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October 11, 2016

Towards the fifty-first state

The snippets of information we hear about the post-Brexit environment suggests that the UK is headed for systems on immigration controls and trade and investment policy very similar to that of the US. On immigration we are looking at the equivalent of a green-card system. And on investment, the UK is now considering US-style vetting, according to the FT. The point is that they want to make sure to have a process in place to vet investment in sensitive areas, but not the way this is done in France, where such vetting occurs on a more ad hoc basis - considered as too protectionist in the UK. The article says that the policy has not been formulated in full. One question is whether foreign investments should be subjected to a public interest test. Theresa May favours a regime that is transparent and rules-based. She disliked the informality with which David Cameron allowed Pfizer to bid for AstraZeneca - a deal that later collapsed.

Another story that caught our eye came from the BBC according to which the government had planned to publish a consultation paper on Brexit, but has decided not to go down that route. The story does not explain what happened. We presume that they want to proceed without a lengthy consultation process.

Among commentators we noted Janan Ganesh, who strongly supported Remain, and who says that Remainers should accept the hard version of Brexit.

"Sometimes history throws up ideas that are better tested than forever stymied. Britain’s mastery of its own affairs, even at the cost of access to the European market and the political chambers that regulate it, is a big, legitimate idea that has stirred politics for 30 years. If it is not allowed to run its course, even after a national referendum in its favour, it will not disappear, it will intensify in the shadows and return in more fearsome form."

We happen to agree with him on this point. But conversely, if a hard Brexit is the right choice for Britain - that is, after having voted no, and rejected the EEA option - what is the right strategy for the EU? We disagree profoundly with the emerging consensus that the best strategy is to take a hard punishing line on the UK. That could backfire if Brexit turns out to be economically neutral or positive, an outcome we would not exclude. We noted an article in FAZ this morning on an as-yet unpublished study by the IW economic institute in Cologne, in which its director, Michael Huther, argues in favour of a particularly tough line on the UK. Brexit constitutes an existential question for the EU, he argues, which requires a negotiating position that accepts no compromise. His fear is that, if you give ground to the UK, other EU principles will also be sacrificed on the altar of compromise, like Germany's cherished stabillity pact.

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October 11, 2016

Brexit and Northern Ireland

One of the trickiest questions in the Brexit negotiations will be the internal Irish border. While it is a legal and political fact, practically it is invisible, with 30,000 commuters crossing it daily. The prospect of a hard border evokes haunting memories of The Troubles, before the Northern Ireland peace process. Locals on both sides of the 300km border are now starting to hold protest rallies calling on the capitals to respect Northern Ireland's referendum vote, where a majority of 56% voted to remain in the EU, the FT reports. The campaigners last weekend said they will continue until their concerns are addressed.

Immigration controls at ports and airports is another thorny matter. Digital collection of advanced passenger information allows both governments to screen out those barred from entry before they even get on a plane. In March, Ireland passed legislation allowing the UK to require airlines and ferry companies to provide advance passenger details on all UK-Irish journeys. Asking the Irish to carry out Britain’s passport checks may not be what Brexiteers had in mind when they campaigned to "take back control of Britain’s borders", writes the Guardian. The chairman of the Vote Leave campaign, former chancellor Lord Lawson, explicitly called for the return of a hard border between Northern Ireland and the Republic during the referendum campaign. 

Customs checks are a different issue, but academics say they could operate on the same principles as those between Norway and Sweden where mobile spot checks don’t necessarily take place at the physical border.

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October 11, 2016

Enemies of the state

Catalan regional premier Carles Puigdemont was in Madrid yesterday at the invitation of Europa Press, to give his overview of the Catalan and Spanish political situation. Puigdemont, who just two weeks ago won a confidence motion in the Catalan parliament, stressed that he has a stable government with which to implement his separatist agenda, and contrasted this with the state of paralysis in Spain's central government in the ten months since general elections were held. Puigdemont, who was appointed regional premier in January after three months of gridlock in the Catalan parliament, submitted to the confidence motion as a result of his failure to gain approval for his 2016 budget before the Summer. Puigdemont reiterated the familiar themes of the Catalan separatist movement: a demand for an independence referendum the terms of which he wants to negotiate with the central Spanish government. In support of this demand, he cited the broad majorities enjoyed by referendum resolutions in the Catalan parliament. In a jab at the Catalan socialist PSC, he noted that their proposal for a federal reform of the Spanish constitution - including the recognition of Catalonia's nationhood - was overwhelmingly rejected with the combined votes of the separatists and the unionist opposition. In the context of the PSOE's internal strife, the PSC's federalist proposal was not welcomed by the Pedro Sánchez's opponents who now control the national party through a steering group.

Later in the day Puigdemont met with Pablo Iglesias, leader of Podemos. Podemos is known to be favourable to a Catalan referendum, though not to Catalan independence. At their meeting yesterday, Iglesias reassured Puigdemont that Podemos would vote against lifting the parliamentary immunity of Francesc Homs, currently an MP and parliamentary spokesman for Puigdemont's party Democracia i Llibertat (DiL), to be prosecuted for his involvement as interior minister of the Catalan government in the mock consultation on independence carried out in Catalonia in November 2014. This kind of stuff is part of why a large part of the PSOE was wary of making a deal with Podemos to unseat Mariano Rajoy as PM, and the prospect of Pedro Sánchez entering into such a deal may have precipitated his ouster. Just to get a taste of the extent to which Iglesias and Puigdemont are seen as enemies of the state by a substantial segment of the Spanish population, here's a blog by Mariano Calleja published in ABC yesterday: 

"... We face an institutional coup d'état ... they don't care about the law. Their only goal is independence, the breakup of Spain, illegal secession. ... They want to build a project of a state with the anti-system, the populist, and the radical ... Puigdemont took advantage of his day in Madrid to meet... Pablo Iglesias. Do a majority of Catalans really not find all this unsettling? Puigdemont's words ooze contempt for Spain. ... This is called treason. ..."

In the current political environment, the "natural" majority in Spain's parliament is PP + PSOE + Ciudadanos in support of a unionist government, not a left government of PSOE + Podemos supported by Ciudadanos, let alone by the Catalan and Basque nationalists. And so the Catalan separatist government will go along with its plan to call a unilateral referendum next year, in a climate of complete lack of communication with the government in Madrid.

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