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September 18, 2017

Why Germany cannot lead Europe, let alone the free world

Natalie Nougayrède is absolutely right in her Guardian column asserting that Germany cannot lead the free world. The country is hardly looking beyond its own borders. She notes this is very similar to the UK at the moment, but for different reasons. While the provincialism of the UK election was largely due to psychological factors, there is a genuine lack of interest in world affairs in Germany, where neither Europe nor the wider world play a role in the campaign. She believes that the deep reason for navel-gazing is the relative success of the German economy, which has led to an unprecedented level of complacency. This is her overall conclusion:

"To be sure, all politics is local. But the Germans will choose Merkel yet again because they believe she will protect them from external pressures, not help transform the world, or Europe, for the better. Most just want to keep things the way they are: an apparently placid, content country that likes rules to be strictly respected and doesn’t want to be troubled much by what’s going on beyond its realm. A Kantian village in a world that has become ever more Hobbesian. Can that be real?"

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September 18, 2017

Will Macron help to build up Mélenchon?

Emmanuel Macron and Jean-Luc Mélenchon, once two political outsiders, are now the main actors in France's political landscape. The two traditional parties, the Socialists and the Republicans, are still licking their wounds after a devastating defeat in the elections. Marine Le Pen seems to be out of the picture, too. The playing field is thus free for Macron and Mélenchon, at least for now. 

Mélenchon’s aim is to prove that he is the leader of the opposition, but also that he - and he alone - represents the people. This is why he won’t side with the CGT trade union in its labour reform protest movement, says Cécile Cornudet. So, are we to prepare for a duel between the two men at the next presidential elections? Will Macron enable a President Mélenchon? 

The Achilles' heel of Macron is that, while he was elected in a large part by left voters, his government and its reform agenda look more to the taste of the right. Marianne reminds us that, among the 8.6m French who voted for Macron, half were former Hollande and Bayrou voters, and just under a fifth voted for Nicolas Sarkozy at the previous presidential election. One forgets sometimes that, during this year's presidential election, the voters of the right were relatively more loyal to their party despite François Fillon faltering as a candidate. 

Since the election, the voters of the left became more and more disillusioned. It started with the forming of the government, which included only a few politicians from the left. Then came the political reform agenda. Policies like the labour law reform emphasise the first and not the latter of the motto "liberalise and protect", concludes Journal du Dimanche. The timing and the out-of-context delivery of the proposed rent subsidy cuts gave the impression that the government is ready to do whatever it takes, even to cut social services, in order to fulfil its budget obligations to Europe. To limit the damage, Macron and his team have now pushed this controversial reform further down the line, into 2018. They are also making an effort on communication. In the assembly the 313 LREM deputies are also getting a team-building seminar this week. And Macron has started to talk to the press again. Whether this will be enough to appease his base remains to be seen. 

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September 18, 2017

Boris' Coup

There is always entertainment value in watching UK politics, and we are once again in one of those wonderful backstabbing moments as Boris Johnson is trying to organise a palace coup against his prime minister. It came in the form of a 4000-word essay in the Daily Telegraph, which we would strongly urge readers not to read.

Rather, it is more fruitful to take a step back and ask about the political reality of Brexit. According also to the Daily Telegraph this morning, Johnson will try to confront May this week, presumably in the cabinet, demanding that the UK should not accept a Brexit bill. This would effectively mean a cliff-edge Brexit in 2019. Newspapers have been reporting that May is about to make just that concession when she sets out her vision of the transition agreement, in an eagerly awaited speech in Florence on Friday. What Johnson is proposing - not to pay any money beyond what is legally necessary from the British legal interpretation - would effectively mean Brexit without an Article 50 agreement, and without any hopes of a trade agreement in subsequent years. Even if there is a majority in the Conservative Party to replace May - which we don't believe - there is definitely no majority in the House of Commons in favour of such a hard version of Brexit. If Johnson were to become prime minister, the Article 50 talks would end. There would be enough Tory rebels to boycott the Repeal Bill by supporting various amendments, and there may well be a concerted attempt by both Houses of the Parliament to undo a hard Brexit - which, in the absence of an Article 50 agreement, can only mean undoing Brexit itself. The Parliament is legally in a position to call for a second referendum, and while we see no chance of this for so long as May is leader, we see a much bigger probability if Johnson were to become prime minister. 

We have been arguing all along that a Brexit reversal is not likely. The only scenario where we believe this is more than likely would be if a hard Brexit in March 2019 became a certainty.

The harshest version of Brexit does have its share of advocates in the UK. Among noted newspaper commentators, one is Dominique Lawson who raises a question we ourselves have been asking since just after Brexit: would manufacturers really relocate out of the UK to keep their supply chains in tact? An alternative is, of course, the very opposite strategy - they could concentrate production in the UK. Lawson said he spoke to advisers to multinational companies who seem to be more concerned about the UK's political climate than about Brexit as such. 

"...if there are to be post-Brexit tariffs on products manufactured here (such as cars) which have complex European supply chains, then they see a stark choice between locating more of those supply chains in the UK, or in the EU. A decision in favour of the former — which would actually move jobs from the EU to the UK — depends on Britain continuing to offer an increasingly more attractive corporate tax regime than that of the EU generally."

The only scenario where we see such a hard Brexit happening would be for the Tories to accept Johnson as prime minister, for Johnson to call immediate elections, and for him to win with a large majority. An alternative sequence of events is for Johnson toppling May, seeking an election, and losing to Jeremy Corbyn. This is the risk that will keep Tory MPs on their toes. Even if emotionally they may support Johnson, they clearly see too that a palace coup in the middle of the Article 50 process carries immense risks.

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  • Macron's grand narrative
  • October 09, 2017
  • UK is starting to prepare for a no-deal Brexit
  • Why Germany will resist meaningful eurozone reform
  • October 04, 2017
  • On why Theresa May is likely to survive
  • On how to resolve the Brexit talks
  • Social housing - not a good start for the French government
  • September 29, 2017
  • Is the CDU about to rebel against Merkel?
  • What about defence?
  • What happened to the French mainstream parties?
  • September 25, 2017
  • Where does this leave eurozone governance reform?
  • Is Mélenchon losing his momentum?
  • Lost in Florence
  • September 21, 2017
  • Time to get serious about Brexit
  • Would the FDP claim the job of finance minister?
  • The return of the ultra-right to German politics
  • September 19, 2017
  • German populist vote - as seen from the outside
  • May's total Brexit power grab