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July 06, 2017

On Merkel’s imperial overreach

There is a lot of optimism among commentators about Europe at the moment, based on three factors: a cyclical economic upswing, uncritical adulation for Emmanuel Macron, and hatred for Donald Trump. As so often, we note that the news coverage is driven largely by the twin sisters of wishful thinking and confirmation bias - the fake-news equivalents in the realm of commentary.

There is a lot of commentary goading on Angela Merkel to seek a showdown with Trump in order to save the planet and the liberal establishment's version of globalisation. We share some of this sentiment in relation to its goals, notably on climate policy, but we think that the attempt to isolate Trump diplomatically is more likely to backfire than to succeed. Even Judy Dempsey, who supports a more assertive European diplomatic stance at the G20, acknowledges that Russia and Australia may side with Trump at the G20 summit on the Paris accord. There are also serious differences of views on how to co-ordinate counter-terrorism at the G20 level, and on migration policies. 

The New York Times reports that efforts to isolate Trump are faltering. That does not surprise us. How can it be any different? How can the EU claim global leadership with its persistent beggar-thy-neighbour current account surpluses, its drain on global resources resulting from its lack of economic crisis resolution, and its members' refusal to adhere to their Nato spending commitments? Whatever other leaders may think of Trump, for many of them the US is and remains a more strategic partner in the long run. We agree that the EU should aspire to a global leadership role, but that would require a sharply different set of attitudes and policies as a starting point.

The New York Times also notes that Germany is giving up on hopes of an everyone-against-Trump G20 summit outcome. It says that Saudi Arabia is unlikely to support the majority in the G20 against Trump, while Russia, Turkey, and Indonesia, are sending mixed signals.

The US does, however, not appear to be seeking to destroy the Paris agreement, beyond pulling out itself. The article explains that an original draft of the "G20 action plan on climate and energy for growth" contains a passage in which the G20 supports the goals, while the US opposition is listed in a footnote. And then there is the communiqué, where the Trump administration is also resisting to be relegated to footnote status. The worst outcome for Merkel would be a failure to reach a common position, which would result in her having to summarise each country’s position separately.

We should also note the comments by the Turkish president, Recep Tayyip Erdogan, who said Germany’s decision not to let him speak at a political rally in Germany amounted to political suicide for Germany. He, too, is unlikely to rally behind Merkel.

We like the comment by Jeremy Shapiro who noted that there are a number of accidents waiting to happen. The fact that Trump sees no strategic purpose in his G20 participation does not mean that there will be no strategic consequences, he argues. If he pushes for LNG exports to Poland, this could drive a wedge between Poland and Germany, but would also annoy Russia, as it messes with the economic logic behind the Nordstream 2 gas pipeline project. And Trump could get mad about the many protesters he may encounter during his trip to Europe. 

As world leaders descend on Hamburg, there is a quite a bit of diplomatic activity going on in the background. Germany’s and China’s commitment to a strategic partnership is mostly based on hot air - and a few commercial contracts. More significant is the EU/Japan trade agreement that was formally concluded yesterday, in time for the G20 summit. The agreement turns the EU and Japan into a giant free trade area affecting 99% of goods, including cars. The EU import levy of 10% is to be phased out over seven years. But, unlike the Ceta agreement, this Japan trade deal has no provisions for investor protection yet. This remains on the agenda, though. FAZ reports that the Commission still considers it an open question whether this is an EU-level agreement, or a mixed agreement. 

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July 06, 2017

When the opposition opposes to oppose

What happened to the opposition in France? Republicans might talk like they are in opposition, but the fact that 75 out of the 99 present at the Assembly voted for Édouard Philippe shows the opposite. One of the MPs said that this was in fact not planned but a result of the grassroots no longer supporting plain opposition. The opposition opposes to oppose, concludes Cécile Cornudet. Opposing who and when? Is one to remain constructive as long as public opinion suggests it? Or to spear ahead and become the first opponent? This is what La France Insoumise and the Front National are doing. Is the opposition defined by numbers (Republicans) or the level of noise (France Insoumise)? Emmanuel Macron might win support every day, but can he govern well without opposition?

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July 06, 2017

Everybody wants the medicines agency

One of the least reported operative conclusions of the recent European Council was to spell out a timetable and a procedure to decide on the relocation of the two EU agencies located in London: the European Banking Authority and the European Medicines Agency. Official candidacies can be filed until the end of July. Then, the European Commission will produce a detailed evaluation of each by the end of September. According to El Mundo, Italy wanted the Commission's evaluation to be at least somewhat decisive, if not ranking the candidates maybe eliminating the less suitable ones. But Spain and the Netherlands successfully lobbied for a political discussion to take place in the general affairs council in October, on the basis of the Commission's evaluation. There will be a final vote in another general affairs council in November.

The race to host the European Medicines Agency has been under-reported relative to the European Banking Authority. Candidate cities include Amsterdam, Barcelona, Bratislava, Copenhagen, Dublin, Milan, or Vienna. Bratislava is seen by some as the stalking horse in this race. Its proximity to Vienna essentially makes Vienna-Bratislava a dual candidacy, which would benefit both cities but in particular the smaller one.

There are some bizarre twists to the race. There has been one suggestion to tie in the relocation of the EMA with the longstanding debate on the European Parliament's dual site, by proposing that Strasbourg host the EMA in exchange for keeping the European Parliament in Brussels full-time. Antonio Tajani rejected this, according to Politico. A story on the choice for Dublin claims that the possibility of a daily commute from London to Dublin by airplane would reduce the disruption to the lives of EU staff currently established in London. And a story on the choice for Barcelona notes that an unilateral referendum on Catalan independence on October 1st would be smack in the middle of the decision process on EMA relocation, which sources in Brussels say doesn't contribute to making Barcelona an attractive destination. 

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