it.

CHARLES GRANT, DIRECTOR, CENTER FOR EUROPEAN REFORM: I think Marion Lapenn (ph) said last December that if Brexit happened it would be equivalent to

the Berlin wall falling in 1989. I think she's absolutely right. The narrative now is a narrative for disintegration more than integration.

It doesn't mean that it's going to fall to pieces. It doesn't mean anybody else is going to leave it soon. But the embattled centrist elites who run

most of the E.U. governments are on the defensive against populist anti-- E.U. parties.

With one consequence, they will not be talking much more about European integration, federalism, moving forward towards a more unified future. I

think it will be much more sober and realistic. They've understood as Donald Tusk said too much integration alienates --

GORANI: They've understood it a little bit too late, though. They went tragically wrong somewhere along the line, didn't they?

[15:15:04]They've lost one of the most significant and important members of their union. Where did, let's put the U.K. to one side, where did E.U.

leaders go wrong here?

GRANT: Well, the euro project has been unsuccessful until many ways. The euro isn't falling to pieces, but it's been organized, and managed in a way

that doesn't make sense. It doesn't work. It's caused a lot of unemployment, and misery, in Southern Europe. So that's one problem. And

I think if they hadn't pursued the euro in the way they did, the British would not have become so anti-E.U. as they have. Even as the British are

not part of the euro.

GORANI: I was going to say, I mean, all these things that you're listing have not affected the United Kingdom. Its growth was less affected.

Certainly nothing like southern European economies. It's not part of the euro. It sets its own interest rates, controls its own borders. Where was

this anger against the E.U. really coming from?

GRANT: Well, the anger against the E.U. probably came from the fact that there's been a lot of migration. Several million people from Central

Europe in particular, now Southern Europe, have come into the E.U. since Poland and the other Central Europeans joined the E.U. in 2004. That

hasn't created mass unemployment. There's no serious unemployment in Britain today.

GORANI: In fact they're almost at full employment.

GRANT: At 5 percent, but it has put pressure on public services in some areas and I would say the popular press had let's say highlighted the

disadvantages of migration and rather exaggerated them without pointing to the many benefits to the British economy, which have been enormous.

GORANI: I mean, this whole Brexit campaign was about immigration and migration and some accused some of the main Brexit campaigners of

xenophobia, of fear mongering. Is that something that contributed to the result?

GRANT: I think so. One reason why the British people voted to leave is because they thought a lot of things about the E.U. that simply aren't

true. I mean, for example, that Turkey is joining the E.U. That's what the Brexit campaigners said. Really not true. That a European army being

planned in Brussels, again, not true.

So one of the problems that those in favor of staying in the E.U. had is that people knocking on doorsteps just told you all sorts of things that

weren't true because they heard it from the Brexit campaigners. They heard it from some of the press who supported the Brexit campaigners.

GORANI: Well, this idea that the establishment centrist politicians, it's not just true of the Eurozone or the U.K. but also in the United States.

You see similar patterns with what's happening with Donald Trump's successor.

GRANT: Enormous parallels. Many of those who in your country, or the United States, don't like the establishment to support trump are the same

people who in my country, Britain, don't like the E.U., don't like establishment politicians. What they have in common is a hostility to


GORANI: Yes, but they've been hurt by it though, in many ways they have --

GRANT: They have been hurt by it because globalization means migration, it means free trade. It means more inequality for those who are less

successful in society.

GORANI: So my question is will exiting the E.U. help alleviate the problems that prompted some people to vote for a Brexit here? I mean, will

leaving the E.U. give depressed economic areas back their growth, their vitality, their industry?

GRANT: No, it will actually worsen these problems. Because leaving the E.U. means less investment, less trade, less money, for the government to

spend on public works. It actually will exacerbate, so there may be a kind of buyer's remorse. I won't be surprised if in a year or two's time if the

economy does as badly as I fear it will people will be saying why the hell did we leave the E.U.?

GORANI: Another referendum? Maybe another question.

GRANT: Unlikely in the short-term.

GORANI: Phrase it differently, get back in somehow.

GRANT: Not impossible. If you have the British economy doing very badly, the Eurozone solving some of its problems, less of a refugee crisis in the

E.U. and some restrictions on labor being given as an olive branch to the British they could reconsider in five or ten year's' time. Not


GORANI: All right, still way down the line. Charles Grant, the director of Center for European Reform, thanks so much for being with us.

A lot more to come this evening. We continue to broadcast live from the Houses of Parliament. Scotland faces up to the reality of Brexit while

hosting a less than welcome guest. More on that coming up. We'll be right back.



GORANI: We'll get back to our special Brexit coverage in a few moments. But right now we want to bring you a major development on another big story

we're following for you. The World Anti-Doping Agency has suspended Brazil's only doping testing lab just one month ahead of the Olympic Games.

What are the implications of this? Nick Paton Walsh is with us live from Rio with more. So first of all, tell us why the suspension and what it

means? What implications it potentially could have?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: We don't know exactly why the World Anti-Doping Agency have made this step. We do know

that the laboratory, the Brazil Doping Control Laboratory, which we visited ourselves and had millions spent on it, was notified about this two days

ago. They put the statement out maybe late in the week.

The key question being, what was the motivation for it? Now, normally in these circumstances, laboratories can have small indiscretions, problems,

they build up a point system and get suspended if they reach a certain threshold. This doesn't appear to be the case.

The spokesperson for WADA saying there appears to be one key issue that was the motivation behind this suspension. Is it going to be ready? Could it

be rectified ahead of the games? There seem suggestions of concern that may not be the case.

It is a possibility said a WADA spokesman they may have to look at alternatives somewhere else. They've done that in Brazil for the World Cup

in the past. They have alternatives potentially in the North America.

The big issue, though, Hala, here is there's a lot of samples that need to be tested, 6,000 during the period of the games. Can you fly those samples

at a fast enough pace to other laboratories, get the results done quick enough? It is a big challenge potentially.

WADA here and we're waiting to hear from the laboratory themselves. We've asked them for comment. They have not responded. But it's a potential

huge problem here, particularly given the volume of attention doping's received.

The questions about how many Russian athletes can even compete here. Pressure on Kenya too, the geopolitical level of pressure, the scrutiny on

this laboratory, which had had issues in the past because equipment wasn't up to scratch.

And I think people are now asking what is this one thing that appears to have occurred that means they're simply not being certified as viable to do

the testing -- Hala.

GORANI: All right. All questions we have to have answers to soon. Thanks very much, Nick Paton Walsh with that significant development out of Rio.

Let us bring you back to this momentous and historic decision by the U.K. to leave the European Union and the reaction. Well, Donald Trump spoke

from Scotland today. Listen.


DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: People want to take their country back. They want to have independence, in a sense, and you see it

with Europe all over Europe. You're going to have more than just, in my opinion, more than just what happened last night. You're going to have

many other cases where they want to take their borders back. They want to take their monetary back. They want to take a lot of things back. They

want to be able to have a country again.


GORANI: All right, Scotland of course and its majority voted to remain inside the E.U. The presumptive U.S. Republican presidential nominee

compared the Brexit vote to the choice Americans will face in November and called it a declaration of independence.

Very much in a similar vein to what Nigel Farage, the leader of the U.K. Independence Party called it yesterday when he spoke to the media and

journalists during the night.

Now for the people of Scotland, Trump's comments may have been hard to swallow. As I mentioned voters were overwhelmingly in favor of staying in

the European Union. Now there's talk of another Scottish referendum to break away from Britain.

CNN's Phil Black is live at Edinburgh, Scotland's most pro-remain city. So I don't remember the exact number, Phil, but I think close to 75 percent of

those who voted in Edinburgh voted to remain in the E.U. So they must be very disappointed.

[15:25:06] What is the likelihood that Scotland will hold another referendum to break away from the U.K., and stay a member of the E.U.?

PHIL BLACK, CNN CORRESPONDENT: Well, Hala, highly likely. That's according to Nicola Sturgeon, the first minister of Scotland, the leader of

the local Scottish government. She had warned all along for some time now that in the event Scotland is pulled out of the European Union against its

will, which is what we're seeing here now potentially that in that case there would be a very strong reasonable argument to once again hold another

referendum on Scottish independence.

The last one was back in September of 2014. The Scottish people voted against independence by 55 percent to 45 percent. Now, the Scottish first

minister says there is very much a democratic argument for saying that there should be another one.

Would it be successful? Is it something that the Scottish people are interested in? That's something we don't know just yet. There's no doubt

they voted in favor of the European Union. They support the idea of the European Union. Turnout across Scotland was 67 percent.

That's not anywhere near as high as the 84 percent turnout they had for the last independence referendum. So they like the E.U. They support the

E.U., but it doesn't electrify them in quite the same way.

These are not the circumstances that Nicola Sturgeon wanted to continue pursuing her goal for Scottish independence. She feels passionately about

this. She wants to make it happen. But not with a neighboring United Kingdom that would no longer be part of the European Union.

And not at a time like this where oil prices are low, making the idea of Scottish economic independence not quite as viable. So, it's a tough sell.

But one of the things that could influence it will be the new prime minister of the United Kingdom.

Scotland doesn't like the Conservative Party. It's not a big fan of David Cameron. But in the event that the person who replaces him is even less

palatable. Even less representative of Scottish political aspirations, then you might see the blood boiling here in Scotland again a renewed

hunger, perhaps, for independence -- Hala.

GORANI: When we say something is historic, an event is historic, sometimes we overstate ii perhaps. But in this case, we are not because indeed the

consequences could be so incredibly radical and long lasting. The breakup of the United Kingdom is a possibility. Thank you very much, Phil Black in


By the way, you know, financial markets hate uncertainty. We'll take a look at the Dow Jones Industrial Average. You see it there and how it's

reacting to this Brexit referendum result. We are down 629 points so far this session. That's 3.5 percent lower for the Dow.

We'll see how the Brexit vote set off an earthquake that triggered massive sell-offs around the world. The U.K. market lost billions of pounds, as

well, overnight. Then reaction from Washington and how the Brexit decision could impact the U.S./U.K. relationship.


GORANI: We're here outside London's Houses of Parliament on a beautiful summer evening. The political climate in this country is anything but


I'm Hala Gorani with more of CNN's special coverage of the U.K.'s decision to leave the European Union. Thank you for being with us throughout. We

spent all night together, hopefully as all of you, alongside the team here in London, were witnessing this historic, and really this seismic event.

The pound is continuing to take a beating. Stocks are plunging around the world. Billions of dollars in market cap are being wiped off of markets

around the globe. Rattled by the aftershocks of Britain's vote to exit the European Union.

Investors not only stunned by the decision, but also worried because they don't know what's going to happen. This has never happened before. Global

stocks saw more than $2 trillion wiped off of their value. More than $100 billion wiped off of London alone.

We're seeing political shockwaves as well. The Prime Minister David Cameron is resigning. He says he cannot be the one to steer Britain out of

the E.U. Mr. Cameron is expected to discuss the impact of Brexit with E.U. leaders at a summit in just a few days' time on Tuesday after he

returns home. The remaining E.U. members will consider their next steps.

Now you'll probably already be familiar with what Nigel Farage looks like and his name but not much else. But arguably more than anyone else in this

country, he made this Brexit possible. Farage has wanted to get Britain out of the E.U. almost since it joined. CNN's Nima Elbagir spoke to him.


NIGEL FARAGE, UK INDEPENDENCE PARTY LEADER: I've been doing this for 25 years. I mean, I was in danger, I think, in the 1990s of becoming the

patron saint of lost causes. I was written off as being a lunatic. And politically support for this was absolutely tiny. When we got to 10:00

last night and the polls closing, I almost dared not to hope that what I dreamt of and worked for 25 years could happen, but it did.


FARAGE: not really. I'm not sure I can now to be honest with you. It is. And I say that not just because of my journey, but it's such a big seismic

political event. It hasn't just affected the United Kingdom. It's affected rest of the European Union too.

ELBAGIR: For those out there who are being concerned that the anti- immigration rhetoric has at times been cover for less savory sentiments, there have been times when phrases like indigenous workers.

FARAGE: I never used that phrase at all.

ELBAGIR: You have not but the leave campaign has become a very broad tent.

FARAGE: Well, both sides are a very broad tent. I would say, my party is nonracist, nonsectarian party. We've been very successful at doing that

and being that and all we've argued for is an Australian-style point system. All we're arguing for is normality.

ELBAGIR: You've seen the market respond quite drastically already. You've heard concerns from around the world pouring in about what this means for

all the ways in which Britain is central and integral not least the war on terror. The foreign secretary saying he doesn't want to over exaggerate

it, but he believes Britain is palpably less safe.

FARAGE: Just think about two things. Firstly, those Kalashnikov rifles used in Paris to murder about 130 people came from Berlin, through into the

Netherlands, through into Belgium, through into France, without any checks or any stops of any kind at all. And two, of the eight people that

committed that atrocity in Paris had come back into Europe through the Greek islands, posing as refugees.

ELBAGIR: But we already don't have passport free travel in this country. So they wouldn't have had that freedom of movement to come into the U.K.

FARAGE: Actually we do. We're not --

ELBAGIR: I always have to show my passport.

FARAGE: We have to show a passport, but it's still basically completely free movement. I think even the Schengen zone is finished. National

borders are going to start going up. The population across the rest of Europe is beginning to demand it.

I would also make this point to Mr. Hammond. The way we deal with things like this, with information sharing and everything else, we act as friends.

We have the closest information sharing with the USA.

But we don't need to become the 51st state to become that. I genuinely don't think Obama understands what the European Union is. He thinks it's

like a big NAFTA. It's not. For goodness sake we are the closest allies in the world.

[15:35:06]ELBAGIR: You are the U.K. Independence Party. You have independence. What happens now to you and --

FARAGE: Well, the first thing that happens is I lead the biggest British delegation in the European parliament. We're going to watch these

negotiations like a hawk to make sure things are happening properly.

And secondly UKIP does need to stay strong to make sure the government carries out the wishes of the people.


GORANI: All right, Nigel Farage there. One of the most public faces of the leave campaign. We heard a lot from Nigel Farage overnight. Certainly

making victory laps there, speaking to many of the networks. And discussing the impact he believes the impact that he believes will be

positive of the U.K., leaving the E.U.

Now, all of Europe's leaders are now digesting David Cameron's stunning announcement that he will resign as British prime minister. Max Foster

looks at how David Cameron's decision to call a referendum ultimately led to his demise.


DAVID CAMERON, BRITISH PRIME MINISTER: This is a decision that is bigger than any individual politician or government.

MAX FOSTER, CNN ROYAL CORRESPONDENT (voice-over): And so it turned out to be. David Cameron's promise of a referendum ultimately the death knell of

his leadership. The argument over Britain's place in Europe, bringing his time at 10 Downing Street to a dramatic end. When Cameron first took

office in 2010 it was against an unfamiliar backdrop. A coalition government for the first time in generations.

CAMERON: We are announcing a new politics.

FOSTER: In this new era, Cameron oversaw the country's gradual economic recovery, a shrinking budget deficit and a record number of jobs created.

Although the process of austerity was painful for some. Cameron maintains Britain's special relationship with America joined the international

coalition against ISIS, and welcomed the world for highly successful London 2012 Olympics.

When it came to re-election last year, even Cameron was taken by surprise, when he won a majority. But that win came at a cost. Pressure from an

increasingly disgruntled group of euro skeptic MPs within Cameron's own party forced him to make a pledge.

CAMERON: Yes, we will deliver that in-out referendum on our future in Europe.

FOSTER: The Europe issue has divided Cameron's Conservative Party for decades.

CAMERON: I am not a British isolationist, but I do want a better deal for Britain.

FOSTER: In February he went to Brussels to renegotiate Britain's position in Europe. He declared it a success. But his critics, including high

profile members of his own cabinet said little had changed.

UNIDENTIFIED MALE: Explain to the House and to the country, in exactly what way this deal returns sovereignty over any field of law making.

FOSTER: Having failed to convince even some of his closest political allies Cameron's position going into the referendum was vulnerable. He

already announced he would step down before the next election in 2020.

CAMERON: I'm not standing for re-election. I have no other agenda. I have no other agenda than what is best for our country.

FOSTER: As Cameron steps down the race to fill his shoes will quickly heat up. Max Foster, CNN, London.


GORANI: Well, this is THE WORLD RIGHT NOW. Ahead, new remarks from President Barack Obama on Brexit. I'll also ask U.S. State Department

official -- U.S. State Department spokesperson about the diplomatic headaches this breakup could cause as we continue to keep our eye on the

Dow Jones down almost 600 points right now as a result of Brexit. We'll be right back.




TONY BLAIR, FORMER BRITISH PRIME MINISTER: I think the in the days and weeks ahead we've got to do everything we can to stabilize our situation.

But this is a decision personally I regret very much, but it's a decision with vast consequences for Britain, for Europe, for the global economy.


GORANI: All right. Britain's former leader bemoaning the Brexit decision there a little while ago. The U.S. president tried to provide some measure

of reassurance, though. Listen to Barack Obama.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I do think that yesterday's vote speaks to the ongoing changes and challenges that are

raised by globalization. But while the U.K.'s relationship with the E.U. will change, one thing that will not change is the special relationship

that exists between our two nations. That will endure.

The E.U. will remain one of our indispensable partners. Our NATO alliance will remain a cornerstone of global security, and in a few weeks we'll be

meeting in Warsaw for the NATO summit. And our shared values, including our commitment to democracy and pluralism, and opportunity for all people

in a globalized world, that will continue to unite all of us.


GORANI: Just going to go live -- All right, there you heard from Barack Obama. Michelle Kosinski is following Mr. Obama's remarks on Brexit.

She's live at the White House.

When you visited London, of course, Barack Obama said while he was speaking to reporters alongside David Cameron, you know, if you decide to leave the

E.U., you'll get the back of the queue when it comes to trade deals --


GORANI: -- perhaps sounding like the U.S. wouldn't be extremely happy giving the U.K. a preferential treatment. Today, though, his remarks were

a bit different.

KOSINSKI: Yes, I mean back then he wanted things to go his way. This was almost a 20-minute lecture he delivered to the British people. And sounded

kind of like a warning, didn't it? That, you know, if you don't go with the E.U., then good luck forging new trade agreements with these same

countries, including the U.S.

But, of course, now that this has happened, and we think that this is going to be the new normal, unless there's another referendum in the near future,

I mean, there are all kinds can of thoughts and rumors circulating about that.

The president wants to reassure people that, of course, those relationships are going to remain strong. And it's in everyone's best interest, right,

to continue trade in trading at least as close as possible to the way that it's been going.

I think what's been interesting is now seeing the White House broaden this out, looking at the sentiments behind this. We heard that a little bit in

President Obama's remarks just now. Talking about the challenges caused by globalization.

Earlier today we heard the vice president take this a step further, broaden it out, talk about the pressures in the world. The challenges the country

has faced. And he said that provides fertile terrain for reactionary politicians and demagogues peddling xenophobia, nationalism, and


And then he talked about this same kind of sentiment that led to the Brexit, led to other upheavals in Europe, happening to some extent within

the United States. Listen.


JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: some politicians find it convenient to scapegoat immigrants instead of welcome

them, to play to our fears. To play to our fears rather than as Abraham Lincoln said appeal to our better angels. Divide us based on religion or

ethnicity, rather than unite us on our common humanity. Build walls instead of bridges. It has been un-American what we have been seeing.


KOSINSKI: And that's another example of, as the White House often does now, clearly reference things that Donald Trump, and other Republicans have

said, but not mentioning Donald Trump by name.

[15:45:06]Talking about the sentiment that is out there. Of course, today Donald Trump responded to the Brexit by saying this is a vote for

independence and soon America will have that same chance to vote for independence -- Hala.

GORANI: All right. Yes, interesting similar themes there, running in the U.K., and the political in the U.K. and the U.S. Thanks very much,

Michelle Kosinski.

Let's find out what this does mean for the U.S. State Department. Spokesperson John Kirby is with me from Washington. First of all, your

reaction to the decision by the United Kingdom to exit the European Union. This is historic. This has profound consequences for the union. What's

your reaction to what happened?

JOHN KIRBY, SPOKESPERSON, STATE DEPARTMENT: Well, we respect this decision. This is obviously reflective of the will of the British people.

And we have great respect for the U.K., and for the British people, and so we respect this decision, and you know, as the secretary made clear here at

the State Department this morning, we need to now move through this.

And to stay closely in touch with U.K. officials, and E.U. officials, as they work through the particulars of what this means. What this means.

It's going to take some time. So, we're going to approach this with a calm, very measured, very deliberate, and a very deliberate fashion.

GORANI: And do you think it was a mistake?

KIRBY: Well, look, this was, again, a decision for the British people, and we respect that. Now, we have to focus on moving forward. I can tell you

a couple of things, we know there's going to be some changes that result from this. What's not going to change, Hala, is our strong, very special

relationship with the U.K.

And what's not going to change is our strong partnership with the E.U. on so many issues. Not just security, but economic and political, as well.

So there's plenty of work to be done here. It's going to take some time to figure out what this all means.

But I can tell you that here at the State Department we're committed to staying in touch with officials at both the E.U. and U.K. as they work

their way through this.

GORANI: But just a few weeks ago President Obama was here in London, alongside David Cameron saying essentially, look, if you decide to leave

the E.U., you're getting no preferential treatment from us on trade deals and other issues. Today was an entirely different tone. Why the change?

KIRBY: Well, look, one of the great things about the relationship we have with the U.K. is we're able to be candid about our concerns, our hopes, our

expectations. The president did that. The outcome here isn't one that neither of our governments preferred.

But nonetheless, it's a decision made by the British people. Prime Minister Cameron has expressed his desire to move forward, to respect that

decision, and we respect him for that. We respect the British people as they make this decision.

Our concern now is moving forward. And as for trade and economics, the developments, we know there's some uncertainty here. We're committed to

working through that uncertainty.

And we'll consider our options as the E.U. and the U.K. consider their options moving forward. The key is, that we stay in touch, stay in

constant communication, and make these decisions together.

GORANI: So I get that. But the president was very clear. He said back of the line. You're getting no preferential treatment. In fact you're going

to lose your spot where you were within the E.U. Is that going to happen or not?

KIRBY: I think we have to work our way through what this means specifically. There is a lot of work that's going to be done. You saw the

president of the European Council come out and stress he's committed to working on their behalf.

We have to figure out what this exactly means. We're going to do that. As we -- and we're still committed to TTIP by the way. As we work through

this, we'll review our options, United States will review our options with respect to trade issues going forward.

But, what we want to do is be supportive of the process that now has to exist between the E.U. and the U.K. as they work their way through it.

GORANI: All right. Well, hopefully we'll get some clarity there on how things will progress going forward in terms of important trade agreements

there between the two countries. Spokesperson John Kirby, thanks very much for joining us from the State Department. We'll have a lot more analysis

after a quick break. Stay with us on CNN.




UNIDENTIFIED MALE: I'm shocked, really. Yes, I don't know what's going to happen. It seems very strange. Worried for young people because most

young people voted to remain.

UNIDENTIFIED MALE: Really just can't say how happy I am. I've waited so long for this. I never wanted to join the common market in the first


UNIDENTIFIED MALE: We have to live with the votes now, and a million more people voted to be out than in. So, we'll see what happens.


GORANI: OK, shock elation all sorts of strong emotion on the streets of London. Although the city London, the city capital voted overwhelmingly to


U.S. markets are still deep in the red with about half an hour left in the trading day. Here's a check of the numbers, 530 points lower. Red arrows

across the board, European markets as well. We're not talking hundreds of millions or billions of market cap wiped off of world markets. We're

talking 2 trillion dollars plus.

I'm joined by Charles Reed, the online business and finance editor for "The Economist." That publication has an article out today titled how to

minimize the damage of Britain's senseless self-inflicted blow.

So we know where you stand on the topic. But how do you do that? How do you minimize the impact? Because right over the last 12 hours we've seen

some terrible losses on market and the pound, as well.

CHARLES READ, ONLINE BUSINESS AND FINANCE EDITOR, "THE ECONOMIST": Well, decision came as a big shock to financial markets. They reacted badly and

quite rightly as well. This is a big economic blow for Britain, and other countries around the world. When Britain leaves, it's got two major

choices of the deal it could get.

It could either go to what's known as World Trade Organization rules like other countries around the world, where Britain doesn't get any

preferential treatment by the E.U. or it could take a Norway-style option which involves having access to single markets, as it does now.

GORANI: But still it would have to accept freedom of movement for workers, right? So it would be similar to what the U.K. maybe has now?

READ: Indeed. But that option will involve much less damage. The economists say that they'll be up to a 6 percent GDP will be lost by 2030

if you go to the World Trade Organization rules option. If Britain goes for the single market, the Norway-style option it will lose much, much

less. That's partly because --

GORANI: But it will have to accept -- it will have to accept the freedom of movement of migrants, which is what most of those people who voted for

Brexit oppose?

READ: They oppose it in theory in ferry. But, freedom of movement of migrants helps British economy. Britain has an aging population. And this

means there's less money each year for pensions, for the National Health Service, and having young migrants coming to Britain working and paying

taxes actually help fund National Health Service.

GORANI: Why wasn't that message -- why didn't that message resonate with the people who were so passionately opposed to E.U. membership?

READ: Well, the major reason is because people use this vote as a way of putting two fingers up and trying to send a message to the establishment.

This is happening across the world. This is happening around Europe, with populist movements. This is happening in America with Trump's movement.

People feel that they're not benefiting from globalization --

GORANI: But they're not just feeling that they're not benefiting. There are large portions of the population of this country, of other countries,

in the United States, we see similar patterns, where globalization has genuinely hurt some workers in post-industrial areas, that kind of thing.

The establishment has not really listened to their concerns, has it?

READ: The point is, is that they need to use stabilization in a way that helps most ordinary people. The point is that the policies by populists

limiting freedom of movement of people going to protectionism will damage the economy even more.

[15:55:12]It will damage the people, the financial health of people. Instead they need to choose other policies such as governments investing

more in education, and transport and infrastructure. These are the policies which will produce productivity, which will boost real income --

GORANI: But I guess for people who live in this London bubble, this elite London bubble, you know, where there's all this -- you know, prosperity

around us, there are parts of the country where it is easy to understand the motivation, the fear, and the desire to want to lash out at these

politicians that have just not listened to us.

READ: And indeed, British --

GORANI: And maybe that's why people got the predictions so wrong.

READ: Maybe. The point is the British politicians for decades have bottled important decisions about investing in education, investing in

infrastructure. Britain hasn't built a new runway in Southern England since the Second World War. Britain needs to become much better at making

these decisions about transport, about infrastructure, investing in education, investing in these things. These are things that will have not

been made over the last few decades.

GORANI: And it's an extremely centralized economy as well in London, there's so many other in fact when you look at the map the Brexit map, it's

all red for Brexit, then you have this bubble over London, a few other dots of blue, and that's it.

READ: I mean, you have Scotland and Northern Ireland.

GORANI: Right. Well, I mean England.

READ: England. Indeed. And but the point is there needs to be more investment in infrastructure. There needs to be more investment in

transport in the regions of the United Kingdom. More investment in education. These things which will help British workers compete in

globalization in a global -- increasingly globalized world. Not limiting number of migrants who can come to Britain which will damage the British


GORANI: Our hour has come to the close. Charles Read of "The Economist," thanks so much for joining us. We really appreciate your take.

This has been THE WORLD RIGHT NOW. I'm Hala Gorani. Thanks for watching. Much more ahead on the repercussions from Britain's historic vote to exit

the E.U. "QUEST MEANS BUSINESS" is live from our London studios coming up next.