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May 16, 2017

After the debacle

We thought the FAZ nailed it this morning when it said that the question is not why the SPD crashed within a period of a few weeks, but why it rose in the first place. The answer they gave is lack of programmatic content - and there is little sign of change. The party is obviously unprepared for the election. It should perhaps not come as a surprise. Martin Schulz claimed after the latest defeat that he was a street fighter - but we all know this is not true. Schulz is a very typical representatives of politics the way it is conducted in Brussels - behind the scenes, consensus-driven, non-ideological. The contrast to Emmanuel Macron could not be starker. Schulz holds many strong views, but he is not ideas-driven or policy-driven. And we are not even sure whether he has a gut instinct of what the German voters truly want. He has not met many of them in his political life.

Schulz yesterday came out with three announcements: the first is that the three themes of his election campaign are going to be social justice (no SPD campaign can be without it), innovation, and Europe. But there is no substance behind any of that - and no concrete decisions. Even yesterday, after the defeat in Northrhein Westfalia, the SPD executive committee was not able to produce any concrete content. We like the idea of innovation, something Germany is badly lacking, but then Schulz mentions more investment in infrastructure and education. This is telling us that there is no strategic concept behind the slogan.  

The second pronouncement is that he will run a campaign directed personally against Angela Merkel. As FAZ points out, senior colleagues advised against that. Merkel is not only popular: the areas of differences are too small for such a campaign to bear fruit. Merkel's embrace of Macron and his agenda tells us that there won’t be a tactical alliance of Macron and Schulz against Merkel. Macron is too smart to align himself with a party that is likely to lose the next elections. And Merkel said that the CDU, too, will be emphasising innovation. And she added, for good measure, that social justice was important to her, too.

The third pronouncement is that he will accept a grand coalition under his own leadership. This is important in one respect. By not excluding another grand coalition, the SPD is now clearly moving away from the one other option - that is now receding in probability - a red, red, green coalition. Events can still intrude, but such a dramatic shift in coalition preference would require, at the outset, at least some joint programmatic work. This has not happened, and now it won’t happen. The astonishing electoral weakness of the Greens is now becoming another factor. 

The best strategy for Schulz, in our view, would be to put some deep thinking into innovation, and to expose those parts in the Macron agenda that Wolfgang Schäuble disagrees with most vehemently. He should exploit the division within the CDU. And he should promise maximal use of Germany's fiscal capacity for investments, as allowed under the constitutional balanced-budget rule.

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May 16, 2017

What is Ireland's role in the EU27?

Now that Brexit is going to happen, Ireland faces three different challenges. The negotiations themselves, preparing for the impact of Brexit, and defining Ireland’s future role in the EU without the UK. The status of Northern Ireland has to be discussed alongside with the UK’s wish to exit the customs union. The Basel transborder region, the Norwegian-Swedish border, and the Hong Kong-China border prior to the former colony's return to Chinese sovereignty might offer helpful parallels, according to Brigid Laffan in the Irish Times. The second is to prepare private and public companies for the outcome of the Brexit talks. Laffan argues that, if no deal can be reached, Ireland needs to secure financial means from the EU to cushion the economic impact. These are immediate challenges. But the more important question on the longer horizon is the role of Ireland in the EU27.

This is not only about whether they will continue to speak English in Brussels after the UK has withdrawn from EU institutions. Ireland may start to find new allies among northern countries. Macron’s presidency may challenge Ireland's policy mix, and the low corporate tax regime may have to be sacrificed. The Apple ruling will be particularly important in this respect. Brexit may also require Ireland to give up its military neutrality, so Laffan. These will all be ways in which Brexit will change the relationship of Ireland to the EU. We wonder whether the EU will still be so popular in Ireland then as it is now.

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May 16, 2017

On the EU’s Brexit negotiations

Andrew Duff offers a number of insights about the possible dangers ahead in the Brexit negotiations. One is, of course, a resurgent British nationalism. But there is also the possibility that the EU is overplaying its already strong hand:

“An inherent contradiction begins to emerge in the approach of the EU 27: on the one hand they insist that the UK post-Brexit will be treated like a third country, while on the other they seem to believe they can impose conditions on the UK similar to those imposed on Iceland, Norway or Switzerland. Those three countries, however, have signed agreements with the EU that were conceived as pre-accession instruments; they agree to abide by EU rules even though they have no say in making them; they pay into the EU budget; they have to accept EU immigrants; and they respect the ultimate jurisdiction of the European Court of Justice (ECJ). As things stand, none of those conditions, either individually or severally, are acceptable to the United Kingdom. As the Norwegians are the first to aver, Britain is not Norway.”

He also notes that the EU is also becoming "increasingly bossy" on citizens’ rights, by insisting on life-long protection through the Court of Justice of the EU. And by piling on more money on top of what he considers a reasonable sum of €60bn, rather than simply insisting on the UK staying within the multi-annual framework until its end in 2020 (an option we would also prefer because it solves the financial and diplomatic problem in one go).

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