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November 04, 2016

An important decision, not a critical one

Yesterday's ruling by the UK's High Court is not nearly as important as the newspaper headlines this morning suggest, and it certainly does not mean a reversal of Brexit, or anything of the kind. It is not even clear whether it means a softer or harder Brexit. One can draw up scenarios that would support both theories. But it means that the process towards Brexit is going to get a touch messier, and early elections are now - for the first time - becoming a real possibility. 

The ruling supports the view of the plaintiffs that the government will need to consult the British Parliament. The court did not specify the nature of this consultation, but much of this debate was short-circuited last night when Theresa May said the logical conclusion of this verdict, if upheld, would be the need to pass an act of parliament before Article 50 can be triggered. The government will appeal to the Supreme Court, which will hold hearings on December 7 and 8. May has arranged for a telephone call with Jean-Claude Juncker this morning to reaffirm that this ruling should not be interpreted in any way as weakening the UK's determination to leave. 

We should not prejudice the outcome of the Supreme Court's ruling. The High Court applied legal principles, but the Supreme Court tends to include political considerations in its rulings as well. In this case, these would be the impact of the decision on the court itself, and on the separation of powers between the government and the judiciary. If the Supreme Court upholds the High Court's decision, it will further flesh out the details of what form the consultation would have to take. 

So, what are the scenarios?

Assuming the Supreme Court upholds the High Court's ruling in full, the government will introduce Article 50 legislation. it is hard to imagine that the House of Commons would vote against triggering Article 50. Such action would very likely result in another election - through either a no-confidence vote, or a two-thirds majority in the parliament, to satisfy the conditions of the Fixed Term Parliaments Act. May is expected to win such an election with an enhanced majority, especially given the robust performance of the economy. In this case, it would take longer for the UK to trigger Article 50, but we would expect a much harder Brexit as a result. 

Alternatively, the parliament could accept Brexit, but demand a softer version. That may well work for May for the simple reason that a soft version may not be on offer by the EU. The parliament may be able to influence the government's negotiating position, but not the EU's. But what if the EU were to offer an EEA-type agreement, as part of which Britain retains membership of the single market, while respecting freedom of movement?

A third possibility is that the Supreme Court upholds the High Court's ruling, but with a rather softer set of conditions. The government may have to consult parliament, but not be under an obligation to pass legislation.

If the Supreme Court overturns the High Court's ruling, nothing will change.

Sebastian Payne notes that Remain supporters should not be under any illusions that the court ruling can force a U-turn on Brexit. In the worst of all circumstance, May will simply trigger an election:

"If Mrs May’s government loses the appeal and finds the Commons troublesome, it might decide to put the question to the country, particularly if a drawn-out parliamentary debate hits up against its timetable of triggering Article 50 by March. Based on the latest opinion polls, this would result in a landslide victory for the Conservatives, which would again not change the fact that Britain is heading out of the EU."

It is interesting to note that there is still constant talk among ex-Remainers about frustrating the Brexit process. We think this talk is extremely counter-productive because it reduces the probability of an EEA-type agreement. One of the incessant second referendum campaigners is John Kerr, a former UK ambassador to the EU and one of the co-authors of Article 50. He said it was not meant to be used, only inserted for a situation in which a country turns into a dictatorship. He made one point we had not heard before - that it is possible to leave the EU without recourse to Article 50. Indeed this was always so, even before the Lisbon Treaty:

"If you stopped paying the bills and you stopped turning up at the meetings, in due course your friends would notice that you seemed to have left."

 

And finally, Angela Merkel has hinted that the EU might be ready to do a deal with Switzerland, now that Bern has accepted a much weakened form of immigration control solely in the form of a rule to offer vacant jobs to Swiss citizens first. Merkel is now trying to ensure that this does not constitute a precedent for the Brexit discussions, which is, of course, illusionary. Once you give up on the principle of freedom of movement, you have weakened your negotiating position. This is Merkel's version of having her cake and eating it:

“If I tried to put myself in the shoes of a Swiss citizen, I wouldn’t be pleased if it was suddenly cast in a new light because of another decision in another country...That’s why we should conduct these talks with Switzerland as if the Great Britain issue never existed. I can only say that the German position hasn’t changed with Great Britain’s decision. These are two completely different issues.”

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November 04, 2016

Europe and Catalonia at the centre of Rajoy's new cabinet

Mariano Rajoy unveiled his new cabinet last night, ending a more than 10-month run as a caretaker PM during which he lost three ministers along the way. The number of positions remains unchanged at 13, but some of the portfolios have been reshuffled. The changes pertaining to our interests are as follows. Soraya Sáenz de Santamaría remains deputy PM, but is released from government speaker duty as she's adding a "territorial administrations" portfolio. As expected, she will be in charge of relations with the separatist Catalan government. Cristóbal Montoro loses territorial administration, but retains finance and public service which makes him sort of a pure austerity minister. Luis de Guindos remains economy minister, but without the purse strings, and gains industry without energy. He will continue to represent Spain at the eurogroup. 

Apart from Sáenz de Santamaría's territorial portfolio, the most interesting appointment is that of Alfonso Dastis, a career diplomat, as foreign minister. For the first Rajoy term, Dastis has been Spain's permanent representative to the EU. His appointment indicates that European diplomacy will be front and centre in Spanish foreign policy. Dastis is exceptionally well acquainted with European diplomacy and law. He was a clerk to Spain's first judge at the European Court of Justice; advisor on European affairs to former PM José María Aznar in charge of the Spanish rotating presidency in 2002; and Spain's representative at the Constitutional Treaty convention. Dastis is reputed to be a skilled negotiator and a keen legal mind. As permanent representative, he accompanied Rajoy at European council meetings. 

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November 04, 2016

Turkey threatens to end refugee deal

We keep on hearing reports, sourced to some feckless Brussels sources, that the EU is still hopeful that it can sign the visa deal with Turkey, irrespective of the little local difficulties that have arisen there. We don't think this is possible, especially after President Recep Tayyip Erdogan's crackdown on the press and the debate on the death penalty. Erdogan's foreign minister, Mevlüt Cavusoglu, said in an interview with Neue Zürcher Zeitung that he was waiting for a response from the EU in the next few days after an earlier deadline of October had lapsed. If this was not forthcoming, he said, Turkey would cancel the agreement. He said Turkey had reacted to the demands of the EU, but was not in a position to change its anti-terrorism laws, which had been one of the EU's demands. On the contrary: the very opposite has happened: Erdogan is about to take absolute power allowing him to run the country without interference from the parliament.

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November 04, 2016

Everyone against Sarkozy

The big story in France last night was the second debate among the seven Republican candidates ahead of their primaries on November 20, and the likely run-off on November 27 if none of them gain an absolute majority. Last night's debate focused on security and education - and it was a matter of everyone against Nicolas Sarkozy, who was in good form, but defensive and not always effective.

In one exchange, Alain Juppe said it was a mistake to have renegotiated the Touquet agreement in 2003 - agreed by Sarkozy as interior minister in 2003 under Jacques Chirac as president, which was designed to stop illegal immigration into the UK, and which turned Calais into a refugee swamp. Sarkozy responded dryly that it was the Canterbury agreement - between Margaret Thatcher and Francois Mitterrand in the 1980s - that was responsible. And then he added that it was probably not important that every candidate was on top of his brief. 

In another exchange, Sarkozy rounded on Nathalie Kosciusko-Morizet, who was a minister for housing and the environment under him. He said he did not regret appointing her, but he was not sure whether he would do it again. "You will not have the occasion to", she responded. Suffice it to say that these seven politicians are not friends.

The two most newsworthy elements of the debate was Sarkozy's announcement that he would seek only a single term, which is also what Alain Juppé had promised earlier. With both of them polling at over 30%, and likely to enter a second-round run off, this means the Republicans will nominate a one-term candidate only. 

The other was Alain Juppe's cautious announcement that it was time to appoint a woman as prime minister, though he said he would not want to discuss names at this point. 

When asked in a radio interview before the exchange whether he would respect the result of the primaries, Sarkozy said yes he would, putting to rest fears that we might end up with him running as an independent. He had earlier declared that the vote was rigged, since it was open to subversion by left-wing activists, who could register to vote for only €2 and elect Juppé instead of him.

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