Yes, it was racially provocative. The Mitt Romney campaign offered his "Anglo Saxon heritage" as the basis for a better foreign policy relationship with Great Britain.
Specifically, John Swaine of the London Daily Telegraph wrote:
In remarks that may prompt accusations of racial insensitivity, one suggested that Mr Romney was better placed to understand the depth of ties between the two countries than Mr Obama, whose father was from Africa.
“We are part of an Anglo-Saxon heritage, and he feels that the special relationship is special,” the adviser said of Mr Romney, adding: “The White House didn’t fully appreciate the shared history we have”.
Cornell Law School's Eduardo Peñalver, whose duties include a course on Catholic social thought and the law, responded derisively for the Catholic magazine Commonweal:
Shorter Mitt Romney advisor to the British press: He’s white ya’ll. He’s white ya’ll. He’s whitily white white white ya’ll.
As for Latinos, Asians, Native Americans, Irish Catholics, Scottish Presbyterians, African American Baptists, Jews and other citizens who aren't specifically Anglo Saxon, it may comfort some of us to know the reference is silly and outdated. Going back to the London Daily Telegraph, Tim Stanley writes:
There are two problems with the "Anglo-Saxon" bomb. First, the extent of the division between our nations is up for debate. Yes, Obama took the Churchill bust out of the Oval Office and hasn’t been super supportive during Britain’s spat with Argentina. But David Cameron’s last visit to the White House was a veritable love-in (“Get a room, guys”), and Obama’s popularity in the UK is undiminished. Many Brits love him because they see him as an antidote to the misdirected machismo of the Bush years. Few of us are keen to revive an alliance that led to the bloody mess of Iraq and Afghanistan.
More importantly, the adviser has a terrible way with words. The emphasis upon the “Anglo-Saxon” identity of the Atlantic alliance is out of date. Both countries are more multicultural than ever before, and both have forged alliances with countries that are decidedly un-Anglo-Saxon: the US is part of a trading bloc with Mexico and the UK is trapped in the engine room of the EU Titanic.
Update
Predictably, the Romney campaign is most obliquely denying the whole thing. Andrea Saul, Romney's press secretary said:
"It's not true. If anyone said that, they weren't reflecting the views of Governor Romney or anyone inside the campaign," she told CBSNews.com in an email. Saul did not comment on what specifically was not true.
The Daily Telegraph is standing by the story and "has not received a request from the Romney campaign to retract or correct the story." Although MoveOn.org would like Romney to apologize.
Update II
Romney has disavowed the staff claim. ABC News reported:
Team Romney distanced itself from the quote and, in an interview with NBC News' Brian Williams. Romney did some damage control as well: "I can tell you that we have a very special relationship between the United States and Great Britain. It goes back to our very beginnings-- cultural and-- and-- historical. But I also believe the president understands that. So I-- I don't agree with whoever that advisor might be."