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April 25, 2016

The death of the Grand Coalition

The first round of Austria's presidential elections is a peek into the future of grand coalitions in Europe. If the two largest parties go into a Grand Coalition, they face annihilation as happened in Austria yesterday. With 10.9% and 11.1% respectively, the SPÖ and ÖVP candidates were relegated into fourth and fifth place. The victor was Norbert Hofer from the ultra-right FPÖ, who managed to get 35.3% in the first round. The Green candidate and former party chairman, Alexander van der Bellen, came second with 21.3%, narrowly ahead of a third candidate, a former president of Austria's constitutional court. The run-off between the two leading candidates is schedule for May 22.

The role of Austrian president is normally ceremonial but, unlike the German president, the Austrian head of state has important powers immediately after elections. The president can refuse to nominate a chancellor and force new elections. One of the issues during the campaign had been whether the president would refuse to nominate FPÖ leader Hans-Christian Strache if he were to win the next general election in 2018. 

We noted that in Germany, too, support for the grand coalition is fast falling below the 50% mark. Germany is not quite where Austria is today. Austria has had a grand coalition since 1987, except during the years 2000-2007 when Wolfgang Schuessel governed in a coalition with the FPÖ. Centrist politics results in political fragmentation.

This was the FPÖ's biggest political success in Austria so far - except for one election in which Jörg Haider won the premiership of the state of Carinthia. Der Standard puts the FPÖ's electoral potential at over 30%, which would make Strache a serious contender for the job of chancellor at the next general election in 2018. It was also the biggest success of the Green Party. Van der Bellen's strategy is that he can consolidate the support of the centrist parties. The third-place candidate, a former constitutional court justice, said she had not made up her mind yet on whom to support in the second-round.

In a commentary Alexandra Foderl-Schmid made the point that the SPÖ did not benefit from their U-turn over refugees. Chancellor Werner Faymann, who had originally supported Angela Merkel's open-door policies, has not been rewarded by the voters (nor have the CDU candidates who went against Merkel's during Germany's regional elections, why vote for centrist turncoats when you can have the real thing?) She also made the point that the emergence of the FPÖ and the Greens as the victorious parties may lead to a realignment of Austrian politics. Faymann said yesterday that he would support the Green candidate.

If the FPÖ comes to power in Austria, the whole Central-Eastern-European region will have turned to the right politically. While the FPÖ is gaining in Austria, Fidesz in Hungary, and Fico's Social Democrats are all part of different party grouping in the European Parliament, they have a lot more in common with one another than with their respective international allies. Witness the rebirth of Austria-Hungary - this time as farce.

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April 25, 2016

Insurrection against TTIP

This is the year in which the Trans-Atlantic trade and investment partnership (TTIP) will have to be concluded, or otherwise the whole process will drag on forever. At a speech in Hannover, where he was greeted by 35,000 anti-TTIP demonstrators, Barak Obama noted that time was "not on our side". The problem are forthcoming elections, in the US of course but - perhaps more importantly - also in Europe. There are increasing reservations about TTIP in Germany, as expressed by recent opinion polls. SPD leader and economy minister Sigmar Gabriel recently threatened to veto TTIP unless the US opens its procurement markets to European companies. France has constantly been putting up new demands as well - and this is not going to get any easier as we are approaching the 2017 elections.

In his FT column Wolfgang Munchau notes a generlised insurrection against the politics of globalisation. He writes that globalisation constitutes an economic shock that has overwhelmed European societies politically and economically. He notes both globalisation and European integration have not been Pareto-optimal. Both have generated real losers in Europe. We are not far from a moment when entire nations lose out. Globalisation has produced two decades of stagnant real incomes, while financial globalisation brought financial instability and years of economic crisis. In such a climate, it would be best to take a step back from TTIP. He accepts that the pact would bring some economic benefits, but they are not large and certainly do not outweigh the political costs.

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April 25, 2016

Juppé to benefit from Macron hype

With all the media hype about Emmanuel Macron and his revolutionary ideas, it is Alain Juppé who emerges as the opposite personality in the political spectrum, writes Cécile Cornudet. Nothing radical, no promise of renewal, no buzz words. He is a classic amongst politicians, calm, disciplined, a pragmatist. Over the weekend Juppé targeted Macron in his televised intervention, calling on the minister to focus 100% on his job. With the Uberisation of Macron, which reminds us of the early days of Sarkozy, Juppé can mark his difference, counting that personality matters more than the radical content of the programme.

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April 25, 2016

On optimal currency areas

Dawid Sawicki observed that income inequality has risen over the last 25 years and argues on the LSE blog that this is due to a lack of automatic stabilisers in the eurozone. Over this period the EU faced a number of asymmetric shocks which could have been dealt with if only automatic stabilisers were in place. But there was just not the same labour mobility there is in the USA and there are no fiscal stabilisers either. In the optimum currency area tradition from Robert Mundell, Sawicki then makes a plea for more fiscal integration. But it is easy to see how this rising inequality can be used politically to argue the exact opposite.

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April 25, 2016

Why the Artic region could be the next geopolitical troublespot

The Norwegian foreign minister Borge Brende made a point about security that is not often made in the general discussion: don't ignore the North - which has been a beacon of stability in the past, though that may not last. In an article about Europe's future security challenges, Brende notes that the Arctic stood out as a remarkable exception. But stability cannot be taken for granted. Russia's military build-up in the region should serve as a warning sign. Its importance will grow due to climate change. It will make minerals and energy more accessible. Access through the north-east passage could reduce maritime transportation times by 30%, and arctic fish stocks will become a growing a source of food for European populations. To avoid geopolitical tensions and an unsustainable race for resources, Europe needs a coherent approach to security in the region.

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April 25, 2016

From a currency to a people

Hjalte Lokdam makes the intriguing observation that the ECB has begun talking about "the people of Europe" in its mission statement. He notes that so far the treaties stay away from the term "the people of Europe", at most referring to "the peoples of Europe" in the plural, with the implication that the several European nations associate together, but remain separate. Lokdam links the discursive change from "the citizens" - an incoherent mass - to "the people" - a political subject - to the development of more centralised fiscal governance during the Euro crisis, which has led to continued debate over sovereignty and deeper political union. He also argues in this process the ECB is called to become less technocratic and more a political institution concerned with the welfare of the European public. Lokdam illustrates this transition with a 2012 speech by Benoît Coeuré who argued already then - significantly, after Mario Draghi's 'whatever it takes' - that the Euro is not a currency without a state but the currency of a state yet to be defined. The unresolved question, especially in light of the cost of the euro crisis, is whether the peoples of Europe want to be a single people and they want the ECB to care for their welfare.

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  • January 31, 2018
  • A compromise of words
  • The Maybot will go on and on and on
  • September 22, 2017
  • The last German polls
  • May 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 30, 2016
  • Brexit facts on the ground
  • Burkinis and Republican primaries
  • The SPD and TTIP
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 01, 2018
  • After the referendum, more turmoil in Macedonia
  • What will happen if the UK parliament votes No?
  • Barnier's no-thanks works much better than a yes-please
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 09, 2018
  • German panic about Target2
  • AfD level with SPD
  • How the EU could fail
  • May 31, 2018
  • Hans Werner Sinn demands German euro exit
  • The politics of the SPD’s links to Russia
  • April 23, 2018
  • More bad news for the SPD
  • Will Theresa May accept a customs union? The Times says yes. We think so too.
  • A comeback for Marine Le Pen?
  • March 16, 2018
  • Pellegrini to succeed Fico
  • Slovenia may go to early elections in late May
  • The case for crypto-currencies
  • February 09, 2018
  • Is the Labour Party shifting towards a customs union?
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • November 27, 2017
  • Will Northern Ireland scupper a Brexit deal?
  • Last-ditch effort to prevent Irish elections
  • Pressure on Wauquiez
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • September 21, 2017
  • Time to get serious about Brexit
  • Would the FDP claim the job of finance minister?
  • The return of the ultra-right to German politics
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • June 09, 2017
  • How about the Italian elections...
  • ...and the French?
  • May 12, 2017
  • What to do with Germany’s tax windfall
  • How Macron counts on building a majority
  • Options for the eurozone
  • April 15, 2017
  • Happy Easter
  • March 20, 2017
  • Does the language of communiques matter?
  • Spain snap election rumblings
  • Will there be a Brexit deal?
  • February 24, 2017
  • Schulz effect stabilises
  • Wilders security breach becomes campaign issue
  • Kenny wants Ireland clause in Brexit deal
  • On why Europe should not overreact to Trump
  • February 01, 2017
  • Do Republicans have a plan B if Fillon falls?
  • Unforgiven
  • January 09, 2017
  • FN campaign troubles
  • Objectionable perhaps, but muddled?
  • December 19, 2016
  • Inside the customs union, outside the single market
  • Back to the future in Italy
  • The lessons from Fillon's first gaffe
  • Montebourg - a bit of everything
  • The Maastricht error
  • If Paul Romer is right...
  • November 28, 2016
  • And now what Monsieur Fillion?
  • The inescapable logic of an interim agreement
  • On Germany's foreign policy post-Trump
  • How to lose against the populists
  • November 09, 2016
  • Brexit all over
  • October 21, 2016
  • Wallonia says No for the third time
  • Do you remember that Dutch referendum on Ukraine?
  • How narratives are destroying the EU
  • October 03, 2016
  • Hard, harder, hardest
  • PSOE cuts its nose to spite its face
  • In defence of Jeremy Corbyn
  • September 15, 2016
  • Five Star Movement says would like to lead interim government
  • Andrew Duff's treaty of London
  • Sarkozy, a converted climate change sceptic?
  • August 30, 2016
  • Brexit facts on the ground
  • Burkinis and Republican primaries
  • The SPD and TTIP
  • August 15, 2016
  • Sarkozy to declare his candidacy
  • Do intra-eurozone current account deficits matter?
  • On the failures of modern macroeconomics
  • July 26, 2016
  • The limits of May's freedom of manoeuvre
  • Don't misread the lack of visible panic in Germany
  • July 11, 2016
  • Towards Brexit outside the EEA
  • On the EU's deteriorating relationship with Russia
  • June 30, 2016
  • The post-Brexit options are mercifully few
  • The Scottish complication
  • June 20, 2016
  • Neck and neck once more
  • How to defeat populism
  • June 09, 2016
  • Greens threaten to block German asylum law
  • The escalating Turkish problem
  • Conspiracy theories in Austria
  • Why Leave means Leave
  • May 31, 2016
  • Grand Coalition below 50%
  • Strikes to continue in France
  • Which crisis will blow up first?
  • Verhofstadt loses patience with the pro-Europeans
  • May 24, 2016
  • Merkel desperate to salvage her Turkey deal
  • May 16, 2016
  • Is the Erdogan deal on the brink of collapse?
  • Towards the end of sexism in French politics
  • The case against TTIP
  • May 09, 2016
  • High noon over debt relief
  • A French plan for a core Europe
  • Polish opposition takes to the streets
  • May 03, 2016
  • TTIP now an election issue, meaning no deal
  • No hopes for a deal before eurogroup meeting
  • Turkey miraculously fulfils conditions for visa-free travel
  • 5,000 amendments for the El Khomri bill
  • The disaster of grand coalitions
  • April 29, 2016
  • Is Brussels now interfering in the Brexit debate?
  • Italy's centre right realigns once again
  • First eurogroup, then summit
  • French labour reform protests turn violent
  • April 27, 2016
  • German grand coalition at 50.5%
  • French Socialists prepare for Hollande not signing TTIP
  • Not going well in Greece
  • What happens when you try to kick the water can down the road?
  • April 26, 2016
  • Could Austria's new president veto TTIP
  • Still squabbling over water charges in Ireland
  • On Brexit and trade - why this is a difficult discussion
  • Brexit inspires FN
  • With friends like Theresa May...