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September 09, 2016

The growing likelihood of a hard Brexit

There is now a lot more realism on Brexit among British commentators. Since the leaders of both the Tory and the Labour Party want Brexit to happen, there are is no more debate about Bregret and the like. The debate is now purely about what type of Brexit. Peter Foster of the Daily Telegraph has a good comment this morning, in which he explains why political and technical constraints now combine to favour a hard Brexit. Theresa May's pledged for some control over immigration leaves three possibilities. 

The first one would be to restrict immigration only to EU citizens with a firm job offer. But this is not going to make a dent in the immigration statistics. This is the kind of solution which he writes could trick Brexiteers into believing that something had changed, when in fact it has not. The scam would be revealed with the publication of the first immigration statistics. Foster says this can be ruled out. It would make a mockery of May's claim to control immigration.

The second option is an emergency brake, similar to what Norway has. But the Europeans are very unlikely to agree such a deal. David Cameron asked for this in February and failed. Why should they agree to it now? There would have to be dramatic change in the politics of the EU.

The third option is work permits, based on education and salary levels. This would bring genuine control over immigration. But the EU would reciprocate, and this means a hard Brexit. This is the scenario with no single passport for the City of London, no membership of the single market, and a free trade agreement down the road. 

George Eaton also notes that May has missed several opportunities to tone down her request for immigration control, and instead has doubled down. He quotes a spokeswoman as saying that a sustainable level of immigration means tens of thousands of net immigrants each year, not over 100,000. That's a fairly clear target. The view from No. 10 is that there is no democratic justification for maintaining free movement in its present form. The point Eaton and Foster disagree on is the firm-job-offer system. Eaton notes that a quarter of immigration is by people without a firm job offer. That was 63,000 people last year. But that, too, would not be acceptable to the EU.

And finally, we noted that Guy Verhofstadt has been appointed the European Parliament's Brexit supremo.

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September 09, 2016

Tsipras holds EU-Med summit

Alexis Tsipras is holding his so-called EU-Med summit today, with leaders from France, Italy, Malta, Cyprus, and Portugal. Spain won’t be present, as there is no government in place there. The idea is to build alliances ahead of a new round of European Council and Eurogroup meetings. Three subjects are on the agenda: debt relief, a common front against austerity, and a new proposal amid the failures of the refugee relocation scheme. As for debt relief, Tsipras does not want to have to wait for the German elections to talk about debt restructuring, even if the finance ministers agreed to last May. Also, recent suggestions that other EU countries could send back their refugees to Greece, and an uptick in refugee arrival rates, make the refugee crisis the pressing theme of the summit. Whether anything real will emerge or it will just be a symbolic meeting remains to be seen. 

Jens Bastian in an interview with Wirtschaftswoche has no high hopes. He says the only reason why the refugee crisis, with more than 53,000 trapped in Greece, has not escalated so far is the support of the Greek people. Greece is hopelessly overburdened, needing more resources and support from Brussels. Greece also has to integrate those refugees and offer them work. With an unemployment rates of 23% this is impossible. Merkel helped and showed commitment, but recent remarks by Thomas de Maziere that they can send back refugees under the Dublin agreement had the opposite effect. Bastian says the debt conference Tsipras is dreaming and will not happen. The most he can hope for is a reduced primary surplus target. But as it is also clear that there will be no fourth bailout programme, thus both sides have a strong incentive to sit down and decide the most crucial reforms they need to agree on.

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September 09, 2016

Consensual or bold?

Two sides are at loggerheads over how to proceed at the Bratislava summit in mid-September. On the one side are France and Germany, who want to discuss those subjects that are likely to achieve consensus and fare well with public opinion. Reinforcing borders, steps towards a European army, new investment plans, and a youth strategy, according to Les Echos. On the other side are countries from the East. The Visegrad group - Poland, Hungary, Czech Republic and Slovakia - make it clear that they want to discuss fundamental issues. They see Brexit as an opportunity to talk about a fundamental overhaul of the European Union, citing the surge of anti-European forces as a stark reminder that something needs to be done soon.

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September 09, 2016

Will Finland join Nato?

René Nyberg, a former Finnish ambassador to Moscow, gives us a fascinating insight into the debate raging in Finland, more intensely that at any time since the end of the Cold War, on whether the country should apply for Nato membership. This debate is also current in Sweden. Russia's aggression against Ukraine has been one of the triggers. Another has been Russia's decision to open the borders to Finland and to allow refugees to pass without visas - a policy that was discontinued only at the end of last year. The border, which had been well managed for many decades, suddenly became a source of political conflict. Nyberg writes that border control policy became "a hybrid tool to convey a message of Russian power". The debate in Finland is no longer about neutrality - that ended with membership of the EU - but about whether the country should be militarily aligned. Finnish Nato membership would be a line in the sand for Russia. Vladimir Putin said in July that a Finnish or Swedish decision to join Nato would prompt him to reposition troops along the Finnish border. Nyberg writes that Putin's response closed the debate for now, but the issue remains a valid strategic option for Finland or, as Nyberg writes, "a tool for managing the unpredictable neighbour".

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