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January 15, 2019

A first set of important concessions by the EU

The Tusk-Juncker Letter to Theresa May was quickly dismissed by anyone minded to vote against her deal tonight. But we doubt that many MPs actually read it, let alone reflected on it.

Of course the letter did not, and could not, give a formal end date for the backstop. But as Donald Tusk wrote, the political commitments have legal value and bind the EU in the most solemn manner. Political commitments are part of the context in which international treaties, such as the withdrawal agreement, are legally interpreted.

Jean-Claude Juncker said the European Commission is ready to start negotiations on the future relationship immediately after the signature of the withdrawal agreement. The intention is to conclude the trade talks by 2020. If the trade deal gets deadlocked in the ratification process, it would be applied provisionally. This would remove the threat of a single country keeping the UK trapped in the backstop. He also said the new arrangements to be negotiated would not have to replicate those of the backstop. The EU would be open-minded to allow technical solutions to facilitate trade across the intra-Irish border.

These commitments address a whole number of important concerns raised by the UK during the negotiations. We have no doubt that a second round of talks could produce further commitments from the EU, but only for as long as there is an expectation that this would unlock the opposition to the withdrawal agreement in the UK parliament. 

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January 15, 2019

Tsipras struggling to find votes to defeat confidence motion

In this historic moment, when the Prespes agreement on the Macedonia name change reaches Greece's parliament, is Alexis Tsipras really in danger of losing his confidence vote tomorrow? And what are the scenarios for the Prespes agreement itself? Could the adoption in the Greek parliament be in danger as a consequence of the confidence vote? Are we up for another Greek political drama? Staged or for real?

Constitutionally, Tsipras only needs a majority of those present to win a confidence vote, which should be possible given that the Communists will not show up. But Tsipras recognised that he would not have a mandate to continue as PM if he cannot secure a majority of 151 votes, and is now up for the hunt ahead of the vote on Wednesday night. He needs another five votes on top of the 145 of his own party plus one independent MP he already secured. And, by the looks of it, he may come pretty close: two Anel MPs said they will back Tsipras in the confidence vote, defying Panos Kammenos' party line. As a consequence they are being ousted from the party. This brings the number of Anel MPs down from 7 to 5. A third Anel MP announced that he will back Tsipras in both confidence vote and Prespes agreement and hand back his party seat after that, and another one is expected to announce his support. So Tsipras can look at 149 or 150 votes already. He may get Spyros Danellis from To Potami, who indicated his support earlier, though there is some arm twisting going on. To Potami's party leader and his deputy are threatening that they will no longer vote for the Prespes agreement if Danellis backs Tsipras in the confidence vote, according to Macropolis.

Tsipras has made it clear that, even if he does not get 151 votes on Wednesday night, he will continue in government so that he can bring the Prespes Agreement and other important legislation to parliament before snap elections. So at the moment the options seem to be that he either wins the confidence vote and loses the majority for the Prespes agreement, or win the Prespes Agreement but lose the confidence vote if To Potami does withdraw its support for the sake of party discipline. A high price to pay. 

Panos Kammenos, meanwhile, is doubling down on his all-out move. Kammenos said he would back a no-confidence vote brought in by New Democracy on the condition that its leader Kyriakos Mitsotakis publicly commits not to accept a deal that will include the term "Macedonia", and that he will never negotiate the term. Kammenos might lose his parliamentary group if the number of Anel MPs drop below 5. Kammenos is thus playing for the survival of his party by choosing to reinforce the party line on Macedonia even if it costs him the right to have a parliamentary group in for the rest of the current term.

The debate ahead of the confidence vote will start this morning. Expect political bargaining to go on until the very last minute.

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January 15, 2019

Is the national tax veto a good EU election topic?

As the press has reported, the pushback against the Commission’s plan to cut back the national veto on taxation matters has started even before the roadmap’s public presentation. One argument is that considering the hostility the Commission’s communication will trigger in many smaller member states, it is a largely a pointless vanity exercise particularly at this stage in the political life of the Juncker Commission. Given that Pierre Moscovici is French and that the topic is popular with the powers-that-be in France, it is easy to suspect the Commissioner of yet another attempt to make his CV as appealing as possible to the inhabitant of the Elysée. Another line of attack points to the European elections. Why launch such a bombshell communication at a time when nationalists and other populists might exploit it, to the detriment the Commission’s own aims in the forthcoming European elections?

Leaving Moscovici’s future employment aside, we disagree on both counts. It is a good thing for the debate that it is the Juncker Commission that now puts forward a comprehensive plan tackling the issue head on. After all, it is headed by the former prime minister of country that has rightly or wrongly come to symbolise everything that is wrong with national tax sovereignty. And it is a good and even essential debate to have in the forthcoming elections. It is nearly a quarter of a century ago that Mario Monti, then the Commissioner in charge of taxation, started sounding the alarm. He warned about the huge social, economic and political danger of the tax burden shifting onto smaller businesses and ordinary taxpayers and away from major corporations availing themselves of the loopholes and sweet deals possible under the principle of national tax sovereignty. The digital revolution has increased the scope for fiscal mobility of big businesses and the very rich even further, and the impact on our societies, their social cohesion and their political stability is nothing short of devastating.

Insurrectional movements such as the gilets jaunes as well as extremist parties are fuelled by rage about unfair fiscal policies. Anger about unfair taxation is historically one of the main causes of the breakdown of established political systems. The argument that it is deeply wrong that the largest and richest companies and the richest citizens should find it easier to exploit the loopholes resulting from national tax sovereignty than anyone else is as easy to make as it is compelling, and the conclusion that national tax sovereignty must therefore be limited is as good as irrefutable. We believe that the forthcoming European elections would be a waste of precious political time if voters across the EU, and particularly in the smaller member states that fetishise tax-sovereignty, are not fully exposed to this argument.

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