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April 26, 2019

How Brexit has given rise to different perceptions of reality

We have been observing for some time how Brexit has produced reality-defying group-think on both sides of the debate. If you lock a bunch of second-referendum supporters into a room for long enough, they will tell you the second referendum is already happening. The same goes for the hard Brexiteers, who keep on banging about the Malthouse compromise.

It may well be that one of the extreme poles in the Brexit debate might prevail in some form of a violent high-noon standoff. But we still believe the more likely solution will be a compromise - though not right now. May has now dropped plans to bring the withdrawal agreement bill to the Commons next week. She has not yet found a majority. We also don't think a compromise is likely before the European elections. Why should Jeremy Corbyn forgo what looks like a potential election victory?

The debate in the Labour Party is fascinating. Last night, a newspaper uncovered Labour's yet unpublished EU election campaign material, which makes no mention of a second referendum. Keir Stamer and the party's many other second referendum supporters were said to be shocked. But why? Labour has not yet changed policy. Its 2017 election manifesto stated explicitly that Labour accepted the referendum result. There are circumstances under which Labour would support a second referendum, for example as a condition to support May's version of the future relationship. Contrary to widespread views, we think this is actually a clear policy, as is Labour's proposal for a customs union. The second referendum crowd obviously disagrees with the stated policy. But it is behaving as though the policy has already changed. Which it hasn't. 

We can see circumstances under which that might happen. But the indications so far point in a different direction. The campaign material seemed to have the handwriting of Seumas Milne, Corbyn's main political adviser and himself a eurosceptic. Corbyn has not given any indications that he would support a second referendum. And people were genuinely shocked to see Lord Adonis, probably the single most extreme second referendum supporter in the Labour Party, come out with a statement to apologise for an earlier remark that Brexiteers should not vote Labour. As a quid pro quo for his nomination as a Labour candidate in the European election, he is now battling for what he calls a sensible Brexit. He would not have been selected otherwise. Would that have happened if policy was about to shift?

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April 26, 2019

The EP, not Madrid, will boost Spanish clout

Marc Bassets, the correspondent of El Pais in Paris, recently told Arte that Emmanuel Macron’s attempt to divide European political forces into a camp of pro-EU progressives opposing a camp of anti-EU nationalists simply makes no sense in Spain. We agree. The party leaders’ debates earlier this week have amply shown how fiercely divided Spain’s political establishment remains over how to deal with Catalan aspirations for independence. The issue looks set to continue to dominate much of Spanish politics and weaken any Spanish government’s ability to develop a European policy commensurate with its potential clout. In the informal ranking of EU member states, Spain punches politically below the weight its economy and demography would suggest. If anything, Bassets told Arte, the right-left divide had deepened with the opposing political camps seeing each other as the enemy of Spain’s integrity. This is a radically different political situation from that in France, where threats to the country’s identity are perceived as coming from outside the country.

Basset’s perceptive analysis highlights the difficulty of developing political narratives that work across the EU. An interpretation of contemporary wider political trends that seems compelling to analysts or political strategists in one country may well utterly fail to capture the reality in another. The bigger or more dominant a country and its language are, the bigger the danger that it will be comparatively blind to diverging foreign realities. Incidentally, this fact is one of the drivers of the present Brexit mess.

This is where the European Parliament kicks in as an essential laboratory and breeding ground for transnational European politics. Party membership and national origin are both relevant to the power dynamics within the EP. Germany’s MEP’s have long used their numerical clout and their country’s strong parliamentary tradition to secure dominance or preponderance over their respective political groups. But, with the French socialists expected to be virtually wiped out in the European elections, and the EPP’s Les Républicains seeing their likely vote shrinking, Spanish MEPs are aiming for a much bigger political role in what are likely to be the three leading groups in the next European Parliament: EPP, S&D, and the liberal-centrist alliance to be built around Macron’s MEPs. We note that, in an analysis about the likely winners of the EP elections in terms of clout, Politico put the MEPs from the PP first. We agree with this assessment. The PP may be unlikely to head the next Spanish government, and its leader may have failed to outshine Albert Rivera, his competitor from Ciudadanos. But the EP is where the PP looks set to see its European weight increase, and the same should hold true for the PSOE and Ciudadanos.

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April 26, 2019

How realistic is a Gaullist Europe?

We took much interest in Zaki Laïdi's well argued essay on whether Europe is becoming more Gaullist, by which he means Gaullist principles applied to Europe as a whole rather than to the nation states. We, too, have been arguing that the EU and the eurozone would need to frame their policies based on the interests of the union as opposed to its member states.

Where Laïdi differs from us is in his optimism. The reason he believes that the EU is moving towards becoming a more interest-based political actor lies in the sudden change of the international environment in the second half of this decade, especially the changed roles of the US and China. While he has no illusions about the extent of German introspection, he writes that Germany's beggar-thy-neighbour attitudes in foreign and economic policy critically relied on the US as a willing accomplice, and on China as a distant but ultimately harmless player. Both of these assumptions are now challenged by events. We agree with him that these are very important shifts in the international environment. 

We also agree with him that Europe has the capacity and the tools to wield power if it wanted to. We have been arguing for some time that a eurobond, if properly constructed, could leverage the sources of the EU's global power through the active deployment of the currency as a geopolitical tool. This kind of thinking has been very alien to the EU, which has been more preoccupied with the triangulation of national interests. 

Laïdi's idea of a hegemonic Europe is obviously broadly consistent with the views of Emmanuel Macron. A question we believe that Macron and his supporters need to address is the strategic emphasis and sequencing. A fiscal facility, as recently agreed in the eurogroup, may have its advantages. But it is not going to be a geopolitical instrument. 

The ultimate reason we are more pessimistic than Laïdi has been the reality of the eurozone crisis. Back in 2007, who would have thought that the succession of a global financial crisis and a eurozone sovereign debt crisis would fail to bring about a big shift in attitudes? But, despite the serial crises, the German ordoliberals are stronger now than they were back then. The European banking system is more fragmented today. A group of small northern countries, led by the Netherlands, are more hostile to European integration than ever before. 

It will, however, be interesting to watch what will happen once the useful idiots complicit in northern Europe's beggar-thy-neighbour attitudes in economic and foreign policy leave the scene. Laidi is right to point out that Germans would never have thought it possible for a US president to threaten tariffs on Germans cars - even though we have been doing the same to them. And, for the first time, the EU is confronted with a US administration that actively conspires against European integration. 

Laïdi sees some signs of a shift, as do we. He refers to Angela Merkel's statement last year that the Europeans would have to take their fate into their own hands. But her government coalition is not committed to higher defence spending. He also points to Peter Altmaier's new industrial strategy. It is indeed very unusual for a German economics minister to depart from long-standing ordoliberal dogma and propose an interests-based policy to curtail Chinese technology investments.

The following is a good summary of what is required: 

"German support for formalising European sovereignty will require it to re-engage with concepts that it has long repressed: Realpolitik (interests-based foreign-policy), Machtpolitik (power politics, including the use of force), Weltpolitik (world politics) – and, by extension, Weltpolitikfähigkeit (the ability even to engage in world politics). This would necessitate a domestic debate extending well beyond the confines of official foreign-policy circles. As matters stand, such a debate does not appear to be in the offing."

On the contrary. We are actually seeing Germany moving in the other direction. Annegret Kramp-Karrenbauer's ill-informed diatribe on European policy, and on France specifically, is perhaps even more typical of German establishment views than Altmaier's. And it is not evident to us that in a Hobbesian environment Germany would necessarily conclude that it needs more Europe. It arrived at a different conclusion during the financial crises. What if Germany were to conclude that it needs more Russia? 

Those crises also taught us that the EU27/28, in their current legal and political framework, are politically not ready to respond to external shocks with adequate force. If the EU eventually were to move towards a more interests-based, pan-European Gaullism, it is far from clear that the road will be smooth. That destiny may well be preceded by discontinuities. And it is not clear to us that Germany and France would necessarily be united throughout such a process. 

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