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September 21, 2016

Will Austria veto Ceta?

Maybe Canada's trade minister Chrystia Freeland should have paid a visit to Austria, not Germany, because this is where the Canada-EU trade agreement is now in acute trouble. Austria's SPÖ, the senior partner in the grand coalition government led by chancellor Christian Kern, asked its members what they wanted about Ceta, the EU's trade deal with Canada. The predictable answer they got was a 'No'. In fact, 92% of the votes were negative. Communist leaders would have been proud to receive such results. Since Austria has a veto in the ratification process, such a strong party mandate can hardly be ignored. The government cannot wiggle out of this dilemma by allowing itself to be outvoted in the council.

On Monday, the German SPD's party congress voted in favour of Ceta after Freeland gave a passionate speech in favour of the deal, and even managed to get portrayed, wrongly, in the German press as a former anti-globalisation activist. FAZ makes the point that the difference in outcomes between Austria and Germany has been the position taken by the party leader. Gabriel campaigned strongly in favour of Ceta, while Kern campaigned against. There is an issue whether the Austrian referendum is representative. Only 14.400 people turned out for the vote, including 9.300 non-members. That leaves a single-digit percentage of SPÖ party members. However, polls suggest that Ceta and TTIP are highly unpopular among the electorate, so this result may be representative.  

FAZ notes that there may be ways to circumvent the national veto through a de facto backdoor implementation, whilst awaiting ratification. But the paper writes that there are currently no indications that they EU will go this way. The only qualification made by Austria's government, which would allow them to accept a backdoor ratification, would be an acceptance in principle of additional declarations and improvements, notably on the question of investor tribunals, social and environmental standards, and a host of other areas. The paper writes the European Commission interpreted this position as a movement towards the position of the SPD, which also has made a number of requests - but crucially none of them require opening up the treaty itself, only the insertion of protocols. 

EU trade ministers are going to meet in Bratislava (of all places) this Friday where they might take a decision on how to proceed. The all-important question is now how Chancellor Kern will play this.

Andreas Schnauder writes in a comment in Der Standard that Kern is playing a dangerous game. Perhaps the EU can manage to negotiate some special exemptions for Austria, which will allow him to sign the treaty with a straight face. More probable, however, is that he has manoeuvred himself into a dead end from which he will not be able to get out of - meaning he will veto Ceta, and risk a full-blown government crisis in Austria and a larger EU crisis. 

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September 21, 2016

Corruption allegations and other bad news for Syriza

It is hard to find cheerful news in Greece: rising tensions over refugee hotspots and integration into schools, a deepening political crisis over the TV license auction, a clash with the archbishop over a government’s plan to change religious education, and new data showing the strongest fall in employment since 2001 for August and a falling current account surplus. Austerity fans may cheer to hear that the 8-month primary surplus surpassed all expectations, at €3.76bn which is €2.78bn above target, mainly due to a drop in government expenditures. But this will only add to the pressure for the Greek government to explain itself. 

Most dangerous for Alexis Tsipras though is the political crisis that followed the TV licensing auction. Using a special provision in the regulations, New Democracy and the center-left Democratic Alignment convinced parliament's transparency and ethics committee to call state minister Nikos Pappas and the successful license bidders to answer questions about the competitive bid procedure. There is also criticism from inside Syriza's own ranks. Interior minister Panayiotis Kouroublis indicated that one of the bidders, Yiannis Kalogritsas the son of construction magnate Christos Kalogritsas, should have his license revoked if claims that the family borrowed millions from state-backed Attica Bank and evaded millions of euros in taxes are substantiated. Later the same day he softened his stance, only saying that all license winners should "fulfill all the legal preconditions." The elder Kalogritsas is the subject of an inquiry over an alleged €20m discrepancy between his deposits and tax declarations, sources told Kathimerini. The son settled his tax debt before participating in the auction. But he used financial guarantees from Attica bank, and it is still not clear to us what the Bank of Greece decision for Attica bank (see our reporting yesterday) means for his bid.

New Democracy is now investing its efforts into exploring that link between Attica bank and the TV licensing auction to argue that Syriza lost its remaining moral capital, by referring to it as leftist corruption and calling for snap elections, according to To Vima.

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September 21, 2016

Let the race begin

Today is the official start of the campaign for the Republican primaries in France. Nicolas Sarkozy occupied the media space this morning with his assertions that immigrants must accept the French "ancestors are the Gauls." While the inhabitants of Martinique or La Réunion might not be so happy about this, his speaker later clarified that Sarkozy meant culturally Gaulois - which is equally absurd. Sarkozy is clearly fishing in Front National waters and his approval ratings went up recently.

This is the defining question about the future of the Republican party, writes Le Monde. Should the party move to the right or to the centre in response to the rising FN? Nicolas Sarkozy and Alan Juppé are the main protagonists of these two directions. Other candidates are somewhere in between. The two main protagonists are building their campaigns on fear-mongering or on paternal calmness, respectively. But none of the eight candidates is conservative any more when it comes to deficit targets. None of them suggests any longer a golden rule of a balanced budget, like they did in 2012. On the contrary, they all propose tax cuts or expenditures that will increase the deficit at least for the next couple of years. 

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