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October 16, 2017

What‘s the deep meaning of the elections in Lower Saxony?

We could answer the question with: none and the story would end right here. The SPD won the elections in Lower Saxony, the first time that Martin Schulz can celebrate an electoral gain since he became party chairman at the beginning of the year. But the SPD will not be able to form a coalition with the Green party as it had hoped. They will be one vote short. And here is the spooky parallel to the Austrian elections. The outgoing SPD/Green government lost its majority after a singe MP quit the Green party - and joined the CDU. With this election, the SPD and the Greens ended up at exactly the same place as before. Since the FDP has categorically rejected a coalition with SPD and Greens, this leaves us with two coalition options: SPD and CDU or a local version of the Jamaica coalition - CDU, FDP and Greens. But a coalition of the losers would not look good, especially in view of the negotiations that will soon take place in Berlin. So we think there is going to be another grand coalition, this time under the SPD‘s leadership. What is also noteworthy is that the AfD did not do well. They only just managed to cross the 5% threshold.

Apart from a morale boost for the SPD, the elections have little meaning for Berlin, except that coalition negotiations can now begin soon. The future of Schulz remains open, though Schulz seems determined to fight for re-election to his role as SPD chairman in December. His most likely future is that of an interim leader who will give way to a new generation of politicians. The list of potential next-generation leaders has grown by one last night - Stephan Weil, the outgoing and probably future first minister of the Lower Saxony. It is the first time since 1998 that the SPD is the largest party in the state legislature.

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October 16, 2017

Can Brexit be revoked?

Ever since the referendum, the idea of a Brexit reversal has been discussed. Initially, we knew of commentators who were 100% certain that Brexit would not happen. The European newspapers reported mostly stories on anti-Brexit demonstrations and the Miller campaign, also giving the impression that Brexit was likely to be reversed. Tony Blair is still leading a campaign to reverse Brexit, and puts his chances at about 30%.

Two questions immediately arise: What is the political process that could lead to this event? And, if this process were to happen, can Brexit be revoked under EU law?

The first questions is somewhat speculative. It would clearly have to involve a second referendum being called ahead of time, and won. Since neither the governing Conservatives nor the Labour Party support a second referendum, the questions then becomes how this can happen. One scenario is that the Brexit negotiations fail to be unlocked in December, and that companies - and banks in particular - implement their contingency plans to move jobs from the UK to continental Europe. An economic crisis ensues (which is a bit of a stretch, but let’s indulge ourselves). The government and the prime minister lose popularity. A Tory leadership challenge is mounted at some point in 2018. The process turns messy and ends in new elections with a hung parliament. Labour forms a coalition with the tiny LibDems, who make their participation in the coalition dependent on a second referendum. And then the people change their mind. There are a lot of nodes in that scenarios, and each one of them has to work out.

But, for argument's sake, let's entertain the possibility that the UK decides to revoke Brexit. Can this be done? The majority opinion among British lawyers is that it can. But this is an argument very much based on an English interpretation of Article 50 TEU. 

Cormac Mac Amlaigh makes the case that Article 50 is not revocable - not even if the European Council were to accept the UK revocation unilaterally. 

He dismisses a number of legal arguments in support of revocation - the Vienna Convention on International Treaties and a possible argument to link the concepts of "intention" and "notification", both words contained in Art 50. The latter argument in particular is rather subtle - though worth perusing - but his main argument is one of moral hazard. This is an argument the ECB in particular might be open to. 

“Allowing the revocation of an Art. 50 notification would create significant moral hazard risks by putting a potentially powerful weapon in the hands of individual member states, particularly smaller states.  This could be used to gain leverage in bargaining over unpopular laws or policies or even to overturn unpopular CJEU decisions... Leaving the door open to such strategic manipulation of EU decision-making processes would undermine the rule of law in the Union, the authority of its courts, and the integrity of EU governance. It is pretty clear that the CJEU could not open the door to such a risk under its watch.  Considering these scenarios, it is almost certain to find that notification cannot be withdrawn for these significant policy reasons.”

He sees, as the only option to prevent Brexit legally, a Potemkin Brexit whereby the UK formally leaves, with a gentlemen’s agreement to rejoin afterwards under Art 50(5) and Art 49, on the same terms as it currently enjoys. That, however, would require a degree of goodwill that is simply not there.

We have great sympathy for this argument. One aspect to consider for the European Council in particular, but also the ECJ if it ever had to deal with a revocation case, is the implications of such an agreement for the future. There can be no doubt that an Art 50 revocation would constitute a precedent, and the only protection against an abuse of such a precedent is the clause that says Article 50 can only be invoked in line with the member states’ constitutional provisions. In the UK, Article 50 would be invoked for a second time if the Conservatives, or possibly a re-invigarated UKIP, assume power. It would be revoked through an act of parliament, not a referendum. Would the EU want to remain in crisis permanently? We don’t see the scenario, as the author suggested, that Greece or Ireland might trigger Art 50 to push their own policy agenda, but it is conceivable that Poland or Hungary might. It would not be Brexit to opens the floodgates to imitations, but the revocation of Brexit. This surely cannot be in the interest of the EU.

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October 16, 2017

Macron's grand narrative

Emmanuel Macron believes in narratives. In an interview with Der Spiegel he gives us one of an intellectually well-versed president, who knows his literature and his own sense of history. France is a country of regicidal monarchists, where the people want to elect a king but overthrow him when they want. In the interview he talks about his ambition to change the narrative for the French and that our times need political heroism to stand up against populism. But convincing the French to back his "revolution" is no easy task. Last night on TV Macron talked to the French directly, not giving in on any of his political goals, but instead being true to his motto 'I do what I promised to do'. He explained his actions including on controversial reforms such as social charges and abolishing the wealth tax. No mea culpa, instead the image of a decisive president who listens and aims for conciliation. Macron gave trade unions the prospect of talks about co-management structures and the reform of the unemployment insurance, and offered the disgruntled mayors to meet with them soon. These are symbolic gestures, but are they enough? The wealth tax is hugely symbolic, and resistance against its abolition cannot simply be reduced to a matter of jealousy, remarks Francoise Fressoz. The left also took issue with Macron calling "equality" a "sad passion". The Socialist Guillaume Garot finds that Macron may have talked to the 24% who voted for him in the first round of the presidential elections, repeating his campaign promises, but he failed to address the rest of the country.

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