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April 20, 2018

Macron at home

Emmanuel Macron's Berlin visit did not feature highly in the French news either. Instead papers looked back to Macron's first year in office. There is no doubt that under Macron many reform projects have been launched. Many of them are already completed, and this in a very short time period. Macron also did not shy away from contentious reforms. On the contrary, he even took on board the SNCF reform even if this had not been promised on the campaign trail. He succeeded to deliver the labour law reform, and is already planning the next challenge, a reform towards a unified pension system. 

Despite all this reform frenzy, there is no sign of a revolution either, writes Les Échos. Instead there is an erosion of trust. The latest Elabe poll shows that 52% consider the election of Macron a bad thing. The French acknowledge Macron's transformational role, but they have lost sense of where this is leading. They also start to worry about the social impact, and what they will get out of this. They are concerned that his reforms will split the country rather than unite it. They also find that he is not delivering on his promise to protect, only to liberalise.

And then there is the question about coherence. The editorialist from L'Opinion finds there are just too many priority projects in the air, which needs to be squared with the government's budget commitments.

Every presidency benefits from the initial good will of the people. It seems that this moment is coming to an end for Macron. What will come next will be important to define what his presidency is about.

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April 20, 2018

EU has rejected all UK proposals on Northern Irish border

We are approaching what promises to be the final high-noon moment in the Brexit negotiations - on the future of the Northern Irish border. Peter Foster has a story in the Daily Telegraph that the EU has comprehensively rejected all of the UK’s proposals for the Northern Irish border. This leaves the UK effectively with a choice of either no deal or accepting a customs union.

The article says the EU produced a "systematic and forensic annihilation" of the UK's proposals, rejecting both of the UK's ideas for the border. 

The first was for a customs partnership, in which the UK would collect duties on the EU’s behalf. This was rejected by the EU on the grounds that it could not allow countries outside its supervision mechanism and IT systems to levy duties, and because the plan places an unfair tariff-collection burden on businesses. The EU also raised objections about costs.

The second proposal was for what the UK calls a streamlined customs arrangement, which includes trusted-trader schemes, with technological support, plus exemptions for small businesses. That, too, was rejected because it would set precedents for the customs union with Turkey, and in any case it would not be workable in practice. 

The story quote a source as saying the EU had given a comprehensive and forensic rebuttal of the proposals on Wednesday. The EU’s position essentially leaves the UK with no alternative choice but to accept a customs union. The alternative would be no deal, but that would also produce a hard border in Ireland. The article said that the British team, led by Olly Robbins, was shocked by the total lack of flexibility by the EU on this issue. 

The EU, meanwhile, has suspended all work on the future EU-UK trade until this issue is settled. In response, Theresa May will now chair weekly meetings with her inner Brexit war cabinet starting next week, in an effort to find alternative solutions. The article also makes another troubling point for the UK. If the UK decides to join a customs union, the EU would still require full compliance with EU rules for goods and agricultural products. This is why we still think that EEA membership is a vastly superior option to a customs union. 

We noted an interesting comment by Martin Wolf in the FT. While he has not changed his extremely negative views on Brexit, he has now come to the conclusion that a second referendum would be a thoroughly bad idea. For once, it would be hard to find the right question to answer; time might be too short to organise it; but most importantly, it would tear the country apart, and might not even resolve the issue.

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April 20, 2018

Could there be a Five Star-Forza Italia government?

It took barely a day for the exploratory mandate given by Italian president Sergio Mattarella to Maria Elisabetta Alberti Casellati, a Forza Italia politician, to collapse. The first thing Casellati did was to suggest a government role for her party leader, Silvio Berlusconi, and that Five Star might provide outside support for a centre-right government. This infuriated the leaders of both Lega, Matteo Salvini, and Five Star, Luigi di Maio. Salvini because he sees himself as the leader of the centre-right coalition since his Lega Nord did better than Forza Italia at the elections. And Di Maio because Five Star is the largest single party (though it failed to beat the centre-right coalition) and doesn't see itself as a junior partner to anyone else. In addition, the base of Five Star appears incensed at the suggestion of a deal involving Berlusconi.   

According to La Repubblica, Matteralla's reaction to the unedifying spectacle is likely to be to take Casellati's mandate as failed, and give another mandate on Monday. The paper suggests that this mandate will go to Five Star, because the coalition has already got the mandate once. This would be despite Salvini's protestations that he's the leader of the centre-right coalition. The only way Salvini can get the mandate now is if he manages to assemble a parliamentary majority that he can present to Mattarella by Monday.

The paper also suggests that di Maio has earned the bona fides of Mattarella by moderating his public positions on Nato. Foreign policy is a major concern for an Italian president, and Salvini has undermined his own international credibility with his pro-Russian reaction to the Syria bonbing by the US, UK, and France. Among yesterday's brouhaha, Di Maio did suggest he would accept outside support by Forza Italia and the other party in the centre-right coalition, the Brothers of Italy, just not a government role for Berlusconi.

The question is whether Salvini, rather than be a junior partner, will prefer to stay in opposition in hopes of growing his party's support. With the Partito Democratico divided and leaning towards also staying in opposition, could they end up having a Five Star government with Forza Italia support? The only other alternative to new elections would be a technical government or "president's government".

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