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November 15, 2017

A Christmas bonus for poor Greeks

Alexis Tsipras announced the redistribution of €1.4bn in a TV appearance on Monday night. The announcement caught everyone by surprise, even if this "social dividend" has been discussed for some time. He said the bonus was possible because the Greek economy performed exceptionally well, with a growth rate of around 2%, decreasing unemployment and rising employment, and a primary surplus above the 1.75% target. Tsipras pointed out that the handout is more than twice as much as the €615m last year, and that this is largely within the parameters agreed with the institutions.

Tspiras announced the following payouts:

  • €720m will be paid out before Christmas to 3.4m people. The payments will be tax-free and will depend on income, assets, and household size. Nobody earning more than €18,000 a year will receive anything. These one-off payments will range between €250 and €900, depending on income and family status.
  • Another €315m goes to pensioners to compensate them for the 2012-2016 "illegal health contribution payments" as he said.
  • And €360m is for the financially troubled Greece’s Public Power Corporation (DEH), to cover the gap for subsidised services they offer and to prevent electricity tariff increases.

The reaction in the media was one of utter disbelief. The conservative party accused Tsipras of dressing this up as a gift. This is money he had taken before by overtaxing the middle class or that was due to be paid back anyway after a court ruling. Macropolis remarked that the timing was just to draw attention of the left voters back to him after last Sunday’s first round leadership contest of the new centre-left alliance attracted more support than expected. Kathimerini notes that while Tsipras is paying out funds, public investment programmes are frozen. Despite reassurances that the investment target will be met, the article says the government promised the same last year but eventually sacrificed it for the distribution of a social dividend of €615m.

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November 15, 2017

Dim prospects of negotiated de-escalation on Catalonia

Two months ago, in the run-up to the Catalan independence vote of October 1st, the PSOE proposed the creation of a committee in the Spanish parliament to study the reform of Spain's territorial constitution (the sui-generis "autonomy state"). This was hastily approved right after the arrests of about fifteen Catalan government officials in the course of searches of Catalan government offices. We interpreted the quick creation of the committee as a gesture of good will, as it provided a forum to explore the accommodation of Catalonia within Spain, and held up the prospect of a constitutional reform in the medium term which would include a referendum that would need to pass in Catalonia. The committee will be formed today, but watered down by the absence of several important parties, and the apathy of those that will take part. The PSOE will thus not get out of the committee the compensation it expected for its support for Rajoy's intervention of the Catalan regional government according to Article 155 of Spain's constitution. And Spain will continue not to have a forum where progress can plausibly be made on the Catalan question.

At the time the committee was approved, the MPs of the Catalan separatist parties PDeCat and ERC had said they would no longer attend committees in protest for the arrests, and they have not joined the committee now being created. But it's not only them. The Basque nationalist party, which just six months ago supported Mariano Rajoy's 2017 budget, is also sitting out of the territorial reform committee. And so is Podemos and allies. Cuidadanos is taking its seats on the committee, but refusing to take any on its board. Only the tiny parties in the mixed group have agreed to take part, but without much enthusiasm. 

Just about every politician quoted by the press plays down the importance of the committee. Rajoy is back to his usual reluctance to entertain constitutional reform. Ciudadanos' parliament spokesman said the committee may actually be counter-productive for a meaningful constitutional reform. The Basque Nationalists said essentially the same, while both Podemos and the Catalan separatists say the committee cannot function as long as there are Catalan politicians in jail. Only the PSOE is putting on a brave face in respect of its pet project.

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November 15, 2017

Macron's favourite to succeed Juncker - first round

We learn from Politico that Emmanuel Macron already has a favourite to succeed Jean Claude Juncker as Commission president in 2019: Magrethe Vestager. Though it is too early for anything to be taken seriously, Vestager seems to fit the bill for him. According to the LREM MP Pieyre-Alexandre Anglade, she is the ideal candidate. She is doing an excellent job, is influential, and works on files that Macron cares about, plus she is a woman and visibly pro-European. It is an open question whether this works politically, as she is from the Liberals, Macron’s LREM is not yet even in the European Parliament, and there is the question of whether the next Commission president will be elected among 'Spitzenkandidaten' as last time. A successful candidate used to come from the Council, that is, had been a head of state or government, and from a eurozone country without too many enemies. Vestager certainly does not fulfil the first criterion, and possibly also not the last. But Politico writes that Vesteger has a lot in common with Macron. Both are seeking to square economic liberalism with social protection. Both are strong believers in the European project, and relative outsiders in their national political establishments. But their alliance in the past may not last, as Vesteger has to approve the Siemens-Alstom merger and there is an antitrust probe into EDF. Also, Macron might find it hard to dismiss the ambitions of his own commissioner Michel Barnier - also not a former head of government. 

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November 15, 2017

On sovereignty

As Germany is gearing up for the discussions with Emmanuel Macron about the future of Europe, we noted a long article in FAZ by Dieter Grimm, a former justice of the constitutional court, taking issue with a comment by president Frank-Walter Steinmeier who called for a Europe that was "sovereign, united and democratic", in line with Macron's own view. Grimm says the EU is democratic and united to some extent but, crucially, it is not sovereign, nor can it become sovereign through ordinary procedures. He explains that in Germany the notion of sovereignty arose after the collapse of the medieval principalities, when the newly created central powers concentrated various rights previously held at regional level. Sovereignty is the state's right to determine its own constitution. It is not dependent on other parties. Sovereignty is thus the very essence of the state.

The EU is not sovereign under that definition. Sovereign does not mean the right to take your own decisions. The EU clearly has those rights. The EU, however, cannot decide about its own future. It cannot give itself treaties. It cannot dissolve itself. It depends on the member states for that. This is why talking about pooled sovereignty or shared sovereignty is a category error. And Grimm reminds us that the German constitutional court decided in its Lisbon Treaty ruling that the German state organs are not entitled to transfer sovereignty to the EU. Only the people themselves can do that. What the German government and parliament can do is transfer what one may translate as sovereign powers ("Hoheitsrechte") to the EU. But this is distinct, in German legal thinking, from sovereignty itself. 

Grimm concludes that President Macron's idea of a reconstitution of a Europe as a sovereign entity requires formal statehood.

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November 15, 2017

Gli Azzurri

We treat football as definitely outside our reservation, but can't help wondering about the broader political, social, and economic effects of the failure by Italy's football squad to qualify for the World Cup finals for the first time since 1958. We recall the broader positive impact of the championship on France in 1998, and on Germany in 2006, and wonder how this humiliation will play out in Italy ahead of a crucial election year. We can't be sure, of course, but if you wanted to choreograph Italy's exit from its long crises, you would not want something like this to get in your way.

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