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April 23, 2017

The demise of the AfD has accelerated dramatically

It remains the consensus among German political commentators that the AfD will beat the 5% threshold necessary for representation in the Bundestag. But this is becoming less certain, given the deep division of the party that came out into the open over the weekend. We already reported on the decision by Frauke Petry, the party leader, not to enter the forthcoming election campaign as the top candidate - Spitzenkandidat as it is known. At the party congress over the weekend Petry lost five battles, most notably a suggestion that the party should have no candidates, and that it should position itself to be able to enter into a coalition in 2021. The party not only rejected her proposals: they voted not even to put them up for discussion. By the end of the Congress she looked utterly devastated and isolated. 

The congress instead decided to nominate two other politicians, Alexander Gauland and Alice Weidel, as their two joint candidates. But neither is a match to Petry. Petry is hardly a centrist herself, but the party is now moving further to the right and is now led by candidates who are effectively condoning the membership of neo-Nazis within the party, which has been one of the sources of the conflict. 

Petry is still nominally the party leader. Some people expected her to resign over the weekend. We think her game plan is let her opponents run into a wall and pick up the rubble afterwards. But it is not clear to us that the party will survive such a clash. 

Jasper von Altenbockum made an important point in his commentary about the demise of this party. German conservatives had great hopes that the AfD would ultimately emerge as Germany’s conservative/liberal party, a bit like the Tories in the UK, or the Republicans in the US. He notes that the economic section of the manifesto contains virtually no liberal policies. The AfD is instead following in the footsteps of other populists parties in Europe, with its emphasis on anti-establishment politics and a criticism of the excesses of liberal society. The party has reduced itself to an anti-immigration movement. Petry tried to open a pathway to conservative-liberal forces of German society, but this path is now blocked.

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April 23, 2017

On how France will need to confront Germany

In his FT column - written before the French election results became known - Wolfgang Munchau focuses on what he considers the single most important task confronting the next French president: to find an economic and institutional answer to the eurozone’s internal imbalances, and in particular Germany’s current surplus. This is an issue of common interest between France and the US, which may be on verge of classifying Germany as a currency manipulator. Munchau argues the problem is not trade: Germany does not unfairly subsidise its exporters, nor does it manipulate its exchange rate. The problem is a structural savings surplus exacerbated by bad economic policies. The surplus, which was 8.6% in 2016, will come down to under 8% this year. But no fundamental rebalancing is likely to occur in the absence of policy change - which will have to involve changes in fiscal policy and the opening up of German services industries to foreign competition. Munchau concludes that the new French president would set himself or herself up for failure if they failed to addressed this issue. And the smart strategy for Donald Trump is not to go for unilateral action against Germany, but to align himself with France on the issue.

Our sense from the weekend meetings in Washington is that the US has not shifted its position on the bilateral trade deficit with Germany, which is currently under investigation by the US Department of Commerce. A report, due by the end of June, will look at the impact of policy on the bilateral trade balance, and make recommendations to the president. We don’t expect Germany to be labelled a currency manipulator, but we think it is plausible that the US might levy punitive tariffs on selected goods.

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  • Has Macron given up on eurozone reform?
  • April 09, 2018
  • Orbán gets his supermajority
  • Riding the wave of resistance
  • The EU’s self-defeating strategy
  • March 15, 2018
  • Miro Cerar resigns over railway
  • Taking on trade unions over the rail reform
  • How strong is the EU's solidarity with the UK really?
  • February 19, 2018
  • SPD divided over grand coalition
  • Wauquiez - the French Trump?
  • Why Brexit will be extremely hard to reverse
  • January 26, 2018
  • Will the prison strike turn the fate for Macron?
  • Destroying the constitution in order to save it
  • Will populism wane with the global recovery?
  • Issing on the coalition agreement
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 04, 2017
  • Can Brexit still be stopped?
  • Could Poland open up the Posted Workers Directive again?
  • Has the Bank of England solved the productivity puzzle?
  • 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
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • October 06, 2017
  • Catalan parliament session suspended
  • Can Jamaica fail? (not the country)
  • Portugal to give tax relief to the lower middle class
  • Stagnant wages and Central European populism
  • September 20, 2017
  • AfD on the rise
  • Is this the end of the FN as we know it?
  • Refugees overflowing Lesvos lead to call for action
  • September 05, 2017
  • On the Turkish question
  • Macron's unemployment insurance reform, next?
  • Labour to vote against the Repeal Bill
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 25, 2017
  • The impact of Duda's veto
  • How to undo Brexit
  • Front National: Frexit or not?
  • July 12, 2017
  • And now for the real Brexit talks
  • June 30, 2017
  • Recurring Brexit myths
  • On EU citizen rights
  • On Brexodus
  • June 19, 2017
  • SPD to focus on inequality
  • On radical uncertainty
  • June 08, 2017
  • Day 0
  • Macron and his overly enthusiastic minions
  • May 30, 2017
  • Beer tent politics - Merkel edition
  • Brexit arrives in UK elections
  • Rajoy clears budget hurdle
  • 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 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • May 08, 2017
  • A message of hope
  • Barnier's not so easily agreed Brexit principles
  • The rebirth of the paranoid conspiracy theory
  • May 02, 2017
  • An accident waiting to happen
  • Matteo Renzi wins PD primaries
  • So much for the Schulz effect
  • April 28, 2017
  • On the coming Tory landslide
  • How Grillo sees the markets
  • April 26, 2017
  • The realities of Brexit - residency rights edition
  • How Franco-German economic imbalances manifest
  • Pasok - the now classic Socialist dilemma
  • April 25, 2017
  • Germans conflicted about Macron
  • A choice over Europe
  • Who can stop the Tories?