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July 26, 2018

Brexit to become Chefsache

We were wondering about the swift decision by Theresa May to demote her new appointed Brexit secretary to be the de facto deputy in the Brexit talks. The Times delivers the fuller explanation. Brexit is about to become Chefsache - a matter to be dealt with by the heads of state and government in the European Council. This is a totally plausible development because a decision to let the UK crash out of the EU can hardly be taken at technical level. 

Donald Tusk has yet to make a decision, but the paper writes that it is under serious consideration to devote the Salzburg summit in September to Brexit, and to allow Theresa May to hold direct talks with EU leaders. Angela Merkel is quoted as having expressed dismay at the sense of drift in the Brexit talks. The Irish in particular are getting very nervous about the no-deal scenario, and are expressing alarm that both sides are now stepping up their preparations for a no-deal Brexit.  

The Salzburg summit is billed as a last chance to avert a hard Brexit, but our experience tells us to be cautious with statements about deadlines. The only real deadline is March - minus the time needed for ratification. We think that the December summit is a more realistic deadline, not September. They may even go all the way to March - and extend the Art. 50 period for a couple of months.

The article says that the European Commission has privately rejected Ms May’s white paper on the grounds that it would end the unity of the four freedoms. It also dismissed the customs arrangements for the Irish border as unworkable. EU leaders are more cautious at arriving at this conclusion because they have to weigh the sanctity of the four freedoms against the political and economic costs of a hard Brexit. 

We also noted a comment by George Eaton in the New Statesman, who tries to explain why Remainers are so confident that the EU would encourage them to have a second referendum. What the Remainers, and Eaton, do not quite see is the EU’s position in the two different scenarios of a deal versus no deal. If there is a deal, it will not only be Theresa May’s deal, but also the EU’s. At that point, the EU itself will portray it as a take-it-or-leave-it choice, and will make it clear that there is no better deal to be had. We also think it is conceivable that May would formally ask EU leaders to foreclose on any extension of the Article 50 deadline. That would reduce the British parliament’s choice to accepting the deal or voting in favour of crashing out of the EU.

The situation could be different if there were no deal. The defeat of the meaningful-vote amendment has deprived parliament of its only real instrument to take matters in its own hands at that juncture. That leaves parliament with its only real option - to force elections by securing a vote of no-confidence in the government. We don’t think the votes are there on the basis of recent voting patterns. If Labour were to win an election before March, it could ask the EU to extend the deadline, but the EU would only accept that if the new government were to accept a plain-vanilla customs union/EEA deal, a plain vanilla FTA with a customs border in the Irish Sea, or a repeal of Article 50 following a referendum. But this outcome would require the following sequence of events: failure to reach a deal by May and EU leaders, majority in UK parliament to pass vote of no-confidence; a Labour victory with a coalition of pro-Remain parties; and a total U-turn on Brexit by Jeremy Corbyn. We think this sequences will collapse at the first or second step.

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July 26, 2018

EU migration strategy going nowhere fast

Enzo Moavero Milanesi, Italy’s foreign minister, told reporters after a meeting with Heiko Maas, his German counterpart, that Italian ports would continue to accept migrants rescued at sea for the next five weeks while the EU negotiates an overhaul of its migration policy. This is just about the only good news on this issue, though. At a meeting with the member states' ambassadors yesterday to discuss the Commission's latest proposal none of them volunteered to run the envisaged pilot of controlled centres where rescued migrants would be quickly screened for eligibility for refugee status. Italy criticised the part of the plan involving paying member states €6000 per resettled refugee. The EU is planning a meeting with the UN's High Commission for Refugees and the International Organisation for Migration next week to discuss regional disembarkation centres in non-EU member states, which are also not enthusiastic.

Corriere della Sera writes that the Italian overture relates to a renegotiation of the terms of the Sophia sea rescue mission. The mission is based in Italy as the only docking point, and the Italian government has recently asked the EU to reconsider this so that other member states to share the burden. The five-week period also takes us beyond the August summer holiday.

The Commission released a technical non-paper on each of the two types of refugee centres, within the EU and in third countries.  The idea of disembarkation centres on non-EU states promises to turn into a major international cooperation project, if it doesn't fizzle out first, because to be effective it requires the participation of every country on the Mediterranean coast. The non-paper cites the need for all coastal countries to ratify the international convention on search and rescue and to set up maritime rescue coordination centres. One important feature of the disembarkation-centre proposal is to avoid creating a pull factor by making it clear that resettlement will be an available option for only part of those deemed in need of international protection. 

story by Euractiv notes that Libya, Egypt, Morocco and Tunisia have already rejected the idea of hosting EU asylum processing centres. It is not clear whether this refers to the disembarkation centres or to having EU-run centres in third countries to process asylum applications. This was a third option discussed by the Council in June, but which appears to have been dropped from further discussion within the EU. In any case, the approach taken by the EU of first agreeing a plan with the UNHCR and IMO and only then approaching the non-EU states to join it is not likely to go down well either.

The EU's non-papers don't address the major points of friction among member states. First of all there is still no obligation for EU member states to take part in refugee resettlement, which would continue to put a disproportionate burden on coastal states such as Italy. Secondly, the issue of secondary movements is touched only briefly to say that speedy processing would address the problem. This assumes the issue is just migrants moving between member states before being registered, where the issue raised in Germany concerned movements by registered migrants.

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July 26, 2018

How the Greek wildfire tragedy resets political narratives

The wildfires in a Greek sea resort now claim at least 80 dead, and dozens are still missing. The focus is on this tragedy and its victims now, while other agenda points move to the background, such as the celebration of the exit from the bailout programme. Even the opposition is holding its fire. It is time to mourn, not to settle accounts.

With only 10 months until the elections, this disaster is likely to affect campaign narratives. The government will be working on its reputation. They already dedicated €20m from the public investment budget to help the areas affected by the fires. Families of fire victims will receive up to €6,000 while impacted businesses get €8,000. Income declarations can be filed later and their properties will be exempt from the ENFIA property tax this year. Those with debts to the state will be given an extra six months to settle, so Macropolis.

The tragedy will also make it much harder for creditors to publicly admonish Greece for not doing what it was supposed to do, or to threaten that if they do not stay on course the debt-relief measures already decided will be lost, at least in the next couple of months. Germany is still blocking a €15bn disbursement due to the unilateral decision by the Greek government to extend the value-added tax discount on the five Aegean islands suffering the most from the migrant influx. However, the disbursement is likely to happen once it passes the German parliament next month. The German government just calculated that the debt relief measures cost €34bn, according to the FAZ.

The tragedy will also put on the table the question of who to blame for budget cuts and lack of preparedness. How much were austerity cuts responsible for the delayed firefighting response? How could this have been prevented? There will be questions about planning permissions for those houses in the woodland that should never have been built and are now turned into charcoal. In July 2016, the Greek parliament passed legislation allowing the builders of illegal houses to regularise them by paying a small fine during a two-year amnesty period, as the government was desperate to get some cash in, according to the New York Times. These houses have been built for decades now, and there is suspicion in the local communities that fires were deliberately used to clear more woodland area as more people from Athens were keen to get a house next to the sea. Whether these arguments will be exploited in the election campaign or not, there are some fundamental questions that need to be addressed.

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