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August 26, 2016

Will the refugee crisis return?

Frankfurter Allgemeine has an interview with Bojko Borisov, the Bulgarian prime minister, who warned of a return of the refugee crisis. If the Turkey-EU deal fails - as he expects it will if the EU does not deliver its part of the bargain - he would expect the Turkish president Recep Tayyip Erdogan to make good on his threats to flood Europe with immigrants. The problems with threats like these is that you eventually have to fulfil them, or lose your credibility, he said. He complains of a lack of support by the EU for his country, and says Bulgaria was not able to withstand the migration pressure at its borders for much longer. This Saturday, Borisov will meet with Angela Merkel and the prime ministers of Austria, Croatia, and Slovenia, to discuss the strategy. Merkel has failed to win over for refugee quotas the centre-left government of the Czech Republic. Austria's defence minister Hans Peter Doskozil said the situation in Italy was comparable to that of Hungary in the summer of 2015, which triggered the large refugee streams to northern Europe.

Wolfgang Weisgram recalls in Austria's Der Standard that tomorrow is the first anniversary of the day when a truck was found in Austria with over 60 dead refugees. That horrific incident was the symbolic start of the refugee crisis. One and a half million refugees later, the crisis has triggered a deeper and wider confrontation about the future of Europe. The outcome of this historic process is unknown, but its beginning can be timed accurately. It started a year ago.

Greece, meanwhile, faces new challenges with Turkey as seven Turkish civilians arrived in Alexandroupoli and Rhodes expected to request asylum. Their case is set to put yet more strain on already tense relations between the traditional rivals after eight Turkish officers fled to Greece in the aftermath of the attempted coup, Kathimerini reports. Ankara has demanded the immediate extradition of the officers to stand trial for treason. Greece said the decision will rest with its courts, which are independent. Amid the threat that the death penalty could be reintroduced, will Athens allow their extradition to a country where they may risk of torture and execution, or accept a deterioration of the diplomatic relationship between the two countries?

We think it is highly likely that the refugee crisis will return because of the continuation of the war in Syria, in which Turkey is now getting involved as well, and because Erdogan is very likely to break the deal if the EU fails to liberalise the visa regime. This it cannot do now, even though we are sure the EU would fudge were it not for recent events. We would not be surprised if Erdogan used the German election year of 2017 as the moment for his diplomatic counter-offensive against Merkel, who would be politically most at risk from a return of the refugee crisis. It is the only scenario that could lead to a genuine election upset in Germany - one of the reasons we will continue to monitor the situation closely.

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August 26, 2016

Montebourg en avant

A poll by the Socialist party shows what nobody expected: Arnaud Montebourg could win the second round in the left primaries regardless who he faces as an adversary. Le Point got ahold of a poll, conducted in early July, which the board of the Socialist party decided not to publish. The poll takes into account only respondents who said they are sure to vote - 6% of the 15,814 people polled (not just Socialists), and is therefore to be read with a good deal of scepticism. But the results are interesting nevertheless and the leak is certain to influence the political debate. The polls show that Montebourg would not come first in the first round but that he would win the nomination in the second round nevertheless. 

This is based on different scenarios: If François Hollande runs, he would win the first round with 37% followed by Montebourg with 32%. In the second round, though, Montebourg would get the nomination with 53% against 47% for Hollande. Against Manuel Valls the lead would even be stronger, 54% against 46%. Emmanuel Macron would be most strongly ahead of Montebourg in the first round (38% against 30%) and only lose against him in the second round by 2 percentage points (51% against 49%).

How is this possible? A look at who would vote for him is quite telling. While Hollande is the candidate for the Socialists, Montebourg is a favourite of supporters from the non-governmental left, the right, and the Front National. During his two year stint as economics minister he made headlines as the man promoting "Made in France". Known for his decree to extend the French state's right of veto of foreign takeovers to assets in the sectors of energy supply, water, transport, telecoms and public health, he was striking a cord with many voters on the right. As the primaries will be open for all, and not only supporters on the left, this does matter a great deal. If Montebourg were to get the nomination, how well does he then do against Nicolas Sarkozy and Marine Le Pen?

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August 26, 2016

Moisi on Sarkozy's chances

Dominique Moisi has an excellent analysis about Nicolas Sarkozy's chances to win. Essentially this boils down to whether the reasons people ended his presidency four years ago still hold or today’s circumstances justify his return to power. With an unpopular president Hollande amind France's deteriorating social, economic, and security situation, circumstances have indeed changed. Sarkozy knows how to read public opinion well, and is determined to get his revenge. He wants to capitalise on the public's angry feelings to get their support, like Donald Trump does in the US. But the question is whether voters trust him enough, with his buzzy energy and nervous tics, to steer through these tricky times. Or would they prefer the more moderate Alain Juppé? Both, Sarkozy and Juppé, put French identity at the centre of their campaign. Juppé coined the term l’identité heureuse (the happy identity), aiming to transcend the deepening divisions within French society that Sarkozy wants to capitalise on. Moisi still sees Juppé to be most likely to emerge as the next French president. But anger and fear are strong forces, and Sarkozy is riding them, and that makes this race unpredictable.

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August 26, 2016

Binary choices

What should the EU's line be in the upcoming negotiations with Britain? Paul de Grauwe believes it should offer the UK a binary choice: membership in the EEA, or what he calls the stand-alone model - a bilateral free-trade agreement under the auspices of the WTO. The EU must make it clear that there is nothing between those choices. De Grauwe believes that the UK will try to get a deal allowing it to control immigration while keeping full access to the single market. Such a deal would be hugely dangerous for the EU because it would set a precedent and signal to other countries that it is possible to exit the EU with impunity.

Mark Leonard offers a different perspective. He notes that the most troubling thing about the EU at the moment is not Britain's impending departure, but the fragility of the remaining 27 member states. It is not an implausible scenario that both the EU and some of its member states will disintegrate. He writes that the Brexit negotiations should be conducted in a spirit to contain these risks. Concretely, this means the UK and the EU should co-operate in areas where both sides would gain, but without creating any incentives for other countries to leave as well. At the same time, many countries have strong trade links with the UK, and these should be kept alive. For the UK, it would make more sense to settle for an existing model than to carve out a completely new one. A Norway-plus deal would be most sensible.

The Germans have already said that the UK, as an existing member, will require a tailor-made agreement. The Norway model was not intended for departing member states, and it is not going to be politically acceptable for the UK. But, at the same time, we agree with de Grauwe that single market access would become problematic in any other setting. The idea of a single passport for financial services is absurd when the UK starts to control immigration. Even the Germans would not accept cherrypicking among the four freedoms. The binary choice between immigration control and single-market access is thus not so much a consequence of the EU's negotiating position, but of the legal and political environment. If the goal of Brexit is to regain full national sovereignty over immigration and all aspects of regulation, then surely a hard Brexit with a bilateral FTA is the only choice. It would certainly reduce much of the complexity. Our best guess is that the negotiated outcome would be an FTA with a transition regime close to that of the EEA.

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