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February 27, 2019

EU bets on stable dictatorships to guard its south

We would not normally offer a post-mortem of the EU’s recent summit meeting with the Arab league, the first in what is to be an annual shindig alternating between EU and Arab capitals. No doubt to the frustration of more than a few of the participants, Brexit news and talks predictably hijacked parts of the summit. The impassioned plea by the Egyptian president Abdel Fattah al-Sisi for Europeans not to interfere with the Arab States’ management of their own affairs was perhaps the other salient summit event. The Egyptian dictator’s seemingly-impromptu press conference speech was greeted with vigorous applause from Egyptian media representatives; and it was left to Jean-Claude Juncker to insist that the question of human rights had indeed been raised. The joint declaration published at the end of the summit mentions neither these words, nor democracy. It is quite simply as if the Arab Spring had never happened – or rather, it has happened, and therefore those fearsome words must never be mentioned again.

All this is a long preamble to say that the EU has now determined that nothing matters more or so much as to sustain and cultivate a ring of stable states on the Mediterranean’s borders, countries able and willing to keep Africa’s refugees from travelling across the Mediterranean to Europe. As the earlier EU idea of creating vast refugee camps where the asylum requests could be pre-screened or dealt with has been universally rejected across the region, the business of keeping the refugees out or away is now done quietly. The logical conclusion is that the EU will henceforth see the economic stabilisation of the dictatorships in Egypt and other Arab states as a vital own interest. We note with a degree of wonder about the times we live in that it fell to one Recep Tayyip Erdogan of Turkey to chide Egypt ahead of the summit for its liberal use of the death penalty.

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February 27, 2019

The grand débat context for the unemployment insurance reform

The French government is taking the unemployment insurance reform away from trade unions and employers, as they failed to agree on a common proposal. Édouard Philippe said yesterday that the government would come up with its own outline. He said that the government wants to trim down the high end of unemployment benefits - they can reach a maximum of €7,700 per month - and to discourage companies from using recurring short-term employment contracts. Currently the unemployment benefit is calculated at an average 68% of the previous wage. Only 0.03% of benefit recipients get the highest amount and the average employment seeker get closer to €1200, according to Reuters.

The government wants the reform to take effect in the summer, with the aim to save €3.9bn over the next three years. The unemployment insurer Unedic is run by trade unions and employers with a state guarantee, which means its debt is accounted for in France's total public debt figure. 

It is also interesting to note that, instead of a tripartite meeting between government, trade unions and employers, the government chose to enhance the consultations to include parliamentarians and associations of unemployed workers. Expect even more diverse positions to emerge than under a tripartite meeting. Maybe this is deliberate, as it is in line with the spirit of the grand débat. It certainly confirms Macron's appetite for this new form of participative democracy that it is now reaching the negotiation table with the social partners.

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February 27, 2019

Survey suggests that political dividing line in Europe is between France and Germany

FAZ has the story on a yet to be published survey by Germany's Leibniz Centre for European Economic Research, which asked MPs in Germany, France and Italy about the future of the EU. The bottom line result was that French and Italian MPs are calling for more Europe, while German MPs are distinctly more sceptical - with some cross-party variation. We would make the observation that this is a complete shift from the situation only 10 years ago when German politicians were much more eager to accept more European integration. There are some statistical issues with the survey. The response rate of German MPs was much higher. 

Where MPs agreed on was on more investment and - interestingly - on less labour market flexibility. They disagreed vehemently on all aspects of eurozone governance, with the Germans universally more sceptical about asset purchases, eurobonds, and deposit insurance, while the French and Italian favoured more eurozone reforms. There was one issue the French and the Germans agreed - on rejecting a loosening of the stability pact. A majority of Italian MPs supported it.

The only other finding that struck us were the divisions within the Italian coalition. The Lega MPs rejected the notion of more European integration in all of the five main criteria while the Five Star MPs were in favour of more European integration in all of them.

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