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May 26, 2017

“The Germans are very, very bad”

This is diplomacy from hell. The dinner in Brussels last night was even worse than the public humiliation Donald Trump dished out to the other Nato leaders, who were lined up like schoolchildren and castigated in public for not putting 2% of their GDP into defence. Over dinner it got worse. This is a Trump quotation from the account by Spiegel

“The Germans are very, very bad. Just look at the millions of cars they are selling in the US. Terrible. We will stop this.”

Süddeutsche corrobates that conversation, and adds that the only small upshot from yesterday’s talks between Trump and Donald Tusk and Jean-Claude Juncker is the agreement on a working group to identify common ground between the US and the EU. The goal is to make the tiniest of progress, the news report says. There is no way that TTIP can be revived. The differences are simply too big, Juncker is quoted as saying. 

Yesterday’s events are a reminder, if any was needed, that Trump is serious about his trade agenda. He won’t implement every single threat he issued during the campaign, but his determination to reduce Germany’s bilateral trade surplus with the US seems unbroken. We note that the US Department of Commerce will finalise its report on bilateral trade imbalances in June, at which point we would expect to see retaliatory action on trade - possibly anti-dumping duties on isolated German products.

The FT quotes Trump as saying, over dinner, that the EU was a vehicle for Germany. The FT focuses mainly on his refusal to endorse Article 5 of the Nato treaty. The unveiling of a 9/11 memorial in front of Nato headquarters would have naturally invited such an endorsement, given that 9/11 was the only event in Nato’s history resulting in Article 5 being triggered.

The diplomatic nightmare is set to continue today and tomorrow, when G7 leaders meet in Taormina, Sicily. The sherpas for these meetings have been trying hard, and failing, to assemble an agenda on which the US and the other members can agree. There are unsurmountable differences over climate change, and Trumps’ rhetoric on Germany’s trade surplus suggests that the summit will not produce a joint commitment towards global free trade either. FAZ reports that the German government has set itself as the goal for this year’s G7 meeting not to fall behind the decisions made last year. The article also noted that four of seven leaders, including the host Paolo Gentiloni, are attending for the first time. Of the six separate meetings planned, the third one - on the global economy - is likely to be the most important. The main issues are free trade, anti-dumping procedures, protection mechanisms, and climate change. There is zero chance that Trump will change his position on climate change. The Germans are trying to cajole Trump into believing that climate change policies are good for jobs - pointing to a recent OECD study on the subject. 

The Times reports further on the sherpas' desperate attempt to find any common ground on these issues. Early drafts had already been watered down amid US pressure. The main text is likely to be cut to a mere six pages, down from last year’s 32. Most of the annexes were also scrapped.

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May 26, 2017

Is the AfD imploding?

FAZ has a page-long article written by the Allensbach polling organisation, which manages to give us a comprehensive answer about the future of the AfD. The short answer is that the party is in acute danger of failing to hit the 5% threshold for parliamentary representation, unless the refugee crisis flares up again. 

The long answer is based on a detail survey of how public perceptions towards the AfD have changed over the years. The members of the AfD are very different from the protest voters in other EU member states. There is a big gap between the self-perception of its members and how they are perceived outside. They are not the moral majority they think they are, but a rather isolated group. The biggest change in perceptions of the party relates to its economic policies. It was founded largely as an anti-euro party, and has morphed into a predominantly anti-immigration party. The party is no longer viewed as pro-business, as it used to be the case. When asked to plot parties on a political scale from 0 on the left to 100 on the right, the AfD scored 82, close to the outer right edge. In 2015, that number was 73. The party is viewed as increasingly radical. 

Allensbach then asks whether such a radical party can succeed at the September elections. It says the AfD is currently polling above 5%, but it is far from clear that it will be able to keep this up. The party’s main theme - unease over refugees - remains a latent issue in German politics but has lost political significance. The election campaign will be dominated by other issues, and experience has shown that the population tends to rally behind the government parties in the last months of the elections. Among AfD supporters there are a number of protest voters, who can change their mind if they believe that their protest has been heard. 20% of current AfD voters are considered to fall into that category.

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