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May 21, 2018

Another snap election in the UK? Tories are preparing

One of the great things about the Royal Wedding is that it managed to displace Brexit from the front pages for a brief moment. But we note that the Times also managed to sneak in a political scoop - that Tory MPs are preparing for new elections in the autumn.

There is a domestic political logic to that. The Tory Party  cannot agree to a customs union as of now. The parliament as a  whole cannot agree to anything else. 

According to the article, some Tory MPs have spoken to their local party associations asking to be readopted as prospective parliamentary candidates. This followed a private meeting with Theresa May last week, which left the backbenchers increasingly convinced that another election would be inevitable. 

This discussion is typical in the sense that it fails to take into account the complex dynamics of the Brexit negotiations themselves. For starters, we don't believe there will be a deal ready for ratification in the autumn. This may drag on until December. Will the Tories risk elections a month or two before March 30, 2019? And secondly, British commentators tend to ignore the critical point that the future relationship is not an integral part of the Article 50 agreement itself, but is laid out in the accompany political declaration. It is a statement of intent, not a legally binding trade or association agreement. This is the bit that can be fudged if both sides want it.

If this a fudge is not possible, we would not rule a failure of the whole deal. The probability of this has been increasing as there is no obvious solution to the customs union dispute. If May decides that it is in her political interest to take the negotiations to the brink, and then to live up to her image of a "bloody difficult woman", all bets are off. No deal may well turn out to be the politically easiest option, because it does not require parliamentary assent.

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May 21, 2018

Merkel and Putin - the beginning of a beautiful friendship?

Several political observers were overcome with a strange sensation when they saw Angela Merkel arrive in Sochi for a bilateral summit at Valdimir Putin’s summer residence. Putin gave her flowers. The two started to speak in German, and then she switched in Russian when addressing Dmitry Medvedev. Despite all the political differences, she seemed a lot more at ease with these guys than with Donald Trump.

The US, meanwhile, is toughening its hostile position on Nord Stream 2. Handelsblatt reports on a briefing at the US embassy in Berlin, ahead of Merkel’s visit to Sochi, according to which the US will use all its diplomatic means to stop the Nord Stream 2 project. As Handelsblatt notes, it was known that Washington was unhappy about this project, but they did not see such a strong reaction coming. 

Handelsblatt says one of the unintended consequences of Trump’s policy is to drive Germany into the hands of Putin. Opinion polls have suggested for a long time that a majority of Germans are more negatively disposed to the US than to Russia. This trend was briefly interrupted during the Obama years. 

The arrival of Trump is accelerating a number of geopolitical shifts that have been under way but have not reached critical mass. 

Zaki Laidi makes the observation that multilaterism is dying because it is not compatible with a multipolar world. It required a benevolent anchor, a role the US is no longer willing to play. He invokes Mancur Olson’s book Logic of Collective Action which lays out how groups can fail to act in their collective interests: if the group itself is not sufficiently powerful or if there is no external coercion. Laidi is not all that pessimistic on trade, because the presence of global value chains are likely to prevent it being significantly disrupted. But the breakdown of multilateralism on foreign policy does matter. The US has no interest in the Iran nuclear deal, and Russia has no interest in a deal on Syria. He sees the emerging world not so much characterised as multipolar, but as doubly bipolar. The US and China are the economic poles, and the US and Russia are the political ones. Here is his conclusion:

"The current crisis of multilateralism reflects a superimposition of the 20th century competition between the US and Russia, and the 21st-century rivalry between the US and China. When raw power politics shapes the global system, multilateralism recedes."

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