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October 12, 2018

A deal so close, and yet so far

The FT reports this morning that the EU and the UK were close to a Brexit deal. We reserve judgement on this specific issue, but note the more important point that the parliamentary math is - as of yet - not conducive to approval, and indeed has become less so over the last few days. It is interesting that the Times has no Brexit news at all among its lead stories this morning, while the Guardian reports on a Kent motorway being turned into a car park as part of the no-deal preparations. And this despite the fact that Theresa May has invited her inner war cabinet to a meeting yesterday to update them on the state of the talks. The Telegraph notes that there is unhappiness among eurosceptic ministers about the lack of an end-date for what we call the second of three stages of Brexit. 

The already-agreed 21-month transitional period is to be followed by a further phase during which the whole of the UK remains in a customs union with the EU. The UK is to stay there until a free-trade agreement is negotiated, including an agreement for its provisional application prior to full ratification. The end date is an important issue for the eurosceptics, but what many in the UK fail to realise is that it is also an important issue for Michel Barnier. There is no appetite in the European Commission, or in France, to keep the UK locked in a provisional customs union that becomes permanent over time. The row over the end date is a red herring: the EU side will want to move to a permanent arrangement just as much as the eurosceptics do. Businesses prefer planning clarity, and so will politicians in this case.

The FT noted that two eurosceptic ministers, Andrea Leadsom and Esther McVey, were last night on the verge of quitting. The paper says that May agrees to the European Commission’s principal ideas for the Northern Irish backstop. This would involve minimal checks on goods travelling across the Irish Sea once the FTA takes effect, while Barnier is happy to include the whole of the UK in the customs union until it does. This means there will be no controls in Ireland during that period, followed by minimal controls in the Irish channel afterwards.

The current wording of the drafts that are circulating means that there would be no firm end date to the second period, but what the FT quotes amounts to a clear pathway towards an FTA. We believe that the nature of this transition is the key political issue in the UK, and it is possible that May could seek ways to firm up the path towards an FTA even if it does not include a specific date. 

Polly Toynbee, the political commentator of the Guardian, writes that it is not always easy to separate signal and noise when it comes to Northern Irish politics. But her sources are suggesting that this time the DUP is not bluffing. They already started boycotting the government this week, by supporting an opposition amendment on the agriculture bill. She writes that the absence of a border between Northern Ireland and the UK constitutes the fundamental rationale for the DUP's existence.

"That’s who its MPs are, what they eat and fire-breathe, their only purpose on Earth. Do they care what happens on the Irish border? Not as much as the holy UK bond across the Irish Sea."

She also noted a poll among Tory party members showing a majority supporting the idea that a breakdown in the peace process was a price worth paying for Brexit. She further reports that the Labour leadership is very confident that the vast majority of Labour MPs will follow Jeremy Corbyn in his rejection of Theresa May’s deal - whatever it will be. She herself concludes that it is hard to see more than a trickle of Labour MPs responding to any appeals to patriotism in support of May’s deal. So this would beg the question: where should parliamentary support for the deal come from? An open-ended customs union may satisfy the Tory Remainers, who themselves plotted to convene a caucus to vote down the deal. But it will energise the European Research Group of Tory eurosceptics. Toynbee suggests, probably correctly, that the opposition from the hard Brexiteers might be smaller than initial estimates suggested. But if the Labour Party sticks with Corbyn and the DUP votes no, the game is up under any scenario.

There is one caveat. The Labour Party’s opposition to the deal is based on the illusion that there are still alternatives. The British debate has not yet entered the world of deal versus cliff-edge. A no vote would throw up a whole number of alternatives, including a second ratification vote closer to the Brexit deadline, new elections, or a second referendum though not necessarily with a Remain option. The fact that May appears to be seeking an early deal suggests that she might already be working on a plan B, in case of a failure to assemble a parliamentary majority for her deal. She seems to have decided against the other strategic option - to procrastinate and strike a deal at the last minute, so as to avoid any uncertainty about the dire consequences of a failure to ratify.

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October 12, 2018

AfD leaves Germans speachless and helpless

Bavaria goes to the polls on Sunday - an election we would normally not take an interest in, but this time is different. If the major parties' results are much worse than the current polls predict, the federal grand coalition itself could be in trouble. The two issues to watch out are how close the CSU will fall towards 30% (they are polling at 33%), and whether the SPD will fall below 10%.

The latest national polls also confirm a dramatic decline in support of both CDU/CSU and SPD. It is clear now that the grand coalition has crossed an invisible line and is no longer a viable political option. And the Greens are taking over from the SPD as the main party of the left.

But what worries us most about German politics is the extreme radicalisation of the AfD, and the sheer helplessness of the German establishment in dealing with it. The latest news left even us gasping for breath. The AfD is setting an internet portal in which school children can denounce anti-AfD teachers - a methods that mirrors those used by the Nazis. The German political system has gone out of its way to avoid Nazi comparisons with the AfD. To avoid the N-word there is now talk about methods used by fascists, but we think this is a bad mistake. It is simply wrong to classify the AfD merely as a populist party: doing so is a way to sanitise them. The AfD are very different from parties like the Lega, or Marine Le Pen's recently-renamed National Rally. It becomes ever more apparent that the AfD deliberately draws on Nazi heritage. The AfD is on its way to looking and talking like a modern Nazi party would look and talk.

As FAZ reports, the AfD has done its legal homework. They are very good at calibrating what they do, and say, so that it stays legal even if it ignores the spirit of the law. At this stage, there is not much the government can do to stop this. The AfD in the state of Baden-Württemberg plans to go a step further by publishing the list of teachers denounced by pupils on the website. Katarina Barley, the SPD justice minister, criticised the platforms sharply, but the German government has no legal means to forbid them. Legal action might now come from the affected teachers themselves. The latest data-protection laws may also help the teachers.

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