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October 01, 2018

After the referendum, more turmoil in Macedonia

Democracy is for those who turn up. Prime Minister Zoran Zaev put a brave face on after the referendum vote yesterday, where only 36.6% of the population turned up to vote on the so-called Prespes agreement with Greece to change the country's name and join the EU and Nato. Under the deal, the former Yugoslav republic would amend its name to North Macedonia and its constitution to exclude any territorial claims on the Greek province of Macedonia, while Greece would drop its objections to the country joining the EU and Nato. Opposition parties and the president had called on citizens to boycott the vote. This seems to have had its effect. But those who did show up yesterday overwhelmingly voted for the agreement: With 80% of the votes counted, the yes vote got a whopping majority of 91.2%. 

Does low participation mean the referendum result is invalid? On the one hand, the constitution requires a minimum turnout of 50% of eligible voters for validation. On the other, Zaev's government insisted that the referendum was consultative anyway.

The final decision is with parliament, where the agreement has to be backed by a two thirds majority in next week's vote. Zaev called on parliament yesterday to ratify. But how? His Social Democratic Union only has 49 seats in the 120-seat assembly, while the centre-right has 51. He would need some votes from the opposition party to pass the deal. But it has already declared the agreement dead, arguing that the people would like to join the EU and Nato but not with this deal. It is a way of saying no.

What happens if parliament rejects the deal as well?  If lawmakers fail to support it, the country will go to elections, Zaev has promised. These would then be considered as a second referendum.

Could the referendum stir up nationalist sentiment? The referendum was the most important historic choice since the independence declaration in 1991. It was held against the backdrop of polarisation and in highly emotional debates about national identity. Russia reportedly stepped up clandestine efforts to prevent Macedonia’s embrace of the west, working in unison with hardcore nationalists to get people to boycott the vote. If the turmoil continues, so will the polarisation about Macedonia's identity.

What does the vote mean for Greece? Basically it buys Athens time to weather the political fallout. The Greek government won't have to present the agreement to parliament in January. The expected split of the government coalition would be delayed. New Democracy's plan to table a censure motion that would trigger new elections before the Prespes vote would turn out to be an empty threat. This does not mean that a political storm won't happen. ToVima writes that the coalition split has become unavoidable and will occur even if the time frame is now a different one.

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October 01, 2018

What will happen if the UK parliament votes No?

Brexit has thrown up a large number of long reports, the vast majority of which deserved to be binned. We would, however, recommend a detailed study of the long version of the report by the UK in a Changing Europe institute at King’s College London, The Brexit Endgame. It has the best analysis of parliamentary procedures for the ratification of the withdrawal agreement in the UK and the EU that we have yet seen. In particular, it outlines a sequence of events we had not yet considered ourselves - the possibility that the UK parliament rejects the withdrawal agreement first, to be followed by a second vote closer to Brexit day when the alternative choice of a hard Brexit becomes clearer.

What we did not know is that parliament can amend the legislation to implement the agreement, but only to such an extent as not to threaten the agreement itself. Amendments are, for example, possible in respect of the future trade relationship and parliament’s right in this process. The authors also discuss the merits, or otherwise, of the decision to lump the ratification of the treaty and the political declaration in the UK, while that is not happening in the European Parliament. 

The report specifically cuts through the casual journalistic observation, much repeated and misleading, that a no-deal Brexit is unlikely because there is no parliamentary majority for it. With the defeat of the Grieve amendment on the meaningful vote, parliament deprived itself of the right to take the Brexit negotiations into its own hands if there is no deal early next year, or if a deal is defeated in the House of Commons. The agreed compromise foresees a much-less-stringent process in which the Speaker of the House has some leeway, but which stops short of parliament passing instructions on to the government. Parliament could try to stall a no-deal Brexit by refusing to implement legislation that would be necessary in that case - but we doubt that this would override the ruthless timetable of Article 50. 

The report also goes into details of the Fixed Term Parliaments Act, which makes it harder but not impossible for the prime minister to initiate new elections. The details of this procedure are probably less relevant to Brexit because Theresa May would almost certainly have the required majority for an election if she wanted one. The Labour Party would clearly be in favour, so she would only need the support of a minority in her own party. One can foresee circumstances in which this might not be the case. But our two main scenarios in case of a defeat of a withdrawal agreement - after the study of this report - are: a process of negotiations between government, parliament and the EU to see whether a second vote would be successful; and, if not, new elections. 

The report, mercifully, does not spend much time discussing a second referendum because the circumstances under which it would happen have a very low probability. Elections would constitute a quasi-referendum offering a choice between Theresa May’s negotiated deal (or no deal if that were the result of the negotiations) and the Labour Party’s custom union - which is not acceptable to the EU in the way proposed by Labour but could serve as a justification to extend the Art. 50 deadline. Labour’s commitment to a referendum does not pertain to the situation in which elections are held before Brexit. It is only relevant to the specific circumstance of no elections, but we don’t see any chance of the UK parliament forcing a reluctant government to ask for the Art. 50 extension that would be required for a second referendum. 

What we have to recognise, however, is that a defeat of the withdrawal agreement and a resignation of the government could potentially unleash so much chaos that other options, including a second referendum, become possible. We remain sceptical about scenarios in which market turmoil turns into the dominant factor. No deal would be hugely disruptive to people’s lives and to lorry drivers but, over the course of a few weeks at most, the UK and the EU would have operational borders and trade flows would resume - of course subject to WTO rules. That said, we also recognise that the markets have not yet priced in a no-deal Brexit. But, even then, we struggle to see a sustained market decline.

We strongly agree with Joschka Fischer, who argued that we should look at the no-deal Brexit not as an economic disaster but as a political one. He says the EU and the UK massively underestimate the foreign policy implications of a hard Brexit. We fear, however, that the Project Fear gene - which reduces all arguments to economics - remains dominant among UK Remainers. We will have to bear it - one more time.

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October 01, 2018

Barnier's no-thanks works much better than a yes-please

Will or won’t he? After France’s centre-right Les Républicains leaked the news that they were considering putting his name forward as a possible European People Party spitzenkandidat in next year’s European elections, Michel Barnier did the right and clever thing - and declined. In a letter to EPP party leader Joseph Daul, Barnier said his current mission to bring the Brexit negotiations to a successful conclusion must remain his overriding and sole priority. Barnier’s move on Friday predictably won him plaudits from all sides praising his dedication to his current job.

We don't think that absolutely rules him out as a possible compromise candidate for Jean-Claude Juncker’s succession, should no other solution be found after the elections. However, Barnier’s age and even more his gender will be seen as handicaps by those who think it is time for a woman and perhaps someone of a younger generation to lead the Commission. But what Barnier's decision clearly does even now is to boost further his cross-party reputation for integrity. It is an open secret that Barnier used to hanker after the post of EU foreign policy supremo now occupied by Federica Mogherini. In a handwritten addendum to his letter, Barnier made crystal clear he wishes to continue to work for the EU in a prominent capacity and, as he put it, renew the European project together. If Barnier still wants Mogherini's job next year, and if the political stars are properly aligned, we expect him to be a near-irresistible contender.

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