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January 26, 2018

Will the prison strike turn the fate for Macron?

A government crisis often starts with something unexpected that then spirals out of control. Could the prison strikes be one of the turning moments for Emmanuel Macron, as l'Opinion suggests? Let's start with the facts: a nationwide prison blockades by guards started after a radicalised inmate attacked three guards in a high-security prison in Northern France on January 11. Yesterday, on the eleventh day of the strike, about 116 of 188 prisons are still taking part in this strike movement, and in 42 of them guards refuse to take up their work completely or partially. 

The responsible minister Nicole Belloubet presented a new proposal this week after two failed rounds of negotiations with the trade unions. In this new plan she offered 1500 places in sealed quarters for Islamists and radicalised terrorist prisoners, 1100 additional guard posts in the next four years, and more than €30m in additional funding.

The reactions from the trade unions were divided: FO and CGT still reject the proposal as unacceptable, while Ufap-Unsa, which represents 40% of the guards, welcomed the proposal as a step forward, according to Libération.

Belloubet was accused by trade unions of being an incompetent technocrat who was too slow to react. Emmanuel Macron backed his minister and called for a fundamental criminal reform by mid-February, with the introduction of community service or electronic bracelets. Are the French ready for a debate like this? Can Macron kick this reform off without delay, and benefit from it with a minister whose reputation is seriously compromised? With the reform of the judiciary going on at the same time, are there too many reforms pursued at once? This crisis turns the warrior Macron into a firefighter. Will he be as successful? His prime minister Édouard Philippe is protecting him so far, taking responsibility for this crisis and the hit in popularity. But this is certainly a crisis to watch.

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January 26, 2018

Destroying the constitution in order to save it

It has become clear over the past years that the only tool the Spanish government is willing and perhaps able to use in response to the Catalan separatist is the judiciary. Mariano Rajoy may have hoped that the hastily called regional elections last month would return a Catalan parliament without a separatist majority, but it was a toss-up and Rajoy lost the bet. Now, in their desperation to prevent Carles Puigdemont from being reappointed regional premier next week, the Spanish government is resorting to every trick in the book. And constitutional law experts are aghast at the stretches to which the Spanish government is taking the constitution.

The situation is this: the speaker of the Catalan parliament has proposed Puigdemont as the candidate for regional PM. The unionist opposition and the Spanish government argue that this is not possible because Puigdemont is not physically in Spain and cannot take part in his own investiture debate remotely or by delegation. The legal counsel of the Catalan parliament agrees. But the investiture session would take place next week, and who knows where Puigdemont could be then? Maybe he will sneak into the parliament (and the Spanish police has been inspecting the sewers in the Ciutadella park where the Catalan parliament is located to ensure he won't get in through them - yes, really). He could also get arrested at the border in which case he would presumably be jailed immediately, but he could petition the judge to be able to attend the session. There is precedent in Spain of jailed politicians being allowed to attend sessions of regional parliaments. Supreme court judge Pablo Llarena actually used this argument to refuse issuing an European arrest warrant when Puigdemont went to Copenhagen this week. To him, Puigdemont wanted to be arrested so that it could not be said that he was away from the parliament voluntarily. But if Llarena is right, Puigdemont is in a win-win situation. Either he is not arrested and he appears in the parliament, or he is arrested and he can allege force majeure so the separatist board of the parliament can allow him to delegate the delivery of his speech, and his vote. Puigdemont's lawyers said this week that there is a chance that he will be present at the debate.

So, smelling defeat - or, worse, embarrassment - the high-powered state lawyers colonising Rajoy's cabinet, starting with the deputy PM Soraya Sáenz de Santamaría who has been in charge of the Catalan dossier for years, have pulled out the last trick in the book. Article 161.2 of the Spanish constitution foresees that, if the government challenges an act of a regional authority before the constitutional court, the court will immediately suspend the act, and has five months to rule on the substance. While this is not in itself objectionable, the problem here is that every constitutional expert in the land agrees that the specific challenge stands no chance. The Spanish government, with the political support of PSOE and Ciudadanos, decided to challenge the nomination of Puigdemont, and asked the consultative council of state to issue an opinion on this. The opinion came back yesterday, and is negative. The council of state argues that the investiture of Puigdemont can only be unconstitutional if he attempts to take part in it without being physically present at the Catalan parliament, which is something that cannot be decided until after the deed is done, and not pre-emptively. But the Spanish government is unfazed, will ignore this opinion, and will use Art 161 to its advantage. 

Spain's constitutional experts are flabbergasted, and call this a "constitutional fraud" according to El Independiente. El Mundo calls, in an editorial, on the government to listen to the council of state. One of the arguments giving the unionists the high ground in this whole mess used to be that in September the separatist board of the Catalan parliament - now indicted as a result of their actions - repeatedly ignored both the regional parliament's legal counsel and the region's council of statutory guarantees (a sort of regional constitutional court). Now the Spanish government is throwing that out the window, and straining the constitution beyond the breaking point not for the first time. 

The only way the Spanish constitutional court can save itself from destruction by Mariano Rajoy's minions is to rule on this case as soon as possible, and not wait five months.

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January 26, 2018

Will populism wane with the global recovery?

Is populism a result of an economic crisis? And would the global recovery not reverse the trend as many now predict? Former Chilean finance minister Andrés Velasco argues that, even if populism started with an economic crisis, that does not imply it will be resolved by rising incomes and falling unemployment. It is much more complex than that. Populists like Donald Trump can well claim the recovery is their own doing. The recovery is also likely to be uneven: asset price inflation trends suggest an unequal recovery with disproportionate increases in income and wealth for the top 1%. And, even if the recovery were to reach the lower income classes, changes would be slow.

But what if populism is not rooted in economic causes, but is essentially political instead? Populism defines an "other" who can be blamed for society's ills. And those ills are not economic, but cultural and social changes, and corruption of the political classes. The middle class might be well-off financially but they feel alone, abused, and are full of mistrust. None of this will change with the recovery. What is needed is a political leadership to help people make sense of the changes they are experiencing. Central banks have done their job to engineer an economic upturn: it is now up to the politicians to do their job, Velasco concludes.

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January 26, 2018

Issing on the coalition agreement

We have noted before that the European section in the preliminary coalition agreement between the CDU/CSU and SPD has triggered remarkably few comments. Our impression was that people didn't take it seriously. One commentator said Angela Merkel made a cheap promise when she accepted a shift in Germany's position on fiscal union: as this will be vetoed by several other member states, she will never have to deliver.

One person who does not share this complacency is Ottmar Issing, who published a page-long article in FAZ this morning on the subject. He starts off with the observation that Germany is nowadays seen as a spoil-sport, somebody with no concept of how Europe should develop. He is referring to the intra-German debate specifically. He said the main reason is the demise of ordo-liberal thinking in Germany, which makes Germany vulnerable to what he calls the problematic ideas of Emmanuel Macron. 

We cannot summarise the multitude of arguments in this article, but will focus on a few that struck us as central. On the fiscal capacity, Issing makes a rare point on which we would agree. We are obsessed with asymmetric shocks, but most shocks we experienced, such as the financial crisis and oil price movements, were symmetric. 

"Show me the member state that innocently gets into trouble,"

he writes. In the few situations where that happens, the ESM constitutes a sufficient mechanism. But, to turn the ESM from an inter-governmental to a supranational institutions, run by the European Commission, would be a mistake, he writes. The Commission has undermined confidence in the stability pact. It will undermine confidence in the rules behind the ESM.

He writes that those in favour of a fiscal union are not really supporting a genuine political federation. It is a smokescreen to undermine the rules of the monetary union and the principle of national economic sovereignty.

Here is his conclusion (our translation):

"The biggest tragedy is this: excessive and misdirected political ambitions threaten a development that reduces economic development in Europe, and deepens the schism between the member states, and within member states. And it will undermine European citizens' identification with this unique project."

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  • Sweden’s Democrats and Germany’s AfD: they don’t win elections, but they set the political agenda
  • Is Boris going to challenge Theresa May?
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 20, 2018
  • Why preparations for no-deal Brexit are a positive development
  • On confirmation bias in the Brexit commentary
  • July 02, 2018
  • Is Trump out to destroy both Nato and the EU?
  • Salvini’s empire
  • Remembrance as a way forward?
  • June 13, 2018
  • Macedonia - a deal hailed internationally and challenged at home
  • Macron - elusive to the left
  • What did Theresa May concede?
  • May 28, 2018
  • A no-confidence motion that could backfire
  • The political repercussions of a historic referendum in Ireland
  • Why the lack of an international role for the euro matters
  • May 14, 2018
  • Catalonia: plus ça change...
  • Conveney says no to Brexit with border infrastructure
  • Why the noble Lords don't really matter
  • April 30, 2018
  • Looming May protests against Macron
  • France has discovered the Laffer curve
  • An important resignation in the UK
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • April 03, 2018
  • Is the time for Brexit revocation running out?
  • March 23, 2018
  • European Council supports UK more strongly than expected on Russia
  • Eurozone policy renationalisation is not the solution
  • The state of macro is not good
  • March 14, 2018
  • The geopolitics of trade war
  • A European labour authority
  • On Novichok
  • March 06, 2018
  • Will Italy exit the eurozone? Of course not. But it's the wrong question.
  • Slovakia's political crisis
  • Are we heading for a trade war?
  • February 26, 2018
  • Angela Merkel's cabinet
  • February 19, 2018
  • SPD divided over grand coalition
  • Wauquiez - the French Trump?
  • Why Brexit will be extremely hard to reverse
  • February 13, 2018
  • Will Zijlstra survive Dachagate? Will Rutte III?
  • Costa's initiative to cover Brexit shortfall
  • February 09, 2018
  • Is the Labour Party shifting towards a customs union?
  • February 05, 2018
  • How big is Germany's external surplus, really?
  • Macron's first election test
  • Coeure's endorsement of a fiscal union
  • January 31, 2018
  • A compromise of words
  • The Maybot will go on and on and on
  • January 29, 2018
  • Where is the opposition in France?
  • Scenarios and risks for Syriza over Macedonia