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October 07, 2016

Merkel and Hollande agree on hard Brexit

We are not sure whether this was a coordinated attempt or whether the two leaders were merely speaking on two separate occasions and essentially saying the same thing. Both Angela Merkel and Francois Hollande took to the big stage yesterday to declare that Brexit will have to be hard. So much for any notion, popular in the British press, that Merkel will come to the rescue.

Angela Merkel was speaking in front of the Germany Federation of Industry where she warned business not to mess with the decision process. She acknowledged that business interests are at stake but said the over-arching interests of the EU were more important. The principle of free movement of labour was more important than German exports, she said bluntly. And if we grant an exemption to the UK, others will ask for it to, and the EU will unravel.

Hollande spoke at the Delors Institute and was equally explicit. Britain wants to leave but not to pay for it, he said:

"The UK has decided in favour of a Brexit - I believe even a hard Brexit - and one has to go to the limits of respecting the will of the British people.... [But] there has to be a threat, it has to be risky, and there has to be a price because if not we will be in a negotiation that does not end..."

These comments underline broad unanimity within the European Council on the principles over which to negotiate. If Theresa May insists on immigration controls, there is nothing to discuss except the length and nature of an interim agreement, and the pensions of British EU civil servants. We don't think that May can, or will want to, extricate herself from her commitment to immigration controls, especially since her home secretary Amber Rudd reaffirmed the target numerically. The promise is to reduce annual immigration to the tens of thousands. And a crackdown on taxi drivers, tenants and bank employees is to start in December. So that's it: The negotiations are over before they started. The only interesting question is whether May wants to initiate immigration controls before the elections or whether she accepts a transition period, which would invariably be an EEA-style system because it is the only one that can be implemented ad-hoc. But as Merkel and Hollande made clear, there can be no immigration controls inside the single market.

There is still a lot of denial about the realities of Brexit. We listened to a discussion on Brexit at the Institute of International Finance in Washington yesterday where senior executives from the City of London were speculating about the possibility of a Bregret, or of early elections, that might undo the results. We wonder how this is logically possible since both May and Jeremy Corbyn now favour Brexit after having campaigned for Remain, half-heartedly. Which election outcome would undo it? An absolute majority of the Liberal Democrats?

In this context we noted a comment by Roland Rudda leader of the Remain campaign (and the brother of the above-mentioned home secretary). Unlike his sister, Rudd appeals for a wider insurrection against a hard Brexit. He says he accepts the referendum result but not the logic of a hard Brexit and of an illiberal future. He has three demands. The government should prioritise access to the single market. It should guarantee the rights of foreigners from the EU and not use them as a bargaining chip. And it should not be secretive in the ensuing procedures.

George Eaton makes the point that pro-market liberals in the UK have nowhere to go. Labour is even worse from their perspective, and the Libdems are too small. We agree with him. Even if they had elections, nothing would change. 

We agree with Rudd's list and wished the Remainers had taken that position right after June 23 rather than wasting time advocating a second referendum, which has destroyed their credibility with the British government. We fear that Rudd's sensible approach is therefore not going to prevail, especially now that May has staked out her position with brutal clarity.

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October 07, 2016

The cost of the PSOE's abstention

The PSOE appears set to abstain allowing Mariano Rajoy a new term as PM. The party's federal committee, which might meet the week after next, will make the final decision, but the ten-person steering committee that replaced Pedro Sánchez is laying the groundwork for a "technical abstention". This means the PSOE won't negotiate a programme with Rajoy like Ciudadanos did, but would simply abstain in recognition of its own inability to assemble an alternative majority. The steering committee chair Javier Fernández met with Rajoy yesterday, and made it clear the PSOE will not guarantee any support for Rajoy's measures after the new government is sworn in. Rajoy, for his part, appears to have softened his stance and will no longer be demanding government stability guarantees. New elections should be averted.

A casualty of these developments may be the PSOE's party unity. At least one MP has vowed to vote against Rajoy in any case, rather than abstaining, and may be disciplined. But the more serious consequence may be the divorce between the PSOE and its Catalan partner PSC. The PSC is unique among the regional socialist parties in that it is not a component of the PSOE but is a separate party in a federation with it. The PSC is holding a leadership contest this month, and both candidates - challenger Núria Parlón and incumbernt Miquel Iceta - have stayed firm in their opposition to a Rajoy government after the ouster of Pedro Sánchez. La Vanguardia writes that PSC MPs feel bound by the decisions of the PSC's national council, not by those of the PSOE federal committee, in case the two differ. Further, the PSOE leadership is uncomfortable with a resolution tabled recently in the Catalan parliament by the PSC, proposing an explicitly federal structure for Spain which would recognise Catalonia's nationhood, and which was defeated by the separatist majority in the Catalan parliament. El Mundo writes that the PSOE's interim leadership is convinced that Pedro Sánchez was negotiating in secret with the Catalan separatist government to gain their support for a PSOE-Podemos alliance. Whether true or not, this reflects the loss of trust between the two federated parties.

The working relationship between PSOE and Podemos at the local and regional level may also suffer. This is most likely in several regions where Podemos allowed a minority PSOE government to unseat the PP. In Castilla-La Mancha, South of Madrid, the divorce is already obvious with Podemos voting down all of the PSOE's initiatives. According to La Vanguardia, Podemos hopes that in those regions where Podemos and PSOE are part of the same government, and in cities like Madrid or Barcelona, the governing agreements will last. This might cause tensions between the local and national levels of the PSOE.

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October 07, 2016

Citizens - the new gadget for election speeches

Ten years after Segolene Royal, 'participative democracy' is no longer ridiculed in France. On the contrary. The citizen is now at the centre of every campaign, on the right, extreme right, or left, writes Cécile Cornudet. Royal and Emmanuel Macron have many points in common, according to an article in Le Monde. But what exactly are candidates suggesting these days? To get a say in the primaries is a start, but hardly what the political speeches suggest if only 6%-7% of the electorate participate. All candidates propose some platform for deliberation in the internet. Nice, but does this really inform the political debate? It's not certain. As for the governance of the country, Francois Hollande suggests a referendum, Macron a citizen commission to which the president responds, or a virtual citizen parliament as suggested by Nathalie Kosciusko-Morizet. To us, it all sounds like just a gadget that is nice to have in an election speech, while meaning nothing in the end. So far.

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