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May 08, 2017

A message of hope

This was the day when the electorate in France voted for a president on a mission to reform the eurozone, and when the tectonic plates in German politics shifted towards the party most likely to resist it. It is game-on in the discussion about the future of the eurozone, possibly the single most important political moment in the history of the nearly twenty-year-old monetary union.

Emmanuel Macron was elected with 66.06% over 33.94% for Marine Le Pen, according to the latest figures. With Macron, the French chose the anti-Trump: a young, pro-European reformer, who never held elected office before. Macron proved the impossible, and this in itself is inspiring. The message is one of hope and optimism, a Barack Obama moment for France. 

The French also voted against Marine Le Pen and her populism, last minute attacks did not dent his victory. He did better than the polls predicted. Macron even won in six out of 14 municipalities with a mayor from the Front National, writes LeLab.  Macron came first in 26044 communes, Le Pen in 9194, according to Le Monde.

What about abstentions? Jean Luc Mélenchon said last night that Le Pen de facto came in third, after Macron and those who chose the ni-ni, neither-nor. Looking at the numbers, a record high 11m who voted for Le Pen. There were 4.2m who went and voted blank, another record. Abstention was strong too with 26%. Mélenchon now counts on winning a majority in the legislative elections. Mélenchon is not the only opponent of Macron’s new movement, there is François Baroin with the Republicans, and of course the Front National. 

Looking at the profile of the voters according to the Ipsos internet poll of over 4800 people between May 4 and 6, there are a couple of observations worth making: 

  • a majority of Mélenchon voters (52%) did vote for Macron in the end rather than abstain (17%); Among those who voted for Fillon in the first round, there were still 20% who chose Le Pen; Looking at the age profile, Macron received most votes from those 60 or older (over 70%) and the least from those aged 35-49 (57%);
  • those who considered themselves to find it very difficult to live with their income voted for Le Pen (69%), those who find it difficult or easy Macron (61% and 79% respectively);
  • Macron was the clear favourite in big cities (72%) and less so in rural regions (59%);
  • the poll also shows that a majority (61%) does not want Macron to win a majority in the legislative elections;
  • among the reasons of why they voted for Macron, 41% said to prevent Le Pen, a third voted for the political renewal that he represents, 16% for his programme and 8% for his personality;
  • those who abstain, 31% reject both candidates, 28% don’t find themselves in their ideas and 16% consider their vote does not change a the fact that Macron was winning. 

So this suggests that Macron has yet to convince with his project or with his persona. But this will be precisely the challenge he faces for the legislative elections. Alexis Brézet in Le Figaro writes that he will hardly succeed to get right candidates for his movement, as there is a real chance of winning for the Republicans. And while there is overlap in the programme, they are also attached to their social and cultural customs. To find a balance between reform and conservation will be the big challenge for Macron.

What next? Emmanuel Macron will take over as president May 14 and appoint a prime minister. Legislative elections will be on June 11 and 18, and his movement, which will now turn into a political party with the name La République en marche! will have to win 289 out of 577 seats in parliament to have a majority.  There is not much time to convince candidates and voters ahead of the next elections. A co-habitation is well in the cards.

The first foreign leader to call him and congratulate was Angela Merkel. Wolfgang Münchau noted in his FT column that Emmanuel Macron is the first leader to his knowledge elected with an explicit mandate to fix the eurozone. While there is no guarantee that he will succeed - the process to reform the eurozone away from a muddling-through monetary union into a robust unified economy has to start right here - with the election of a leader who prioritises the issue. This is going to be a tall order - and it is only all to see to construct scenario in which he might fail. The contours of the first such scenario became visible yesterday during the state election in Schleswig-Holstein (more on this story below), in which the SPD lost the premiership, a setback for Martin Schulz, the German politician most sympathetic to the Macron agenda. Germany has explicitly rejected each of Macron eurozone reform proposals - the common fiscal space, and the common European finance minister, or at the least the kind that Macron has in mind. The only compromise that is likely to work will involve a combination of more fiscal discipline at national level - starting with France itself - in exchange for a common fiscal policy at eurozone level.

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May 08, 2017

Barnier's not so easily agreed Brexit principles

Michel Barnier gave an important speech on Friday laying out the European Commission's thinking on the issue of citizens' rights in the Brexit negotiations. Together with the financial settlement and Ireland, the rights of EU citizens in the UK and conversely is one of the more important points that need to be clarified. The position outlined by Barnier seems sensible and principled. However, by suggesting that the ECJ should guarantee lifetime protection of EU citizens' rights in the UK, Barnier's negotiating position couldn't be farther removed from that of Theresa May. The EU's position is also firm, in that it will not negotiate the future relation with the UK until it is reassured of the proper and humane treatment of all citizens.

Barnier started by stressing that free movement of people is one of the four indivisible freedoms of the EU's single market, and lamenting that warnings about this indivisibility were ignored during the Brexit referendum campaign. He then said that he expected it to be easy to agree on general principles to protect the rights of citizens, but that making them legally precise will be more challenging. Unfortunately, we don't think that the British government will so easily agree to Barnier's principles. These are:

  1. preserving the same level of protection currently afforded under EU law, so that Brexit does not change people's daily lives; 
  2. equal treatment between EU and UK nationals in the UK, and in the EU;
  3. clear legal guarantees that citizens' rights will be enforced, with the ECJ keeping jurisdiction over the rights of EU citizens in the UK.

In particular, existing legal protection should be extended for the lifetime of the affected citizens, be they active or inactive, current or past residents, or frontier workers. Barnier also suggested the cut-off date should be the date when the UK leaves the EU. Barnier also said inequivocally that all those legally residing in the UK should be allowed to stay, and not required to provide additional documentation. 

But there are other rights at stake: the right of a foreign worker to draw unemployment insurance from their host country temporarily even if they return to their home country. Also the right to keep social security coverage while unemployed, or to have social security contributions in various countries aggregated and recognised in a different country. Or the right to export a retirement pension, or for foreign workers to enjoy the same health care as domestic nationals, or the rights of children of foreign workers to study under the same conditions as nationals, whether it is in 2020 or 2030.

Barnier ended by stressing that the future relationship must wait until the rights of current migrants have been sorted out. This, he said, is not any sort of punishment, but a consequence of the UK opting for Brexit. And as an example of the kinds of issues that would be subsumed in the "future relationship", Barnier cited that of research cooperation, given the fact that UK-based researchers undertaking a short-term visit in the EU or conversely would be third-country nationals after 2020. Universities need clarity on this and other issues, but Barnier warned that he didn't expect clarity to be achieved in the short term.

Barnier's easy to agree principles are in fact hard to swallow for the British government. It is because Theresa may wants to extricate the UK from the jurisdiction of the ECJ that she envisages the UK outside the Customs Union. There is no way she will accept ECJ jurisdiction over citizens' rights in the UK. Not to speak of extending the right to stay to those who cannot document their residency.

Barnier is right, however, that there is a plethora of rights that EU citizens in the UK and UK citizens in the EU have acquired, and that these involve various parts of the public administration as well as mutual legal recognition.

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May 08, 2017

The rebirth of the paranoid conspiracy theory

Conspiracy theories used to be the realm of the far left and the far right. Those in the US and the UK who have been on the losing sides of the big political debates of last year, should be careful not to fall into the same trap. We noted an angry article in the Guardian by Carole Cadwalladr, claiming that British democracy was hijacked by a combination of big data and billionaires. New techniques of political campaigning clearly played a role, and the story of the force behind organisations like Cambridge Analytica is indeed fascinating. But we disagree with the inference.

Big data is not what swung it for Brexit. Nor did Russian hacking made Donald Trump president. He is president because his opponent led a terrible campaign. And Brexit happened because the Remainers in the UK never knew how to sell their message - in stark contrast to what Emmanuel Macron just achieved in France. Brexit is the culmination of a political battle that started with the Maastricht Treaty and the pound/s ejection from the ERM, and the fate was sealed when the Blair government decided against the adoption of the euro.

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