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May 05, 2016

The case for dropping TTIP

We can see why France opposes TTIP, but Germany should be one of the beneficiaries. Yet in Germany opposition to the transatlantic trade and investment partnership is running particular high. ARD Deutschlandtrend, one of main German polling organisations, has come out with a poll according to which 70% believe that TTIP is negative. Even most supporters of the FDP, the most liberal of German parties, oppose it. Among SPD voters, only 13% are in favour, and this clearly includes the party's leader, Sigmar Gabriel, who is fighting a hopeless battle. According to this poll people see that it would benefit companies, but most believe that it would damage consumers. This is no surprise given how the TTIP leak was reported in the German media, where the focus has been on the possible imports of genetically modified food to Europe. If you want to kill TTIP, this is how to do it. 

The poll also registered 62% opposition to Angela Merkel's dirty deal with Turkey, especially the lifting of visa restrictions. Fewer refugees are arriving in Germany, but for Merkel the crisis is far from over. The ARD poll has both the CDU/CSU and the SPD down to 33% and 20% respectively, just barely enough for the two parties to form another grand coalition if this is what they want to do. The AfD is at 15%. The detailed analysis, which is more revealing than the headline numbers, suggest that AfD supporters like it a lot that the party does not mince words on refugees, but they are critical of the party's failure to distance itself from far-right influences. The party is therefore vulnerable, and might still implode. But it strikes a chord, more so than any other right wing parties in the past.

Another poll already has the SPD at under 20%. But, whatever the precise number, the weakness of the SPD and the rise of the AfD are the dominant issues in German politics today.

With these polls, we see virtually no chance that TTIP can be ratified unless the Europeans prevail entirely in the debate on consumer protection. The fact that the European Commission is already lowering its standards on visa-free travel for Turkey is not exactly a confidence booster. If they do a similar number on consumer protection, expect a major political insurrection.

The TTIP papers may not have contained any substantively shocking news, but the secrecy of the negotiations and the subsequent leak allowed the critics to assemble the news coverage in a way that put TTIP supporters on the defensive. This is now confirmed by the polls. The German grand coalition supports TTIP, conditionally. If it were to ratify a deal, it would pay heavy political price given its already weak poll ratings.

A TTIP-light version that excludes the controversial elements might be an alternative. But it would still cost political capital. The trade-off is probably not worth it, though this would depend on the precise nature of the agreement. We think they should put the negotiations on hold until after the 2017 elections. There is a risk, of course, that a delay would frustrate an agreement forever, but an attempt to force it through now could easily trigger a populist backlash in one or several of the forthcoming national elections.

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May 05, 2016

Another feud amongst French Republicans?

Contenders for the Republican primaries in November are up in arms after party leader Nicolas Sarkozy changed the way that French expats (roughly 1.2m) can vote. The surprise move is considered to benefit Sarkozy, as polls suggest that Sarkozy can count on his core base of militants on the mainland, while Alain Juppé has a clear advantage over Sarkozy overseas, writes Les Echos.  Candidates previously agreed that French expats would be allowed to vote electronically, but on Tuesday night Sarkozy proposed that they should only be able to vote on paper. The motion passed at a meeting where all other candidates were absent.

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May 05, 2016

Where did the bailout money go?

This study from the business school ESMT in Berlin is sure to make the headlines, but whether it changes anything politically is less certain. Economists looked at the bailout package and traced where the money actually went. They found that, from the first two aid packages worth €215.9bn, only €9.7bn or less than 5% of the total went into the government’s budget, thus benefiting the Greek people directly. The rest went into debt repayment and interest service. €86.9bn was used to pay old debts, €52.3bn were spent on interest payments and €37.3bn were used to recapitalise Greek banks. This capital injection, moreover, was almost completely destroyed as, since their recapitalisation in 2013, banks have lost around 98% of their stock market value. The study argues that a haircut for Greece at the beginning of the bailout programmes in 2010 would have been much better. The whole study can be downloaded from Handelsblatt, behind a paywall.

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May 05, 2016

What the Austrian coalition must do (and won't)

Philip Rathgeb and Fabio Wolkenstein offer some advice for the SPÖ and ÖVP, Austria's no-longer-so-grand coalition partners, who are in acute danger of losing the parliamentary elections in 2018 after dropping out of the presidential election in the first round. They should first of all recognise that this is a major crisis, and that they need to break with the status quo. This is going to be very difficult. 

"...the SPÖ and ÖVP must also put their efforts and energies into rebuilding their long-lost connection with the citizenry. This cannot be done solely through party patronage, the strategy the SPÖ and ÖVP have traditionally pursued. Providing affiliated people with leadership positions is somewhat different from taking the political demands and concerns of the populace seriously. Rather, it must involve extensive reform of the party structure, moving away from the present hierarchical system which undermines the transmission of preferences from the bottom up."

We doubt this is possible in government. They will need to do this in opposition. And that means the FPÖ will come to power eventually.

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