We use cookies to help improve and maintain our site. More information.
close

February 16, 2017

No, the US is not going soft on Nato

We never thought that the seemingly contradictory positions on Nato between Donald Trump and his pro-Nato defence secretary Jim Mattis were unbridgeable. And that is precisely what happened yesterday. The US is shifting from unconditional support for Nato, to conditional support - conditional on the other member states meeting the target of spending 2% of GDP on defence. 

While Mattis was full of warm words for Nato, which he called his second home, he remained tough on the substance. AP quotes him as saying that Washington would "moderate its commitment" to Nato, as he put it, unless the other member states agreed to higher defence expenditures. There were no details of what this would entail, but he did insist that Nato members must adopt a plan this year to set binding dates to reach the 2% target. The politics in countries like Germany is currently moving in the opposite direction. A majority of Germans oppose higher defence spending.

The decision by the US to switch its position from one of absolute support for Nato to one of relative support could also impact the Brexit negotiations. The case for a close EU-UK military alliance is now more urgent. 

Anne Applebaum argues that we should be under no illusions that the real position of the White House is firmly anti-Nato. She said Trump is the first modern US president never to have expressed an interest in democracy, the rule of law, or the shared values that have held Nato together. The choice for the UK is to pretend that this is not happening, and to seek comfort in the special relationship with the US, or to seek a leadership role in Europe. 

“Britain is leaving the EU, but it still wants a European role. Here is a role for the taking: Britain, together with France, Germany and others — perhaps including non-Nato members like Sweden — should launch a new European security pact that actually reflects political reality. In other words, Europe’s leading defence powers should create an organisation that is compatible with Nato, but which also starts preparing coldly for the day when the US security umbrella might be withdrawn.”

Show Comments Write a Comment

February 16, 2017

Why austerity is the real scandal of our time

Matt O’Brien has dug up some new research showing that the impact of austerity on growth in Europe was even more dramatic than we thought. 

A group of economists from the US and France looked at Europe’s fiscal policies over the last eight years, and found that the policies were so counter-productive that they actually raised the debt-to-GDP ratio. The reason is that interest rates were already at the lower bound. Normally a fiscal contraction could be partially offset by a monetary expansion. But that didn’t happen. According to their results, Greece, Ireland, Italy, Portugal and Spain would have contracted by only 1% instead of 18% if they hadn’t slashed spending at all. And the contraction would have been only 7% if they had not joined the monetary union. O’Brien concludes that the euro really has turned out to be a doomsday device for turning recessions into depressions. O’Brien’s grimly paraphrases Margaret Mead:

"It’s a good reminder that you should never doubt that a small group of committed ideologues can destroy the economy. Indeed, it’s the only thing that ever has."

Show Comments Write a Comment

February 16, 2017

Has Kenny just announced Ireland's de-facto EU exit?

It happens from time to time that politicians flatly state out a positions that is internally contradictory, and it is surprising how often they get away with this. Angela Merkel’s categorical support for the euro and her simultaneous refusal to accept eurobonds constitute one much-noted example. Another is the position by Enda Kenny, as reported in the Guardian, who says there shall be no hard border with the UK after Brexit. In a speech in Dublin Kenny said Ireland had no choice but to prevent a hard border on the grounds that Brexit constitutes a major threat to Ireland’s economic prosperity. (Add to that the impact of the proposed US border tax, which would hit Ireland harder than any other European country). 

“...let me be absolutely clear on one point. It is a matter of vital national interest for Ireland that we do not return to the days of a hard border that we knew only too well. Or indeed create a new one in the future.”

So let’s think this one through. The UK is going to leave the EU. The UK will not be part of the single market. The UK will eventually leave the customs union, though it is possible that it might remain a member of the customs unions for an interim period. Looking beyond the interim period - which might not happen or be short - the UK will be outside the customs union, and Ireland will be inside. There will have to be a customs border - unless of course, Ireland follows the UK, and quits the EU as well. 

Furthermore, this is not an issue of political negotiation, but technical necessity. It is possible to soften the hardness of border by erecting customs posts for trucks alongside the motorway, before and after the border, and allow passenger cars free cross the border. But since the EU applies tariffs and taxes to goods entering the customs union, those goods have to be monitored at some point during the transit. You can think of the softest conceivable border as the one between Switzerland and Germany. Switzerland is in Schengen, but not in the customs union. Passenger cars pass relatively quickly, while there are sometime long lines of lorries on the motorway before the border. Call it what you will. But there will have to be customs controls post-Brexit.

So if the categorical position of the Irish government is to prevent a hard border, and if Brexit goes ahead as planned, then Kenny’s words suggest that Ireland is planning to leave the EU. He did not say that explicitly, of course, but this is why his position is internally contradictory. This policy is not without danger. If he stakes out the absence of the border as Ireland’s number one political priority, he is setting up his country for a major confrontation with the EU, which will be blamed in Ireland for scuppering the peace process. That is if he is still around for this confrontation, which he might not, see our coverage above.

Show Comments Write a Comment

This is the public section of the Eurointelligence Professional Briefing, which focuses on the geopolitical aspects of our news coverage. It appears daily at 2pm CET. The full briefing, which appears at 9am CET, is only available to subscribers. Please click here for a free trial, and here for the Eurointelligence home page.

 

Recent News

  • 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 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
  • 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 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • April 23, 2018
  • More bad news for the SPD
  • Will Theresa May accept a customs union? The Times says yes. We think so too.
  • A comeback for Marine Le Pen?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • February 26, 2018
  • Angela Merkel's cabinet
  • January 29, 2018
  • Where is the opposition in France?
  • Scenarios and risks for Syriza over Macedonia
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 06, 2017
  • Ireland in search of its own path in the EU
  • Who owns the eurozone?
  • Gabriel's big speech
  • November 14, 2017
  • The apolitical movement inside LREM
  • On the unity of the PD and the visions of the Italian left
  • A clarification on glyphosate
  • On freedom of movement
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • 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
  • September 11, 2017
  • Turkey issues travel warning for visitors to Germany
  • How nasty is the AfD?
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 24, 2017
  • Macron's popularity falls amid more budget cuts
  • Orbán to support Polish government against EU
  • No exit from Brexit
  • July 05, 2017
  • Europe’s next migration crisis
  • Philippe: French need to kick spending addiction
  • June 20, 2017
  • How to soften Brexit?
  • The deep roots of Brexit: Thatcher and the Germans
  • June 05, 2017
  • What happens to Brexit if Labour wins?
  • What Russia wants
  • May 22, 2017
  • Catalonia's independence blueprint
  • Commission wants completion of eurozone by 2025
  • The case for more honesty about the abolition of cash
  • The case against an Italian euro exit
  • May 08, 2017
  • A message of hope
  • Barnier's not so easily agreed Brexit principles
  • The rebirth of the paranoid conspiracy theory
  • April 26, 2017
  • The realities of Brexit - residency rights edition
  • How Franco-German economic imbalances manifest
  • Pasok - the now classic Socialist dilemma
  • April 15, 2017
  • Happy Easter
  • April 05, 2017
  • What if Macron were to become president?
  • The case for relative optimism about Article 50
  • March 28, 2017
  • To vote or not to vote
  • The pressure is on for the Dutch Green Left
  • On macro risk in the eurozone
  • March 20, 2017
  • Does the language of communiques matter?
  • Spain snap election rumblings
  • Will there be a Brexit deal?
  • March 13, 2017
  • Poland and the future of the EU
  • Polls show 40% support for Costa's Socialists
  • Council of Europe questions Spanish constitutional court reform
  • March 05, 2017
  • Poland vs Tusk
  • Juppé - a recovered candidate?
  • Will Italy leave the euro?
  • February 27, 2017
  • May’s next gamble
  • Macron and the rise of the centre
  • Bite the bullet and get on with it
  • Who is the AfD?
  • February 23, 2017
  • Ukraine agreement passes Dutch lower house
  • Brexit from Euratom
  • Why is Merkel not fighting back against Schulz?
  • February 20, 2017
  • SPD ahead of CDU/CSU
  • Fillon bounces back
  • The Brexit timetable
  • February 17, 2017
  • Watch out for instability of the Balkans
  • The economic consequences of Trump for Europe
  • On muddled thinking in Ireland