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January 16, 2018

Towards a radicalisation of Les Républicains?

Alain Juppé quit his party Les Républicains, and its new leader Laurent Wauquiez did nothing to stop him. Like none other, Juppé represents the moderate, pro-European, wing of the party. But, for Wauquiez and his new team, he is part of the outgoing generation. His departure follows that of former minster Dominique Bussereau, who denounced the closeness of some of the party's new speakers to the Front National. The moderates' red lines have been crossed.

What about other moderates? Will they stay or will they go with Juppé? They are not in a comfortable position inside the conservative party. When it comes to centrist positions, everyone looks to Emmanuel Macron and LREM. And, internally, they are weakened too as Wauquiez' initiative to rebuild the party moves the goalposts clearly to the right. Wauquiez is keen to fill the vacuum left by the Marine Le Pen's weakness.

Is this the beginning of a divorce, wonders Cecile Cornudet? Not clear. Virginie Calmels, Juppé's deputy in Bordeaux and since December vice-president to Wauquiez, took distance and said that everyone is free to do what they want. The next moves by other moderates, like Valery Pécresse or Jean-Pierre Raffarin, will be closely watched. 

What this means for Juppé himself is hard to tell yet. Only last November Juppé said he would be in favour of a grand centrist European movement, for the European elections in 2019. He himself denied that he would join LREM or any other centrist party, though. Could he play a role in the European elections next year as an independent? 

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January 16, 2018

EU toughens its position on Brexit transition

We have been there before. A story says that the EU toughens its position on this and that. But then you realise that the EU, while upholding its principles, has no interest in blowing up the Brexit agreement. This is a negotiation, and every side is playing hardball.

The FT has the story this morning that the EU has toughened its position on the transition period. While there is broad agreement that the transition is a stand-still, in the sense that the UK continues to contribute to the EU budget and enjoys the same rights and duties of EU membership - minus political representation - there are important issues that have yet to be agreed. The Commission wants the deadline until when EU citizens enjoy protection pushed back from March 2019 to the end of the transition, so that everybody who arrives in the UK by 2020 is protected. The FT reports that this amended negotiating mandate came at the behest of Poland and other east-European countries.

Another issue is whether the UK will benefit from any external trade agreements struck by the EU during the transition - and whether the UK can negotiate its own agreements if its request to piggy-back onto an EU deal is denied. It is our sense that this is not going to be a deal breaker.

Perhaps more controversial are fishing quotas, which the EU wants to maintain for the transitional period. This was one of the areas from which the UK wanted an immediate exit.

The new guidelines also make it clear that the UK will only attend regulatory committees in exceptional circumstances, and on a case-by-case basis. This means it will not normally attend. 

We suspect that, as with the discussion on the main parts of the withdrawal agreement, compromise is not impossible. We think it is extremely unlikely that the Brexit agreement will fail due to disagreement on one of these technical factors relating to the transition.

It is also interesting to note that the political discussion in the UK on Brexit has died down since the New Year, as people resign to the likely survival of the May administration beyond Brexit. There has been some idle talk about a second referendum, but we should recall that the first referendum took several years from inception to conclusion. In particular, the Tories wrote it into their election manifesto, and won an absolute majority. Our sense is that any rebellion among some Tories against Brexit is likely to be neutralised by an opposite rebellion in favour. 

There is also a story in this morning's FT according to which Philip Lane, governor of the central bank of Ireland, warned that a sudden Brexit would constitute a threat to the stability of the eurozone's financial system. He was not referring to the need for a trade deal to encompass financial service, but to the prospect of a failure to agree a transition period. 

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