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June 13, 2017

A back channel for Brexit

We have been optimistic on the UK, in comparison with most commentators. We never really believed that the UK would voluntarily leave the EU without an Article 50 deal. And we also think that Theresa May will remain as PM during the Brexit negotiations and, who knows, possibly beyond. Events yesterday seem to confirm our two central views on the UK. Her meeting with the backbenchers of her party went well, and the talk about a leadership challenge has disappeared - for now. And, as the Daily Telegraph reports this morning, senior cabinet ministers have opened backchannels with Labour MPs to secure cross-party backing for a Brexit agreement. 

William (now Lord) Hague, the former Tory leader, yesterday outlined what such a deal could look like - it is very close to our own view of a reasonable Brexit trajectory. He proposes a transitional period with continued membership in the single market and the customs union, lasting two years. (We think it could, and should, last longer). And he proposes an immigration system under which the UK would grant an obligatory work permit to EU citizens - but without the right to social benefits. The Guardian reports that May is also considering revising her immigration targets, but excluding foreign students, and dropping the numerical ceiling of "tens of thousands".

We agree with Michel Barnier that the distinction between hard and soft Brexit is essentially meaningless - in fact it is sign of a series of misunderstandings of how the process works. There are three separate, though interlocking, issues: the Article 50 deal; the nature and length of the transitional period; and the final Free Trade Agreement. Single adjectives do not do justice to the large number of possible combinations.

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June 13, 2017

On Russia’s geopolitical interests

We recently commented on an article by Kadri Liik who argued that Russia’s geostrategic interests are widely misunderstood in the West. He argued that Russia has no interest in destabilising the EU, but was somewhat clumsily trying to assert its role as a regional power, and demanded non-interference in its own backyard. Today we noted a series of comments from Carnegie Russia about the Shanghai Cooperation Organisation, founded by Russia and China in 2001 to assert their respective regional influence. The organisation has now been joined by India and Pakistan, its most important expansion to date. Dmitry Trenin, who heads Carnegie’s Moscow bureau, argues that the enlargement makes sense from a Russian perspective, as Russia seeks to position itself as the central power of a greater Eurasia.

Russia’s strategic goal is to entangle China into a web of specific agreements to prevent it from acting unilaterally. There is a danger that this strategy may backfire. Alexander Gabuev argues that China is much more sceptical than Russia about the enlargement of the SCO. China’s idea was to use the SCO as a multilateral platform to serve Chinese interests. The SCO is a mini-EU including a free-trade area and a development bank. There are now a series of rival initiatives, like the Asian Infrastructure Investment Bank, as a result of which the SCO has become less important for China.

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