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October 27, 2016

Unity of the Dutch left?

The main political development in the Dutch political landscape since the last general election has been the collapse in support for the Dutch labour party PvdA, the junior coalition party to Mark Rutte's VVD. The two parties won 38 and 41 seats respectively in 2012, which gave them together a comfortable majority in the 150-seat Tweede Kamer. But recent opinion polls give the PvdA just 11 seats or thereabouts. It might drop from second to seventh place. This seems extreme even for a junior coalition partner. It is thus perhaps not surprising that PvdA leader Diederik Samson has been exploring alliances with other left parties. Before the summer, it was reported that Samson and the then leader of the GroenLinks (green left) party Bram van Ojik were having talks about cooperating in the next election, which might have gone as far as forming a common parliamentary group after the election. However, since then the GL replaced its leader with Jesse Klaver, who prefers looser but broader cooperation among the left parties, including the left-liberal D66 and the socialist party SP. Samson is known for his environmental credentials, but he's also involved in a leadership contest, so the position of the PvdA on these alliances might change.

Klaver, whose GL party is benefitting the most from the loss of support of the PvdA (it is projected to gain about ten seats from its current four) is proposing that the four left-wing parties adopt a common platform of broad principles before and after the election. These are, according to NRC: reducing inequality, increasing opportunities for children, reducing market forces in healthcare, greening of the economy, and stopping further labour market flexibility. Klaver thinks that the Christian democratic CDA and the conservative Christian Union could also work with his proposed progressive alliance, because they share values of "community and green stewardship". 

It may seem excessive to suggest an alliance of six parties, but with the VVD expected to lose about one third of its seats, and Geert Wilders' party of freedom PVV projected to come at least in second place with about 25 seats, polls suggest no less than four parties would be needed to form a 76-seat majority in the parliament. The six parties that Klaver proposes, CDA, D66, SP, Gl, PvdA and CU, could have a theoretical majority together - but the VVD should be expected to get a first try at forming a government as the foreseeable largest party in the next parliament.

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October 27, 2016

Macron, the tortoise

Manuel Valls and Francois Hollande are engaged in trench warfare, writes Cecile Cornudet. Valls never comes out in a frontal attack but puts his finger where it hurts most: talking about confidence, confidentiality, and respect. Hollande’s supporters fight back by putting other names in the hat, Ségolène Royal or even Christine Taubira, so that the message is understood: only Hollande can unite the party. This morning we see a stronger defence of Hollande. The Journal du Dimanche writes that the book, read in its entirety, is not such a bad verdict about Hollande after all. The first secretary of the Socialists Jean-Christophe Cambadélis countered a strong attack from Claude Bartolone, the president of the assembly. Stéphane Le Foll, the government spokesman, cites the strong unemployment data as a value yardstick. Taken together with the evacuation of the refugee camps in Calais, this is certainly one of the most difficult moments for Hollande.

There is one who continues like a tortoise: Emmanuel Macron. Just in the moment when the Socialist party crumbles, Macron moves forward and presents the structure of his movement "En Marche."  According to Marianne, the organisation has 100 departmental officials, and 1500 local committees throughout the country. The Socialist MP Richard Ferrand became secretary general of the movement. And there are nine other delegates, three elected MPs (two Socialist MPs, one mayor from Pas-de-Calais), three from business to represent classic, social, and start-up enterprises, and three representatives from civil society.  Benjamin Griveaux, former counsellor of Dominique Strauss Kahn, is the spokesperson. Macron sees no need to respond to the demise in the Socialist party really. 

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October 27, 2016

Ruminations on an interim deal

The Brexit discussions are mercifully becoming more technical. It's now all about how it should happen, not whether Brexit is good or bad, or how it might not happen. We came across two notable comments this morning. One is by Simon Tilford who takes a closer look at the interim agreement. Tilford works on the premise that it would take a long time for the EU and the UK to agree a final FTA, so that an interim agreement becomes necessary to avoid a sharp short-term shock after Brexit. We are not sure that the premise is necessarily correct but, if you assume that an FTA would take a long time to negotiate and ratify, an interim agreement is inevitable. How will it end? In a big bang or gradually? Tilford thinks gradually, but then makes an important political point:

"Because the interim status would be more favourable to Britain than the final deal, the rest of the EU will likely conclude that the interim status might become the final status as Britain wakes up to the costs of leaving altogether. They are thus likely to drive a hard bargain on the interim agreement. One solution could be to put a time limit on how long Britain can enjoy such interim status."

Tilford plays down the argument that an interim agreement would have much of a (positive) economic effect as investors would be basing their decisions on their long-term outlook. 

Simon Jenkins, who was a reluctant Leave supporter, writes in his Guardian column that a hard Brexit is not in Britain's interest and that the country should opt for a status as close as possible to that of the EEA. This is exactly the view we have taken. Jenkins says Brexit has divorced politically from the EU, but this does not logically imply an economic divorce.

"Political Europe is in the process of decline, if not disintegration. As refugees, bank bailouts, recession and unemployment all testify, the EU and especially the eurozone are not a functioning confederation but a zone of German influence. Britain has decided to distance itself from that zone. It cannot divorce itself from the economy of its entire continent. Caution and common sense advise the EEA, 'soft' Brexit."

Two short observations: We agree with Tilford that long-term expectations count and that smoothing arrangements may not be all that important. But we are less pessimistic about the long term. The economy will adjust. Resources will shift. And the City of London and its lobbying power will decline. What's so bad about that?

On the EEA: while the proposition to leave the EU in order to join the EEA is nonsensical, the proposition to join the EEA after having decided to leave the EU is in a completely different category. The EEA clearly isn't a first-best option, which would be EU membership. But since it is not attainable, the EEA may be a good enough second-best choice.

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