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December 13, 2016

Pretending as though nothing had happened in Rome

These are not the headlines a new government wants to read: "Gentiloni, governo fotocopia" was La Republicca's this morning, and it says it all. So does the front page cartoon in Corriere della Sera, showing President Sergio Mattarella going through the list of ministers and proclaiming that the name of Matteo Renzi was missing. In all other respects it is the same government, slightly reshuffled. With Paolo Gentiloni’s move from Palazzo Farnesia to Palazzo Chigi, the new foreign minister will beAngelino Alfano, formerly interior minister. And Elena Boschi, Renzi’s reform minister - and author of the failed constitutional reforms - has been promoted to arguably the most important job of all, that of under-secretary to the prime minister, coordinating all strands of policy including the secret service. 

We don’t often agree with Massimo D'Alema, the former Italian prime minister and standard bearer of the left of the PD, but he was right saying that this response to the referendum will have lost the PD a further four or five points of electoral support. He also dismissed Renzi's extraordinary claim that the 40% who supported yes would be the core constituency for the PD at the next elections. D'Alema rightly pointed out a comparison to a previous referendum in 1985, where the Communists achieved 45%, but only managed 27% at the subsequent elections. 

We are going to say this outright: Gentiloni is a weak transitional leader. And there is already ample evidence of this. When asked about his "photocopy government" he said that, if he had tried to do more, the government would not have been ready in time for the European Council on Thursday. Gentiloni also said that he would not oppose Renzi’s ambition to have elections by the summer, hoping that Renzi would not criticise him too severely - although he said he would fully understand if he does. One does not get the sense that Gentiloni is his own man. This sentiment was also expressed, albeit more cautiously, in a comment by Lucia Annunziata in the Huffington Post Italia last night, who writes

"Despite the good intention of Matterella and the list of objectives outline by the new premier, it is impossible to pass this government off as a fresh start in a country that has just voted no to a previous government. The Gentiloni administration is born with fragility in its DNA.”

Renzi, meanwhile, expects to have elections by the summer with a proportional voting system, the idea being to prevent the Five Star Movement from forming a government coalition. As we have written before, no electoral law can ultimately overcome the Italian electorate’s disillusionment with the traditional parties, and this pathetic ministerial reshuffle will only strengthen that disillusionment. 

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December 13, 2016

Preparing narratives of who to blame

These are again decision times for Alexis Tsipras and his government. Tsipras is already preparing narratives in case there is no agreement with the creditors and the IMF. There is no sense of a confrontation with the creditors, as no take-it-or-leave-it threat is on the table, but the Greeks also made it clear that another austerity package worth €4.5bn is not going to happen. 

But Tsipras is preparing for the case that negotiations may fail. Talks resume today.

The dispute between the Europeans and the IMF over the 2018 primary surplus target clearly gives the Greek government an ideal opportunity to argue that it is not to blame for any breakdown, writes Macropolis. And it is played out in full through the media. Euclid Tsakalotos complained in an interview with Reuters that he is disappointed the IMF was not fighting enough for a reduction of the targets. The IMF doubled up their defence in a blog post signed by Poul Thomsen and Maurice Obstfeld, saying that it is ultimately a decision between Greece and the Europeans to find a fair solution, and that the IMF should not be required to square up what is politically feasible to make it economically credible. 

Snap elections are also rumoured and the announcement of the social measures last week can be seen as a precursor. But elections are not a favoured option for Tspiras, so Macropolis. An alternative is to find allies in parliament, e.g. Pasok, the Union of Centrists, etc. But why should they join in, if the alliance is premised on an additional austerity package?

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December 13, 2016

Pretending to criticise Turkey

Spiegel Online reports that Austria, Bulgaria and the Netherlands want to push for an official end to Turkey's accession talks at next week’s meeting of foreign ministers. Germany is opposed, ostensibly to protect the talks in Cyprus, but as the article makes clear the real reason why this initiative is unlikely to muster the necessary qualified majority is the refugee crisis. Many governments have no interest in an increase in refugees in an election years in several countries. While the three countries cannot force the decision to pull the plug on ongoing membership negotiations, the article says they can still veto the scheduled decision for the EU to continue accession talks with the west Balkans and Turkey, which needs to be taken by unanimity. The Austrians are saying they will not accept the current draft, provoking an angry reaction by Germany’s Frank-Walter Steinmeier who said that the only relevant red line should be the introduction of the death penalty. But the Austrian foreign minister, Sebastian Kurz, said a veto by Austria and its two allies on this issue would constitute a strong political signal in its own right, as it would strengthen the position of the European Parliament, and forces the European Council to deal with the issue itself.

Marc Pierini, meanwhile, gives the following advice on how to deal with Turkey, which is currently in acute danger of alienating itself from the West. He notes that the challenge for the EU is to prevent a further deterioration in the relations. He suggests:

First, continue to hold a dialogue with Turkey, come what may. Second, preserve the status quo - the customs union, the Erasmus programme, and of course the refugee deal. Third, proceed with visa liberalisation. He notes that the conditions for a deal have not changed. Fourth, link the future of accession talks to the restoration of democracy. This need not translate into a formal freeze of membership talks, as demanded by the European Parliament, but certainly at least a slow-down. He says the overarching objective of both the ruling AKP and the Gülen movement, is 

“to instal an arch-conservative religious society in Turkey, far from Western standards.”

Pierini ends on a pessimistic note. Turkey’s attitude towards the EU will not be driven by foreign policy considerations. Domestic political requirements will impose new strategic choices and push towards a social utopia incompatible with EU and Western standards.

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December 13, 2016

The futility of the Article 127 challenge

Tobias Lock takes a look at the next legal Brexit challenge, relating to the idea that a separate parliamentary vote is needed to take the UK out of the single market, which is based on Art 127 of the EEA agreement. The argument is that Brexit does not automatically imply a departure from the EEA. If Britain departs from the EU, it would still be a member of the EEA, according to the claimants in this case. Art 127 of the EEA Treaty is the equivalent of Art 50 TEU, setting out the withdrawal procedure from that treaty.

Lock says the claimants have to overcome three hurdles. The first would be to convince the High Court that the UK would remain a member of the single market even if it withdrew from the EU. The EEA is technically an agreement between the EU and the Efta states. So, if a member states leaves the EU but does not join the Efta, it can be argued that the member state will not be part of the EEA at that point. 

The second hurdle would be to convince the government that, if a separate withdrawal is needed, it cannot be done by Royal Prerogative. 

And what if the parliament has to vote and denies the trigger of Art 127? Even in that case it is unlikely that the UK would remain a member of the single market, since it will be neither in the EU, nor in the Efta. The extension of the single market to Efta countries works through a number of institutional mechanism, such as the EEA Joint Committee, of which the UK will not be part. In all of this, there is no room for third countries. Lock concludes that, in light of those hurdles, the Art 127 challenge has only a small chance of success.

We think it is a shame that the ex-Remainers are all over the place following the referendum. They should have accepted that they lost, and not put their faith in legal challenges, but instead drum up political support for a position of single market membership, which would naturally involvement, the free movement of labour, and control EU migration flows through economic disincentives the UK could impose under existing laws, such as residency-based tax and welfare rules.

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