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January 31, 2017

Project fear against Italexit

In his regular comment in Corriere della Sera, Federico Fubini argues against the idea that Italy could leave the euro and remain in the EU. This, he says, is the lesson from Brexit: there are no half-way divorces. Exiting from European mechanisms that a country doesn't want any more entails exit from the whole. If Italy introduced a devalued new currency, threatening not to pay its foreign debt in euros, could find itself outside the single market, he writes. And Italy depends heavily on its exports to France and Germany. Further, in the current geopolitical climate, Italy can hardly afford to be out in the cold outside the EU umbrella.

The reason Fubini feels compelled to write this warning is the realisation that Italy's public opinion is increasingly divorced from the EU and the euro. As he notes, political forces supporting Italy's euro exit are given about 45% altogether by election polls. Only a third of Italians have a positive image of the EU according to the eurobarometer, a precipitous drop from just a few years ago and on a par with the UK. 

As with Brexit, we're not sure project fear is an effective antidote for anti-euro sentiment in Italy.

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January 31, 2017

On how not to frustrate Brexit

After the referendum, the Remainers made a mistake worthy of a Shakespearean drama. They could have united and exploited the division within the Conservative Party - between genuine Remainers, pro-single market Leavers, and hard Brexiteers. Instead they allowed the opposite to happen. Theresa May not only managed to unite her own party behind her hard-Brexit position, but even managed to split the Labour Party. How did this happen? Instead of uniting around a position to accept the referendum result, and to favour continued membership of the single market, many of the Remainers tried their luck through legal challenges, support for a second referendum, or for another final in-out vote by the British parliament. The latest news on Article 50 is that the bill will pass without amendment as the few potential Tory rebels are backing off. 

One can argue, as Lord Neuberger did, that the Supreme Court case on Brexit was purely procedural, and procedures matter. In a constitutional democracy, this statement is obviously true. A decision as momentous as Brexit requires a solid legal basis. This is now what is happening. Brexit is becoming more solid. So this begs the question: why would Remain supporters pin their hopes on the legal process to change this? Our only explanation is muddled thinking.

There are now two further attempts under way to derail the Brexit process. The first is a crowd-funded action in the Republic of Ireland to get the ECJ to rule on the reversibility of Brexit. It is worth reading this article in the Wall Street Journal just to get a scale of the political delusion behind the case. We have no opinion on the narrow legal argument. It may well be that the Article 50 process is declared reversible. But it is hard to imagine a situation where that would be the case in practice. Maybe a US withdrawal from Nato, a US military attack against a Nato member, a US-embargo of EU goods, or something else of that nature might get everybody in the EU, including the UK, to agree to a reversal of Article 50. We are still talking about a process where the House of Commons, the British government, and 27 other EU member states would have to agree unanimously. 

The other attempt to derail the process is a little more intelligent because it is political, but it is coming too late. John Harris argues in the Guardian that the Labour Party should consider blocking Article 50 because of Donald Trump: 

"We all know the opposing arguments, and they are worth taking seriously: that even if the referendum result is speciously interpreted as consent for hard Brexit, it has to be respected; that many Labour MPs represent areas that voted leave and fear Ukip; that there are two byelections coming up in leave-voting seats, and that the party is in an unbelievably fragile position. But at the same time, I know what many people who fear the Trump/Brexit moment will say: that at a moment so freighted with historic significance, when the UK may be about to trade in an enduring alliance with Europe for a role as the ally of a truly terrifying US president, will it really be Labour MPs’ choice to back the most reckless course imaginable? We shall soon see."

Of course they will back Brexit - and even if most Labour MPs were to vote No, the Article 50 motion would still past with the votes of the Conservatives alone. The issue is not how ex-Remainers are voting themselves, but that they totally failed to split the Tories. That is what needs to happen for the government to lose the Article 50 vote.

Gideon Rachman argues along similar lines in the FT:

"Were it not for Brexit ... the UK government would be able to take an appropriately wary approach to Mr Trump. If Britain had voted to stay inside the EU, the obvious response to the arrival of a pro-Russia protectionist in the Oval Office would be to draw closer to its European allies.

Britain could defend free-trade far more effectively with the EU’s bulk behind it — and could also start to explore the possibilities for more EU defence co-operation. As it is, Britain has been thrown into the arms of an American president that the UK’s foreign secretary has called a madman."

Was it not always the point of the EU to be strong in the face of global threats and global competition? Hardly anyone in the UK made the point that the EU needed strengthening to work in Britain's best interest. The pro-EU argument was premised on David Cameron's attempt to extricate the UK from ever closer union. It was based on getting the best deal out of the single market. There was no vision for the EU as a whole behind it. Why did the Remainers fail to make the geo-political case during the referendum campaign? Trump may not have been foreseeable, but Vladimir Putin was already there.

The Brexit mess is the result of decades-long dishonesty about the importance of the EU to the UK. It's now too late. 

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