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October 10, 2018

EU forces car industry to speed up modernisation

On the one hand, climate change. On the other, cars, jobs and money. After a long and intense ministerial debate in Luxembourg, EU governments struck last night a classic middle-of-the-road compromise forcing the European auto industry to speed up its move to electric vehicles faster than planned - but not as fast as a majority in the European Parliament and a minority of governments had wanted. The agreement can be seen as a defeat both for the German government, which fiercely resisted tougher standards so to protect its powerful industry from even stronger pressure to modernise, and advocates of fast action of the kind recommended in the UN’s dramatic new report on climate change. The Luxembourg discussions indicate that report will now be a new benchmark in the debate.

These are the main element of the Luxembourg deal. Where Parliament had voted last week for a reduction of average carbon dioxide emissions by 40% for cars until 2030 – with 2021 as the baseline year – EU environment ministers narrowly agreed a binding target of 35%. This is still 5% more than the European Commission had initially proposed giving in to heavy German lobbying. The differences between the positions of Parliament and Council will now be resolved under the well-honed negotiations procedure that ensues in such cases, with talks scheduled to start today. Disagreements between the two legislative bodies are small enough to make a compromise quite easy to achieve.

Reflecting the loss of influence of the German car industry, whose collective reputation as a honest policy actor lies in tatters after major emissions fraud scandals, the German government - backed by its usual eastern European allies - fought in vain to head off the tougher standards. Bloomberg tells us that Germany did win an interim review of the tougher rules as a separate concession. The ministers also agreed that emissions are to be reduced by 15% in 2025. They did not adopt Parliament’s call for parallel binding targets for the introduction of electric and other low-emissions-vehicles.

FAZ reports that Germany’s environment minister Svenja Schulze deliberately - and astonishingly - weakened her own negotiating position by making clear that her personal preference would have been for tougher targets than those she was officially defending as her government’s position. Her French colleague François de Rugy, conversely, said that while his official position was to go for a 40% reductions target France would not vote to put Germany in the minority. Faced with such statements, Parliament’s representatives should have quite a strong hand in the negotiations beginning today.

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October 10, 2018

Still waiting for the French reshuffle

All day long, the majority in the French assembly waited for the government to announce a reshuffle, but alas, they waited in vain. Some said it was because Bruno Le Maire had to present the corporate law bill which was adopted in the afternoon. The bill intends to increase the competitiveness of companies by simplifying administrative burdens for small companies, facilitating their financing, engaging their employees. It initiates several privatisations such as the gaming company FDJ.

But the evening came, and still no reshuffle. The only message from the Elysée palace was to say that it would happen eventually and without Edouard Philippe having to resign. Everyone is now expecting the announcement of the new team for today. 

So why the delay? Les Echos reports that the negotiations have been trickier than initially expected. Emmanuel Macron and Edouard Philippe could not agree on who is to succeed Gerald Collomb as interior minister. Should it be someone from the left or the right? Some ministers threatened to resign if a candidate of the right were to take over the ministry. Other candidates placed conditions on their engagement. The search was for a result achieving the right balance between men and women; between right, left and centre; between civil society and politics. And perhaps most importantly, there was also a rebalancing between the president and his prime minister. In other words, now that the Macron gloss is off, the world of old Parisian politics is back with a vengeance. Is Philippe now seeking to reaffirm his power against a weakened president - as some LREM MPs fear? Yesterday, there was much criticism aimed at Philippe, the former Republican, while Macron was spared. We note that this may be the beginnings of a process of separation between two men who until now had appeared to work in considerable harmony.

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October 10, 2018

Arlene Foster is not for turning - or is she?

Arlene Foster was in Brussels yesterday to meet Michel Barnier – or rather, to stick it to him, to use the more virile words of the Sun, the great British newspaper that can always be relied on to promote friendship across the channel and peace amongst the people. We doubt that the encounter between the robust DUP leader and the courteous EU Brexit negotiator was quite as lively as the Sun would like its readers to believe. We note that, judging from photographs, Foster was certainly delighted to be there with Barnier during the final gallop to an EU summit which will very likely be, and far more than the last one in Salzburg, a turning point in the negotiations one way or the other.

As the British press reported, Foster did not give Theresa May even one inch of expanded room to negotiate when she appeared before the press following the meeting with Barnier. She did explain though that when she recently spoke of her red line against any further regulatory divergence between Northern Ireland and Great Britain being a blood-red one, she had meant to describe a deep hue of red rather than to suggest something more disturbing.

We noted one interesting thing about Foster’s comments in Brussels. She very much focused on the economic cost to the northern Irish economy of any controls between Great Britain and Northern Ireland, rather than on the constitutional symbolism. She may have been merely tailoring her remarks to a Brussels audience, and this is probably the right interpretation. But we wonder: could this perhaps – just perhaps - be a door opening to a possible compromise? After all, the economic costs of a political deal can be compensated, something the EU is traditionally very good at. Could Arlene – perish the thought! – be bought off?

The Times has the story this morning that May wants to outline to her cabinet the compromise on the Irish border that she hopes to reach with Michel Barnier to her cabinet on Tuesday ahead of next week’s meeting of the European Council. The Times says that the views of four cabinet ministers, who are currently backing May, are going to be decisive: Jeremy Hunt, Sajid Javid, Dominic Raab and Michael Gove. May continues to champion her Chequers proposal with a single market in goods only, which the EU has so far resisted.

The Times also writes that the British government was ready to concede that the UK would follow EU social and environmental laws, and possibly even those on labour standards, to make Chequers more palatable to the EU. Some cabinet ministers have said they would resign in this case. The European Research Group says it has lined up about 40 MPs who would block any plan based on Chequers, which means that May would require some 25-30 MPs from the opposition to support it, plus the DUP.

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