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December 16, 2016

Brexit on the ground

This little short video sequence is a little awkward to watch. It shows Theresa May having no one to talk to at last night’s European Council, and it tells us that Brexit has already happened on many levels, except formally of course. The EU is not only a static legal construction, but a living political entity, from which Britain extricated itself quite some time ago. This is also another reason why we think that Brexit is not undoable - whatever the legal and procedural arguments may be. We are not even sure whether the others would want a rueful UK back in their midst. 

Peter Foster of the Daily Telegraph has probably the best summit story this morning, in which he points to looming divisions among EU member states in their Brexit negotiating strategy. The consensus so far is not a big deal, as it consists of not saying anything until the UK triggers Article 50. This was evident last night, when EU leaders greeted with an eery silence May’s intervention, in which she asked for an early settlement of the status of EU citizens in the UK, and UK citizens in the EU. These difference will come out in the open once the negotiations begin. The article gave a taste of what to expect. It is clear that not all countries support the official hard-line negotiating position, especially on the status of EU citizens. With almost 1m Poles living in the UK, we doubt very much that the EU is going to maintain a position of rejecting May’s offer of a simple reciprocal deal to protect the position of existing residents. We would also not be surprised if some member states wanted to extract a price for such a reciprocal deal - thus turning the residency rights into a bargaining chip. The article quotes a diplomat from an Eastern European member state expressing reservations about the Commission’s hardline stance and calling for a transitional deal as well as parallel negotiations on a trade deal. Another diplomat even challenged Michel Barnier's authority, as he has not been given an official mandate. And, indeed, the European Council last night confirmed that it is in charge of the entire process, from beginning to end, which irked both the Commission and especially the European Parliament. In Brussels, all problems boil down to inter-institutional conflict. 

In the UK, meanwhile, the main discussion has turned to the parallel trade agreement the UK will be negotiating with the EU. We assume that the motivation of those who warned that this might take ten years is simply to scare people into pushing for a reversal of the Brexit course, but these scare tactics have not had a great record of success.  One of the reasons the Remain campaign lost not only the referendum but also the subsequent debates has been a tendency to exaggerate - whether it is the economic consequences of Brexit or the harshness of the deal the EU is going to extract from the UK. And they were always happy to wheel out a rent-a-quote continental politician to confirm that the deal would be very tough, and that it would take a long time. 

The Times and the Telegraph are leading with stories according to which the negotiations of a trade would take ten years, which is, of course, an arbitrary number pulled out of a hat because the EU has never negotiated a trade agreement with a former member. This view was expressed in a private meeting by Sir Ivan Rogers, the UK ambassador to the EU. Even if this agreement ends up as a mixed trade agreement, like the Ceta trade deal with Canada (i.e. in need of ratification by member states), there is no need to negotiate for that long with an ex-member state whose regulatory regime, at the point of departure, is 100% compatible with that of the EU. There are technical issues to be addressed, for sure, and the negotiations about the service sector and regulatory equivalence will be complicated - but not that complicated. The Telegraph quotes Michel Barnier, the EU’s Brexit negotiator, as saying it will take a lot less time, but clearly more than the 18 months of the Article 50 negotiations. This seems to be a realistic assessment to us. 

The Times has spoken to Norbert Röttgen, the head of the Bundestag's foreign affairs committee and once a rising star in the CDU. Röttgen also mentioned the ten years, and desperately tried to dispel the notion that we have been putting forward ourselves that German industry would seek to influence the debate. The only point where we agree with Röttgen is his dismissal of a sector-by-sector trade deal.

Most of Brexit journalism is pure noise. What people say today is not going to be relevant to the decisions they are going to have to take in late 2018 or early 2019. For starters, many of them will not be in power. By then, the reality of Donald Trump will have set in, and the EU will think twice whether it can afford to cut off the member state with the largest defence budget, and only one of two countries with half-decent counter-intelligence service (the other being France). And, given its massive trade surpluses, German industry will not simply lie low and allow the German government to cut off billions in trade. They reluctantly supported Angela Merkel on Russian sanctions because a big principle was at stake, but they are not going to be complicit in any policies to extract revenge or penalise an ex-member state. And, given the potential for systemic financial instability in both the UK and the eurozone, a hard divorce would be reckless. In our view the British government is right to dismiss these scare stories.

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December 16, 2016

The EU/Ukraine agreement and the Dutch senate

Mark Rutte yesterday got his European Council decision on the Ukraine association agreement, but this might still be sunk by the Dutch Senate, where the VVD-PvdA government coalition lacks a majority and needs the help of left-liberal D66 and Christian democrat CDA. The CDA in particular continues to be in doubt. The party's leader Sybrand Buma is quoted by Volskrant as saying on the same day that he was still inclined to listen to the voters as "just going ahead and ignoring the referendum" would increase the gap between politicians and the Dutch people. He will, however, not insist on party discipline for his senators. Sources within the CDA say the senators are likely to support the treaty now as they are pro-EU, but the leader of the senate faction has not reacted publicly yet. The paper puts the timeline for final ratification at "weeks". Next week the agreement will be debated in the Dutch lower house again, and only after ratification will it go to the Senate, where it might be voted on shortly before the general election. The issue at the back of Dutch politicians' minds, especially Buma as party leader, is that perceptions of whether politicians listen to voters are expected to play an important role in the general elections just three months away. 

The tone of Volkskrant's article goes with the narrative that ratifying the agreement would be ignoring the referendum, despite the Council's declaration claiming to have noted the Dutch voters' concerns "as conveyed by the Dutch PM", and to have addressed them. The paper still prefaces Rutte's geopolitical justification for ratifying the agreement with "Rutte defends ignoring the no vote..." We also note an online poll on Volkskrant's front page with the question "the additional statement on the Ukraine treaty is not enough: no is no" has readers agreeing by 64-36% with nearly 7,000 votes. These things are not at all scientific but they are representative of the mood of a self-selecting sample of motivated online readers, as well as because of the slant of the leading question, which must have passed an editorial filter.

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December 16, 2016

A short observation about the future of the EU

When people make the case that the EU is imploding, they are failing to make an important distinction - one that Gianni Rotta made when he answered a question by Judy Dempsey on whether the EU's architecture is collapsing. He says, correctly, that it is the wrong question:

"The architecture in Fatehpur Sikri, once the capital of the Mogul Empire, is still wonderful, yet the city itself is a fascinating ghost town. Lamanai, in northern Belize, was once a bustling Mayan metropolis; now, the ancient ruins attracts only tourists....The EU’s architecture was not perfect to begin with, yet the real trouble today recalls the long-lost fates of Fatehpur Sikri and Lamanai: the stones are still there, but the people left centuries ago."

The issue for the EU is not collapse, or formal dissolution, but irrelevance. It is about what you do, not who you are. This is why we keep on saying that Brexit has already happened on the ground because the UK ceased to be engaged in the EU some time ago. And this is not just a UK problem. With each EU summit, like the one last night, it is becoming harder to see what the EU actually does beyond issuing press releases, or agreeing on strategy papers.

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  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • March 13, 2019
  • Not really all that meaningful
  • Will the EPP merely put Orban on probation?
  • Why AKKs riposte to Macron is deeply disturbing
  • October 02, 2017
  • Catalonia recalls EU and eurozone instability
  • French trade unions increase pressure over labour reforms
  • Watch out for a political accident in the UK
  • Municipal elections boost Portugal's Socialists
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • February 11, 2019
  • SPD dumps Hartz IV
  • Macron's revival
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • January 07, 2019
  • What to look out for in the Brexit debates
  • Macron's last-resort tool for the gilets jaunes
  • August 31, 2017
  • Where are the Républicains?
  • Poland unmoved by EU rule-of-law sanctions
  • May will stay through Brexit, and then fight the 2022 elections
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • December 12, 2018
  • 48 letters
  • A sense of deja-vu
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 29, 2018
  • Why the EEA is no longer a Brexit option
  • Behold the rising superpower: post-catholic Ireland’s European miracle
  • July 27, 2017
  • Löfven's move
  • The nearing end of petrol and diesel engines
  • Why a second referendum in the UK won’t happen, and why it would be wrong
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 17, 2019
  • A dangerous game for the EU
  • After Brexit, get ready for a German EU budget rebate
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • June 20, 2017
  • How to soften Brexit?
  • The deep roots of Brexit: Thatcher and the Germans
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 09, 2018
  • German panic about Target2
  • AfD level with SPD
  • How the EU could fail
  • May 31, 2017
  • Getting real in the debate on the euro's future
  • Russia's growing influence in Italy
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • June 18, 2019
  • Retaliation threats over drilling
  • May 28, 2018
  • A no-confidence motion that could backfire
  • The political repercussions of a historic referendum in Ireland
  • Why the lack of an international role for the euro matters
  • May 10, 2017
  • PSOE primary campaign in full swing
  • Czech government crisis escalates
  • Backroom dealing on electoral reform in Italy
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • April 09, 2019
  • What can go wrong now?
  • April 13, 2018
  • German support for eurozone reform next to zero...
  • ... and no support for France on Syria either
  • A French sermon
  • Why the euro endures
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • January 29, 2019
  • What comes after plan B fails? Plan C, of course. C for cliff-edge
  • Gilets jaunes, how to structure a movement in free flow?
  • European Court of Auditors criticises Juncker’s investment fund
  • February 26, 2018
  • Angela Merkel's cabinet
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 30, 2019
  • A pyrrhic victory for Kurz
  • Will there really be UK elections?
  • November 19, 2018
  • May’s pushback is kicking in
  • January 08, 2018
  • Getting real on Brexit
  • Macron in China
  • March 01, 2017
  • The threat of Frexit
  • Fear and loathing of a referendum in Spain
  • How to get around Theresa May’s little ECJ issue
  • Solve the problem
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • June 11, 2019
  • Politics and the new sense of urgency
  • Ten little monkeys jumping up and down - down mostly
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • November 13, 2017
  • A pro-European list: Wauquiez' nightmare
  • Catalan separatism isn't going away
  • Why oh why does Germany behave the way it does?
  • Why the four freedoms matter
  • February 02, 2017
  • Will it come to the use of force in Catalonia?
  • The day Brexit became irreversible
  • Can Trump and May succeed?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 29, 2019
  • People's Vote descends into Civil War
  • CDU at odds on dealing with extreme parties
  • February 13, 2019
  • What to make of the man in the pub - and other tales
  • Macron loses more early advisers - or cuts them loose
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • May 09, 2019
  • The EU's impossible dilemma
  • The horsetrading starts in Sibiu
  • May to bring withdrawal bill to Commons week after next
  • September 27, 2018
  • Two ways out of the Brexit impasse
  • February 16, 2018
  • How big will the euro budget be?
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • November 30, 2016
  • Is Russia behind a massive cyber attack in Germany?
  • Will Fillon move to the centre?
  • The Dutch left field is getting crowded
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 18, 2019
  • The horrifying implications of Merkel’s 5G decision
  • April 17, 2019
  • Why it is far from clear that the grand coalition will survive the year
  • Macron's chance and challenge
  • Eurozone firms' surprising response to sagging profits
  • The result of Spain's elections, a riddle wrapped in mystery
  • The MMT debate is coming to Europe - and Germany
  • Greek parliament seeks German war reparations
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • October 16, 2017
  • What‘s the deep meaning of the elections in Lower Saxony?
  • Can Brexit be revoked?
  • Macron's grand narrative
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • October 20, 2016
  • No games please, we are Europeans
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 16, 2019
  • What next, after EU sanctions Turkey?
  • What to make of Johnson’s four-point Brexit plan
  • Galileo fails, and nobody notices
  • March 04, 2019
  • Macron's two-month sprint
  • May's numbers are not there yet
  • Greening QE
  • On the "hope" of a rate raise
  • October 22, 2018
  • A week of intense political tension in the UK
  • Poland's local elections reveal deeply-split country
  • June 11, 2018
  • The end of the G7 - good riddance
  • Macron needs allies for his European agenda
  • Who is going to be the next director-general of the Italian treasury?
  • January 29, 2018
  • Where is the opposition in France?
  • Scenarios and risks for Syriza over Macedonia
  • September 21, 2017
  • Time to get serious about Brexit
  • Would the FDP claim the job of finance minister?
  • The return of the ultra-right to German politics
  • May 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 30, 2016
  • Brexit facts on the ground
  • Burkinis and Republican primaries
  • The SPD and TTIP
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • November 04, 2019
  • Brexit tactical voting is happening - on both sides
  • Merkel promises 1m charging stations - but doesn't tell us how
  • September 19, 2019
  • Italy's 2020 budget will be a moment of truth
  • Austria's soft faced far-right
  • August 06, 2019
  • Macron's next bet: municipal elections
  • A victory for Salvini and his coalition
  • June 25, 2019
  • What’s behind the dispute about Weber
  • May 14, 2019
  • Trump gives Orbán his blessing
  • Outcome of Belgium's parliament election on Sunday totally open
  • Has Trump really got the economics of trade all wrong?
  • April 03, 2019
  • Game on
  • Can someone please take the table off-the-table!
  • February 22, 2019
  • The maths of a Brexit deal
  • Does public protest crowd out of climate change?
  • January 14, 2019
  • Our Brexit predictions
  • 1789 - Macron's version
  • Tsipras calls confidence vote after Kammenos pulls out
  • December 06, 2018
  • There can be no deal as long as delusions of easy alternatives persist
  • What do the gilets jaunes mean for green fiscal policy?
  • October 31, 2018
  • Macron's break raises some worrying questions
  • Tsipras campaigns on constitutional reform
  • A further move in Warsaw to submit to the ECJ’s authority
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 16, 2018
  • How to think about the three Brexit options
  • How to respond to Trump
  • June 14, 2018
  • A Labour rebellion, really?
  • May 14, 2018
  • Catalonia: plus ça change...
  • Conveney says no to Brexit with border infrastructure
  • Why the noble Lords don't really matter
  • April 12, 2018
  • The ineffective European Globalisation Adjustment Fund
  • Davis wants concrete language on future trading relationship
  • The name dispute of Alexander the Great's descendants
  • March 13, 2018
  • When events intrude: Novichok edition
  • Fico loses Kalinák, might lose himself
  • February 12, 2018
  • What the euro debate is really about
  • How Brexit can still falter
  • January 15, 2018
  • Is the section on Europe for real?
  • Can Drahos upset Zeman?
  • December 18, 2017
  • SPD regional party preemptively rejects grand coalition
  • Future of eurozone to be decided by March - we can hardly wait
  • November 21, 2017
  • A short note on the impact of German political chaos on Brexit
  • A scandal, overshadowed
  • October 27, 2017
  • What exactly happened in Catalonia yesterday?
  • Transactional versus strategic foreign policy
  • October 04, 2017
  • On why Theresa May is likely to survive
  • On how to resolve the Brexit talks
  • Social housing - not a good start for the French government
  • September 12, 2017
  • Brexit bill passes Commons
  • Macron to weather another political storm
  • Conservative PM re-elected in Norway
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 26, 2017
  • Has Schulz blown it?
  • Housing benefits cuts expose Macron's weakness
  • July 07, 2017
  • Is Emmanuel Macron just another Matteo Renzi?
  • The real obstacles to a Brexit deal
  • Why Nordstream 2 should be delayed
  • On why the G20 won’t solve the main problem
  • June 19, 2017
  • SPD to focus on inequality
  • On radical uncertainty
  • May 30, 2017
  • Beer tent politics - Merkel edition
  • Brexit arrives in UK elections
  • Rajoy clears budget hurdle
  • May 10, 2017
  • PSOE primary campaign in full swing
  • Czech government crisis escalates
  • Backroom dealing on electoral reform in Italy
  • April 25, 2017
  • Germans conflicted about Macron
  • A choice over Europe
  • Who can stop the Tories?
  • April 10, 2017
  • Nein, nein, nein, und nein
  • Sounds like a bad Brexit story, but ain’t
  • On how not to exit the euro
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • March 14, 2017
  • Rutte vs Wilders
  • Fillon doubles down on his reform programme
  • March 03, 2017
  • Death of Diesel
  • February 20, 2017
  • SPD ahead of CDU/CSU
  • Fillon bounces back
  • The Brexit timetable
  • February 08, 2017
  • Fillon faces new allegations
  • Does Martin Schulz really have a chance?
  • Spain's not-so-green taxes
  • Building the Catalan tax database - legally?
  • Reports of the death of Russia’s economy were exaggerated
  • January 30, 2017
  • On the illusion of choice
  • January 23, 2017
  • What if the populists clash with one another?
  • Why the euro is a real problem for the German left
  • When you call the US, what number do you dial?
  • January 16, 2017
  • Trump doubles down against the EU
  • Fake maths
  • January 09, 2017
  • FN campaign troubles
  • Objectionable perhaps, but muddled?
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • December 22, 2016
  • Round up the usual suspects
  • A populist goes to Moscow
  • Macron ahead of Fillon?
  • Discombobulated
  • December 20, 2016
  • The politics of terror
  • On Lagarde
  • Is a disruptive Brexit possible?
  • December 19, 2016
  • Inside the customs union, outside the single market
  • Back to the future in Italy
  • The lessons from Fillon's first gaffe
  • Montebourg - a bit of everything
  • The Maastricht error
  • If Paul Romer is right...