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May 28, 2018

A no-confidence motion that could backfire

Last Friday Spain's PSOE filed a motion of no confidence against Mariano Rajoy in the Spanish parliament. This came as a reaction to a court sentence on Thursday on the so-called Gürtel case involving kickbacks on public tenders by PP-led local and regional governments. The PP itself was fined a modest amount for its civil liability in the case, and the court sentence questioned the credibility of Rajoy's witness testimony in the case. This presented Pedro Sánchez, PSOE leader, with an excuse to call for Rajoy's removal as PM. However it is not clear that the no-confidence motion will succeed. The motion is subject to the same parliamentary arithmetic and multiple mutual vetoes among political parties that made it possible for Rajoy to be reappointed as PM in the first place eighteen months ago. If the motion fails, not only would Rajoy be almost certain to serve his full term until mid-2020, but he could claim to have survived two no-confidence motions on the same issue of corruption. By not measuring his strength or seeking alliances before filing his motion, Sánchez risks it backfiring.

The Spanish constitution demands that a no-confidence motion be constructive, that is, including an alternative candidate for PM. The problem for Sánchez is that he can assemble a negative coalition against Rajoy, but not a coherent coalition in support of his own or any government. As Javier Pérez Royo points out, Rajoy's aim in government is to prevent the roll-back of the measures legislated in his first term. But Sánchez, not having a majority for a positive governing platform, cannot govern and should call elections immediately if he does win the no-confidence motion. Ciudadanos, the party providing outside support for Rajoy's minority government, has explicitly asked for new elections. But, given the current polls, Sánchez would be handing the government over to Ciudadanos if he called elections. In his commentary on all this, José Antonio Zarzalejos criticises Sánchez for not consulting his own party's leadership; for the aim to put Ciudadanos in a bind, as it supports Rajoy's government while claiming to be against corruption; for not negotiating the support of other political parties; for doing all this while knowing that he has no positive majority; for outlining a utopian government platform; and for risking the failure of the 2018 budget in the Senate. Zarzalejos also considers that the best course of action is to go to new elections as Ciudadanos demands.  

The motion needs an absolute majority of seats in the parliament, and that requires either Podemos and Ciudadanos to vote together, or else the support of Podemos and the Basque and Catalan nationalists. This includes the Catalan separatist parties, which would make many in the PSOE itself uncomfortable. And the Basque nationalist party PNV just supported Rajoy's budget together with Ciudadanos. 

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May 28, 2018

The political repercussions of a historic referendum in Ireland

Irish history took a turn last Friday with a referendum to revoke the ban on abortion, the eighth amendment in the constitution which had been in place for 35 years. The outcome was a resounding victory for the repeal camp, with 66.4% in favour and a turnout of 64%. The topic itself may be outside our reservation but a historic moment like this has political implications that are relevant to us. 

The big political winners are those who led the political campaign for the repeal, in particular Simon Harris, health minister, but also Leo Varadkar himself. The fate of the opposition party Fianna Fáil is less clear. Lots of its MPs opposed the repeal, as did the party's voters. Its party leader Micheál Martin, however, chose to support the repeal. Where to go from there? The resounding victory may help Martin shore up his authority inside the party, and may give him a chance to modernise it. But he also will have to show leadership to enforce discipline and avoid chaos within the party, argues the Irish Times.

The full political impact of the vote will filter through only later. A single-issue campaign like this one may be important, but is not always relevant for general elections. However the build-up to the referendum has shown how important politics is to realise social change, writes Pat Leahy. In the end all political leaders were for the repeal, and this was made possible because the middle class turned out to be a soft Yes constituency - in favour of change but otehrwise with no clear idea of what they wanted. Politics delivered that idea. And, instead of talking about women's rights, they emphasised the hard cases of rape or foetal abnormality that women had to live with. Leo Varadkar promised new abortion legislation by the end of the year.

The other interesting political fallout to watch out for is the impact on Northern Ireland. They have similarly strict abortion laws and, with the Irish referendum in the background, there are now calls on Theresa May to act. By the end of the year, Northern Ireland would become the only part of the UK and Ireland with almost a blanket ban on pregnancy terminations. 

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May 28, 2018

Why the lack of an international role for the euro matters

Wolfgang Munchau writes in his FT column that the euro's lack of a role as a global currency has important geostrategic implications. He notes that this was no accident but a choice. It was done on purpose in order not to deflect from the narrow goals that were predominant in the 1990s - the pursuits of price stability and fiscal probity. But in a world where the EU is confronted with a non-cooperative US president, that decision comes at a cost. Munchau considers the five dimensions of a currency’s global role - as reserve currency, invoicing currency; currency for issuance in bond markets; for international credit; and for foreign exchange transactions. The euro lags behind the dollar on all five metrics, and strongly on four of them. A decision to give the euro a stronger role would at a minimum have required a large mutualised debt instrument, backed by a fiscal union. It would also have required a real banking and capital markets union as opposed to the incomplete bureaucratic mess the EU has created instead. If there is no majority of EU member states for such policies, this is partly because the costs of forgoing the benefits of a global currency are not sufficiently considered. Munchau concludes that this may change as Europe suffers real damage in a less benign external environment.

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