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October 23, 2017

Macron's plans for the European Parliament

Emmanuel Macron redrew the political landscape in France and has great ambitions to change political boundaries in Europe too, laid out in his Sorbonne speech. For the European parliament he suggested pan-European lists starting with the 73 seats that the UK will leave behind in 2019. But pan-European lists will not be so easy, as they require electoral laws to change in 27 countries. Also, other country leaders don't necessarily share Macron's view that things have to change, or do not agree with his direction. Macron got a taste of this resistance last week at the EU summit, when some of his proposals for Europe — from an overhaul of the way tech groups are taxed to the approach to trade talks — were rebuffed, writes the FT

So far Macron refused to join any of the main European political groups. His reasoning is that the groups combine national parties that do not have the same approach towards Europe. Angela Merkel’s CDU has little in common with Viktor Orban’s Fidesz, though they are in the same group in the European parliament. So far, Macron’s party is in talks with many different MPs throughout Europe, who share Macron’s vision. But it remains to be seen whether they have the persistence and know-how to mobilise for change without being part of the European parliament themselves. Or it is a question of timing? If the chances to get pan-European lists in place by 2019 are not really looking good, Macron’s party can still hope to change things after the 2019 elections. For this his party needs to win enough MEPs in France to attract other MEPs from other countries to form a new group. 

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October 23, 2017

First phase of Brexit negotiations in final stretch

The European Council went relatively well for Theresa May - she lives to see another one, in December, which in our view will lead to a deal on the first phase of Brexit. But, as we and others keep pointing out, the second phase is going to be much harder as the UK remains under serious delusions about the scope of a post-Brexit trade agreement, and the ability to run a truly independent immigration regime.

We expect that agreement on a transition will be relatively easy - the rules are clear, the main issue will be length and renewability. We doubt that a trade agreement will be ready in time for Brexit - nor does it need to. The final article 50 agreement will be a relatively narrow deal, setting out the terms of Brexit and the transition. 

In his FT column, Wolfgang Munchau makes the point that one of the reasons the mood in the European Council has shifted has been a realisation that May may otherwise not survive, and be succeeded by a far more anti-European leader. Germany in particular needs this deal for two reasons. The country's export surplus with the UK has risen to over €50bn, 1.6% of German GDP. And the Jamaica coalition will be fiscally expansive, and exhaust Germany's room for manoeuvre to plug any EU financing gaps as a result of Brexit. A hard Brexit would cause a severe financial crisis in the EU. Germany has an interest in a cost-neutral Brexit, which means that it needs to keep the conversation going. Angela Merkel also confirmed that she firmly expects to reach a deal in December.  

Keir Starmer, Labour's shadow Brexit secretary, has set out a number of conditions for the Labour Party to support the Repeal Bill, the set of legislative measures to transform EU law into UK law after Brexit. He writes that the Labour Party accepts the principle of such a bill (because Brexit would otherwise create a legal vacuum). Labour is making six specific demands: 

  1. agreement on a transition (will happen);
  2. greater involvement of parliament in the management of Brexit;
  3. protection and enforcement mechanism for all EU-derived rights for workers, consumers and on environmental standards;
  4. explicit respect for devolution - to ensure that repatriated powers are not hoarded in Whitehall;
  5. entrenchment of the EU charter of fundamental rights;
  6. a final vote by parliament on the approval of the withdrawal agreement.

These seem reasonable demands to us, but the last point is deliberately misleading. Under Article 50, a failure to agree - or to ratify - would automatically trigger a hard Brexit. Parliament will have a vote on the deal in any case but, because of Article 50, this can only be a vote on whether to leave the EU with a deal or without, since the EU can hardly be expected to return to the negotiating table if the deal is rejected. We suspect Starmer wants an embedded re-entry option because the idea of a meaningful vote makes no sense otherwise. But he is deliberately not clear about this, in order to avoid opening big tensions within his own party. 

The government could easily give ground on all the other options, but not on the last which is based on a deliberate obfuscation of the legal facts. In the end, the government has the greater powers because there is nothing the parliament itself can do to force a Brexit revocation, as it has no control over the position of the European Council. 

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October 23, 2017

Why the left hates Europe

Bill Mitchell and Thomas Fazi provide a very useful insight into why the European Left is no longer betting on supra-national institutions like the EU, and why it is seeking national solutions instead. If you want to understand the success of Jeremy Corbyn in the UK, this is a piece worth reading. 

The authors' main point is that what they call the neoliberal revolution, beginning with Ronald Reagan and Margaret Thatcher, was fundamentally a state-driven project. It was the state that decided the liberalisation of capital markets, privatisation, deregulation, and the reduction of the rights of trade unions and labour activism in general. This policy had the support of all international organisations and institutions throughout the West. The bank rescues were done in the same spirit, and governments used the euro crisis to destroy the post-war European social and economic model. 

The authors specifically argue that the globalised world does not function like a state: there is exchange-rate uncertainty; cultural and linguistic differences that prevent full labour mobility; home bias; and high correlation between national rates of savings and investment. 

Governments, meanwhile, have reduced the powers of the state to correct globalisation by reducing the powers of national parliaments; central bank independence; inflation targeting; fiscal rules; and fixed exchange-rate systems such as the euro.

"...it is only natural that the revolt against neoliberalism should first and foremost take the form of demands for a repoliticisation of national decision-making processes – that is, for more democratic control over politics (and particularly over the destructive global flows unleashed by neoliberalism), which necessarily can only be exercised at the national level, in the absence of effective supranational mechanisms of representation. The EU is obviously no exception: in fact, it is (correctly) seen by many as the embodiment of technocratic rule and elite estrangement from the masses, as demonstrated by the Brexit vote and the widespread euroscepticism engulfing the continent."

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