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May 19, 2017

The EU is shocked, shocked by the UK’s stance on Brexit

We have argued for some time that the main risk to the entire Brexit process is a source of cognitive dissonance on the part of the EU, which has a long history of misjudging UK politics. The Guardian has a wonderful story about a memo detailing a Commission meeting that includes an exchange between Michel Barnier and Jean-Claude Juncker. Barnier said he detected a growing readiness by the UK to pull out without a deal - something they both seem to have discounted before. And Barnier makes another important point: the reason why the Brexit bill has become such a serious issue is related to internal EU politics: Germany and France are steadfastly refusing to put any new money into the EU’s budget, while the net recipient member states will not accept lower disbursements. This is why the Brexit bill has been ratcheted up.

We presume, but don't know for sure, that this conversation took place after Juncker’s infamous No.10 dinner. Juncker told Barnier that May was softening up the British public for a Brexit without agreement. The minutes of the meeting also show that Barnier has given up on the timetable. There will be no deal by the end of the year, as he previously envisaged. 

The most important issue for Juncker and Barnier is the sequencing. The EU insists on an Art. 50 exit deal first, while the UK wants this commingled with trade negotiations. 

“He [Juncker] noted that on the UK side, the government was trying to gain credence for the idea that if agreement were not reached on all the negotiating points, including those in the second phase, there would be no overall agreement on its orderly withdrawal,”

The problem for the EU is not so much a point of principle, but the sheer workload of the Art 50 process itself. They don’t believe that it is possible to spend much time on a detailed trade negotiation. The meeting then discussed 

“the need to integrate in the parameters for the future negotiations the growing support in British public opinion for the idea of a disorderly exit of the UK from the union”.

We find this story very revealing. We recall that people laughed at Theresa May’s Brexit-means-Brexit pledge, only to find out later that it was an accurate, albeit incomplete, pledge. We feel the same goes for the "better-no-deal-than-a-bad-deal" pledge. They really mean it, and the EU is right to factor this into their own negotiating stance. There is a history of misjudgement: the EU did not see the Brexit referendum coming. It did not factor in any probability of a Leave vote. After the referendum, many bought into the "Bregret" hopes, only to find out that British politics is not going to make that happen. And now they are surprised that the UK is willing to pull the plug on an Article 50 agreement. It is not hard to see a pattern here.

The EU is now finding out that the Brexit negotiations are going to be different from the talks with Greece in 2015. The European Council then took the view, correctly as it turned out, that Alexis Tsipras would not have the stamina to pull the plug. The UK government is better prepared for Brexit partly because it is not doing much else these days, while the EU has a few other issues to deal with, and because it has concluded that a credible no-deal threat is the only tool it has to equalise the negotiating position.

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May 19, 2017

Macron and the press

After Emmanuel Macron delivered his renewal of the political system, now comes a change in the government’s relationship with the press. After the omnipresence of Nicolas Sarkozy and François Hollande, Macron is much more reticent. Outrage followed a declaration by the Élysée, which now wants to choose those journalists who are to accompany Macron. For his trip to Mali on Friday, his team wants to include only those with competences in the subject rather than political correspondents. 

This move provoked a protest from several newspapers and news agencies, who insist that the choice is that of the editorial team not the government. In their address to the president they warn that this new procedure would bend the boundaries between communication and journalism, and is thus bad news for democracy. The Élysée defended the decision by saying that these are recommendations for journalists with competences in the respective domains and that this procedure should also allow the president to interact with citizens rather than being hold back by a flood of cameras. 

The latest Elabe poll for Les Échos shows that while his personal popularity is only 45%, low even compared to François Hollande when he became president, Macron could well get his majority in parliament in three weeks. La Republique En Marche (LREM) got 27% of the voters' intentions nationwide, compared with 20% for the right and the far right, and far ahead of Jean Luc Melenchon’s party La France insoumise (14 %) and the Socialists (11 %). Using the results from the presidential elections in 2012 and 2017 and the regional elections in 2015 and the social profile in each region, Elabe calculated that LREM could well end up with 280-300 seats, while the Republicans together and the UDI centrists could get 150-170. The president creates his majority, so it seems. What is interesting in this poll is that many of those who said they were satisfied with Macron as president preferred to vote differently for the legislative elections.

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May 19, 2017

Towards a Buy European act?

Is the European Commission rethinking its view on globalisation? Margrethe Vestager indicated in an interview with several European newspapers that the EU executive was open to rethinking its competition rules, by considering a "Buy European" policy, as promoted by Emmanuel Macron during his campaign. A  "Buy European Act" that would make it harder for non-European firms to bid for public contracts would be part of a more muscular response from Europe on foreign trade and investment.

Vestager said she had not made up her mind yet, but made it clear that the idea could not be discarded without discussion, according to the Guardian. This could be a bluff, a signal of openness that leads to nothing in the end. But the populist backlash against globalisation is getting the Commission to look into some of the issues.

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