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March 10, 2017

Return of De Gaulle’s empty chair

Last night’s European Council conclusions are already a modern classic. Not often do we have the opportunity to quote them in their entirety:

“The European Council deliberated on the attached document. It was supported by 27 Members of the European Council, but it did not gather consensus, for reasons unrelated to its substance. References to the European Council in the attached document should not be read as implying a formal endorsement by the European Council acting as an institution.”

Poland’s veto of the conclusions came in response to the reelection of Donald Tusk as president of the European Council by a majority of 27 to one. Poland’s hope of getting at least Viktor Orban and Theresa May to support its own candidate came to nothing, as both leaders rightly concluded they had nothing to gain from participating in such a suicide mission. Nor would that have stopped the election of Tusk, given the thresholds for qualified majority voting. Like so many other observers, we, too, are struggling to comprehend what purpose the Polish government could have conceivable hoped to achieve by isolating itself in the European Council. 

Moreover, Poland chose a bad day for vetoing the Council conclusion - because there was not much to veto in substance. The European leaders, after their monumental mismanagement of the eurozone crisis, are now taking credit for the uptick in the economic cycle. There was, as so often, no substance in those conclusions. Only if Poland maintained an empty-chair policy, like De Gaulle did in the 1960s, would its stance become serious. There are important issues that require unanimity in the council - and that's a lever a member state might choose to pull.

We noted a comment from the Warsaw correspondent of ARD German television, who is looking at the domestic political impact. Poland is among the EU countries with the largest support for EU membership - about 80%. 

Poland benefits more than any other country from EU support. The EU will now become the battleground in the next Polish elections. So this raises the question whether Civic Platform might ultimately benefit from this diplomatic disaster.

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March 10, 2017

Will the French Socialists split?

Is this the end of the French Socialist party as we know it? Le Figaro got ahold of a leaked declaration circulating among the reformers inside the Socialist party, on why they support Emmanuel Macron. Edited by Gilles Savary and Christophe Caresche, both of whom have already joined Macron's movement En Marche!, this statement was discussed among about 40 MPs of the right-wing of the Socialist party. In the text the writers accuse Benoît Hamon of opposing the outgoing majority and thus failing to present a credible strategy for the elections in May. They see backing Macron as their best strategy to avoid having to chose between the right and the far-right, between François Fillon and Marine Le Pen. Against a fractured left, Macron mobilises voters and marks a political renewal. They end the statement calling for a new European and reformist alliance around Macron.

After the leak went public, there was a strong denial from all sides. Caresche told Le Figaro that this is a private conversation and that there will be no statement today. Same for Savary. Some of those who received the email with the statement referring to it as the result of previous discussions were contacted, and denied that they will sign such a declaration.

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March 10, 2017

How to think about Russia

Karl Heinz Kamp argues that Russia’s annexation of Crimea is ultimately damaging its own interests, and that the country will almost certainly change course in the post-Putin era. He said EU sanctions did hurt, even though they were moderate. So did Russia’s removal from the G8. None of it is vital in itself, but it has dented Russia’s self-image as a global player. The consequences of the diplomacy of the last few years is that neighbouring countries, like Poland, are now reducing their energy dependence on Russia through their support of fracking and alternative sources of energy imports. Even the German federation of industry, a traditional ally to Russia, is not supporting Putin.

The mere presence of a negative cost-benefit analysis does not mean much, since Vladimir Putin calculates costs and benefits in a different way than most of us would do, which means that he is not following what we would see as Russia’s best interest. But this also means that things will change once he’s gone. This is Kamp's rather upbeat conclusion:

“Putin’s successor—whenever he comes to power—may discover that Russia desperately needs modernisation and that to modernise, it desperately needs the West. That is why it was right for EU and NATO not to burn all bridges. Putin, however, has lost all trust among his Western neighbours—if there ever was any to start with.”

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March 10, 2017

On economic forecasting

We liked Robert Samuelson’s put-down on economic forecasting. He refers to a recent study by the Fed and the central bank of Australia, which finds a monumental failure of economic forecasting. And the gap between forecasts and reality is widening. Samuelson notes that a persistent bias in economic forecasts means that policy makers are relying on bad data, and making bad choices as a result: 

“Government officials — not only at the Federal Reserve but also in Congress and the White House — are condemned to make mistakes. Their vision of the future is blurred; therefore, their policies may blunder. The same is true of the private sector: Consumers and companies, misreading the future, may act to bring the economy down. They may borrow too much or spend too little.”

The study compared a whole range of forecasts from 1996 until 2015. There are no forecasters who are consistently better than others. Crowd behaviour dominates. And he notes that all the big shocks were unforeseen, like the great financial crisis, the great recession, the fall in long-term interest rates, and the rapid decline in unemployment which seems inconsistent with the other variables.

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  • June 27, 2018
  • The ramifications of the Macedonia name deal
  • Could no-deal Brexit preparations become a self-fulfilling prophecy?
  • Why it is so difficult to agree a post-Brexit defence and security co-operation
  • May 29, 2018
  • Abandon all hope ye who enter the eurozone debate
  • Italian political fallout for Macron
  • On the future of EU/Nato relations post-Brexit
  • May 01, 2018
  • What Germany wants to reform, and what not
  • How effective is Macron?
  • April 03, 2018
  • Is the time for Brexit revocation running out?
  • March 06, 2018
  • Will Italy exit the eurozone? Of course not. But it's the wrong question.
  • Slovakia's political crisis
  • Are we heading for a trade war?
  • February 09, 2018
  • Is the Labour Party shifting towards a customs union?
  • January 15, 2018
  • Is the section on Europe for real?
  • Can Drahos upset Zeman?
  • December 21, 2017
  • Catalonia votes
  • A deputy prime minister resigns
  • Will Gibraltar result in another Irish fudge?
  • Blood, sweat and tears
  • November 28, 2017
  • On the Northern Ireland question
  • Kammenos off the hook, for now
  • November 06, 2017
  • Pressures on EU rise over Catalonia
  • German pre-coalition talks hit glitch
  • If you thought UK politics couldn‘t get worse...
  • October 16, 2017
  • What‘s the deep meaning of the elections in Lower Saxony?
  • Can Brexit be revoked?
  • Macron's grand narrative
  • September 26, 2017
  • Brexit is a binary choice between EEA or third-country status
  • September 08, 2017
  • SPD keeps sliding
  • Macron in Athens: symbolism over substance
  • The main Brexit battle lines run through the Tory party
  • 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 11, 2017
  • The political fallout of the G20 in Germany
  • June 26, 2017
  • Brexit - the central case and the tail-risk
  • The German fear of Macron
  • June 12, 2017
  • Not strong perhaps, but stable
  • Catalan independence, a mental state
  • May 31, 2017
  • Getting real in the debate on the euro's future
  • Russia's growing influence in Italy
  • May 19, 2017
  • The EU is shocked, shocked by the UK’s stance on Brexit
  • Macron and the press
  • Towards a Buy European act?
  • May 08, 2017
  • A message of hope
  • Barnier's not so easily agreed Brexit principles
  • The rebirth of the paranoid conspiracy theory
  • April 27, 2017
  • Courageous or reckless?
  • Softer, softer, soft
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • April 10, 2017
  • Nein, nein, nein, und nein
  • Sounds like a bad Brexit story, but ain’t
  • On how not to exit the euro
  • April 03, 2017
  • On the meaning of the Navalny protests
  • On the surreal nature of Italy’s political debate
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • March 20, 2017
  • Does the language of communiques matter?
  • Spain snap election rumblings
  • Will there be a Brexit deal?
  • March 17, 2017
  • Le Pen fishes for Sarkozy voters
  • Catalonia is nothing like Scotland... Oh, wait!
  • Sinn’s Europe
  • March 15, 2017
  • On the nuances of Spain's position on Scotland
  • On how not to deal with Turkey
  • 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 10, 2017
  • Return of De Gaulle’s empty chair
  • Will the French Socialists split?
  • How to think about Russia
  • On economic forecasting