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March 18, 2019

May's deal still on the table. Don't rule it out.

Another cliffhanger Brexit week, or perhaps not. Perhaps the biggest news we read this morning is the suggestion by Boris Johnson that he might, just might, back Theresa May's deal on condition that the next round of trade negotiations would have to be conducted in a different spirit - in other words, without May as leader. She will step down this year in any case, so this condition is not going to be hard to fulfil. Apart from Johnson, Tories now likely to support the agreement also include Ester McVeigh, Ian Duncan Smith, David Davies, and we think also Jacob Rees-Mogg. Some unrelenting backbenchers have declared that they will not budge. Thus there cannot be a Tory/DUP only majority. The government will need some Labour MPs to support the deal - or twice as many to abstain. 

The DUP is, of course, critical. Lord Trimble, the former DUP leader, seems to have swung around in favour of the deal. The DUP leadership only said it was in substantive discussions. If they agree - we think there is a more than even chance they will - the game is wide open. Ideally the government would like this settled this week, before Thursday's European Council. If the talks with the DUP succeed, a meaningful vote could be held late on Tuesday or Wednesday. But Downing Street will need to have the numbers first, and secure some support from Labour. The thing to note with the group of pro-Brexit Labour MPs is that they will only stage a mutiny at the last minute - and only if victory is certain. No one deserts to the losing side. We think May can afford between 10-20 Tory No votes at most. We would not rule out a fourth meaningful vote next week if the numbers do not come together this week. It was always our contention that this would go to the brink. 

So, what about an extension? May's gamble is to dangle the horror of a long Brexit extension in front of her own MPs' noses to pressure them to support the deal. A long extension is a death sentence for the Conservative Party. Donald Tusk's advocacy of a long extension has been useful in that respect. If feeds the conspiracy theory that the EU is plotting to keep the UK inside forever.

That said, we also think this strategy could unravel at the summit. Wolfgang Munchau lists a number of reasons why a long Brexit extension is exceedingly risky from the EU's perspective - including the impact on the balance of power in the European Parliament as the UK would have to hold elections to it - and a distraction from more important geopolitical issues. If the EU opts for a shorter extension, as we would expect, it would have less of a deterrent impact on the eurosceptics - if they expect this to result in no-deal Brexit with no possibility of extension in May or June. A short extension would still allow the UK to settle for an alternative future relationship - Norway or the single market. Changes to the political declaration do not require a long extension since the withdrawal treaty would be unchanged. The same goes for a general election. It is possible that elections could take place as early as May 2 - a date set for UK local elections. The Fixed Term Parliaments Act requires only a minimum of 17 working days between the dissolution of parliament and the elections. Elections would lead only to a one-month Brexit delay. 

The Tories will probably not want to hold elections. If you look at the most recent opinion polls, their most important feature is extraordinary volatility. The polls follow the news. 

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March 18, 2019

EPP decision on Fidesz still open

Two days before the crucial EPP meeting in Brussels, the decision about whether to keep Fidesz and Viktor Orbán in, suspend their membership, or kick them out still seems as open as it was last week. The most striking thing was not Orbán's predictable move on Friday, to use Hungary's national commemoration of the 1848 uprising against the Hapsburg Monarchy to renew his attacks on the EU as an 'liberal Empire' and call for an age of 'national leaders', but the deafening silence from the CDU. The vote of the EPP presidium on Wednesday on what to do about Orbán will be a secret ballot, which is one of the reasons the outcome is so hard to predict. None of the 13 parties that have called for Fidesz' suspension or expulsion seem to have been mollified by his recent moves. If anything, sentiment seems to have hardened.

Meanwhile, we note that it is no accident that EPP spitzenkandidat published an op-ed in FAZ am Sonntag yesterday in which he called for a new mechanism to monitor EU member states' respect for EU values and democratic principles. This would entrust the ultimate supervision to the ECJ, with an independent panel of retired senior jurists monitoring behaviour. Could this be part of a strategy to propose suspending Fidesz rather than expelling it?  

Thomas Klau writes: There are plenty of plausible reasons to keep Fidesz in the EPP. The departure of Hungary's ruling party from the Christian Democratic alliance might well lead to the emergence of a major new hard-right force in the European Parliament. It would reinforce the perception and to some extent the reality that an East-West split runs through the EU and its politics. More parochially, it would lessen the EPP group's preponderance over other groups in the EP; and it might make it more difficult for Annegret Kramp-Karrenbauer and the CDU to fight and win the upcoming crucial regional elections in East Germany, where Viktor Orbán's anti-migrant discourse resonates with much of the potential CDU electorate.

So, plenty of plausible reasons - but all of them together still not good enough. Orbán has proved beyond any reasonable doubt that attacking the EU's values entrenched in such documents as the Charter of Fundamental Rights is part of his political raison d'être. His transformation of Hungary into a semi-authoritarian state progresses by the day. Most importantly, not a week goes by without Orbán or his political henchmen signalling their appalling fondness for the vilest kind of antisemitic tropes. That the Orbáns of this world all too often seem to get a free pass from the present government of Israel should not be good enough for the EU, not for the EPP, and certainly not for Germany's CDU and CSU. It is high time for the EPP to salvage its reputation and cut Fidesz loose.

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March 18, 2019

On the defeat of liberalism

Our observations about the increasing problems of the EU and the eurozone reflect a much bigger global phenomenon - the decline of liberal democracy. Robert Kagan, writing in the Washington Post, puts the decline of liberalism into a broader historical context. He compares the emergence of the 21st century strongmen - like Vladimir Putin or Recep Tayyip Erdogan - to the rise of fascism and communism in the early 20th century and sees it as an indictment of the failure of liberal society. And he makes the observation that these tendencies are particularly strong in good and relatively peaceful times. Kagan notes that the perception of insecurity in the widest sense of the word is the main factor in explaining the retreat of liberalism in the modern age. Liberalism provides security against intrusion from the state, but lacks in other dimensions:

"Humans do not yearn only for freedom. They also seek security — not only physical security against attack but also the security that comes from family, tribe, race and culture. Often, people welcome a strong, charismatic leader who can provide that kind of protection. Liberalism has no particular answer to these needs."

He notes that there is nothing special about the decline of liberalism in our modern age. He ends his long essay with the observation that the mainly older white males who are the main supporters of illiberal policies act, as he calls it, with an unspoken faith that the liberalism that allows them to challenge the system will be protected by the very liberalism they are criticising.

Kagan makes a number of subtle points worthy of deeper reflection but, like so many other liberals, Kagan too is not confronting liberalism non-self-correcting failures, like the persistent tendency for financial instability and the impacts on society through economic policies. This is not just about perceptions.

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