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March 29, 2019

Don't take Macron for granted

Readers of Eurointelligence might recall that we advocated the separation of the withdrawal agreement and the political declaration as a way out of the Brexit impasse all the way back in December. When Theresa May took the decision yesterday to do exactly that, she caused massive confusion. MPs and political commentators were shocked to learn that the two were indeed separate documents. This is telling us that the single biggest risk to the entire process remains astonishing ignorance of facts and a narcissistic tendency to indulge in silly procedural games in the House of Commons.

There is a consensus among virtually all UK commentators that May will lose today’s vote because both the DUP and the Labour Party are opposed. They also agree that a long Brexit extension will automatically follow and that the UK will as a consequence accept to take part in European elections.

Both outcomes are indeed possible. We are more cautious, however. On the first - today’s vote - two issues might yet intrude. The first is that some MPs might get nervous at the idea of an even greater loss of control once today’s deadline passes. A Yes vote would automatically trigger the procedure to leave the EU on May 22. A No vote would bring further uncertainty. We would not completely rule out that even in the case of a No vote the UK might still leave on May 22. This would require the indicative votes on Monday to produce a soft-Brexit majority, and a final meaningful vote to be held and won before April 10.

But, after analysing the voting data for the first round of the indicative votes, we have become less optimistic. The number of Tories supporting a softer Brexit was surprisingly small. Only 33 Tories supported Kenneth Clarke’s version of a customs union - the option that came closest to an overall majority. And only eight supported the second referendum. And remember: Labour whipped its MPs in support of the referendum while the Tories allowed a free vote. In terms of support for a referendum, this is as good as it can get.

The second, more critical, potential misjudgement is that the failure to agree on anything before the April 10 European Council would automatically trigger a long delay - as opposed to a hard Brexit on April 12. We believe the UK should not take for granted the possibility of a longer extension. Emmanuel Macron is the most vocal member of the European Council to insist there will be only a short delay unless there is a clear majority for an alternative mandate. This has not happened yet. Also, even if the UK were to propose a second referendum a longer delay is not guaranteed. Nathalie Loiseau, who leads Macron’s party into the European elections, called a second referendum a denial of democracy. Even if it is only her personal view, you can imagine that this argument will have some traction in France and elsewhere.

The situation therefore remains highly dynamic. We would urge readers to distrust the argument that a no-Brexit cannot happen on the grounds that the UK parliament has voted to take it off the table. The EU has interests of its own. Of course, the EU would ultimately extend if the UK were to agree to a second referendum or hold a general election. But we think that it would be risky for May to return to Brussels with nothing to offer except a grudging acknowledgement that the UK would organise European elections after all.

Also consider the asymmetric impact of a long extension on the balance of power in the European Parliament. The EP currently has 751 members, including 73 from the UK. The plan had been to allocate 27 of the UK's seats to other countries. The two biggest beneficiaries would be France and Spain, with five seats each. We conclude that Macron’s politically-important post election leverage would be substantially reduced as a result of the UK taking part in European elections. This is all the more so because, if elections were held, we expect Labour could emerge as one of the largest national groups in the newly elected EP to the huge benefit of the embattled Socialists and Democrats in the EP. The remaining UK MPs would be assorted eurosceptics, either Tories or Nigel Farage and his supporters. Whatever the outcome, a decision by the UK to hold elections would reduce the relative weight of Macron’s people, both in terms of country weight and distribution of MEPs. We are not saying that this consideration alone would inform his decision. But we are saying that we should not take it for granted that he accepts whatever the British are proposing.

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March 29, 2019

Green is EU's future - Loiseau takes a stance

Nathalie Loiseau hardly had time to come up with concrete policy proposals for Rennaissance, Emmanuel Macron's list for the European elections. Instead she made some surprisingly stark remarks putting the environment as the defining frame of her policy positions. The latest is that she won't support EU trade deals with nations that are not signatories of the Paris climate accord, including the US. Wow. She is clearly putting a radical edge into the EU elections campaign, making her one to watch out for.

Loiseau also advocated a reorientation of the euro budget towards green projects instead of building motorways in Slovakia. This raised many eyebrows across Europe and some fundamental issues about fairness: can the EU deny newer member states with a less-developed infrastructure the same benefits than older member states enjoyed in earlier decades on the basis that they no longer fit the objectives of the older member states? She is just at the beginning of her campaign, but with this kind of attitude we can expect some more radical ideas to come, backed by her number two Pascal Canfin and his environmental credentials.

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