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July 02, 2019

How not to choose

The reason why we have been so reluctant to draw up potential lists for the five top jobs was the realisation that this task cannot be accomplished without shafting at least somebody. What makes it even more difficult is that this decision is not about the quality of candidates, but about very different political designs of how the EU should operate - with France and Germany at opposite ends in this debate. 

There are no solutions that tick all of the boxes. Whatever list of names you draw up, there is always something wrong: not enough women; no eastern Europeans; or a political imbalance - too many liberals, or too few. 

The task becomes impossible when you add the following conditions on top: Germany wants a spitzenkandidat as Commission president; France does not want Manfred Weber; Italy does not want Margrethe Vestager, fearing it might get Jens Weidmann at the ECB. And then there are the east Europeans who don’t want Frans Timmermans. And the EPP, which does not want him either. It is unsurprising that the lists kept on rotating back to the starting point. We think journalists and other commentators should realise that they are being played by those who leak lists to them. 

In order to get a solution now, the European Council will need to revisit the various self-imposed constraints and agree to outvote somebody. The era of consensus politics is ending. So we can say for sure that one of two things will happen today: someone will lose big, or there will once again be no decision. Angela Merkel was right when she said that they were not even close to a deal yesterday because they would have continued otherwise. And Emmanuel Macron was right on another point: that in the future the system will have to change.

Formally, today’s meeting is the last chance by the European Council to agree its candidate before the European Parliament preempts the process by voting for its own president. If the EP votes for Weber, one of the three spitzenkandidaten is off the table. If they vote for Guy Verhofstadt, things would be very complicated for the European Council. In the Brexit jargon, the parliament will have the opportunity to take Weber off the table - or to put him firmly back on. Or else, Weber might fall between chairs - or tables.

Of the five jobs, there are only two that matter to the outside world and to us: of those the ECB is by far the most important and the least discussed among EU leaders. Having observed the European Council’s persistent and ongoing mismanagement of the eurozone, this lack of interest does not surprise us. Given the continued fragility of the monetary union, it appears downright irresponsible to us for politicians to prioritise spitzenkandidaten, or even a formal women quota. This is on so many levels worse than the futility expressed in the English metaphor of rearranging deck chairs on the Titanic. There was not much you could do on a sinking ship with insufficient space on life boats. What we are seeing here is a conscious choice not to focus on relevant issues. 

The ECB presidency is now on course to be settled as a residual in a political calculation. If you stipulate two of the five candidates are women, and then you pick three men and one woman for the other four jobs, then Christine Lagarde will be the only candidate. At no point have we seen EU leaders even considering the question of what they want from the ECB in the next eight years.

The only turn of events that could still swing it in favour of Weidmann is for Merkel to get shafted on the Commission presidency. If the successful Commission president is none of the three spitzenkandidaten, Merkel may have no choice but to seek a majority in favour of Weidmann. We don’t think the European Council will formally decide that issue today. 

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July 02, 2019

Why no-deal Brexit has emerged as a strong probability

The hustings of the two Tory candidates for the leadership campaign continue, with the only difference that Jeremy Hunt has moved its position on Brexit - yet again. Yesterday he laid out his no-deal timetable. In doing so, he is picking up some votes. 

In the meantime, and perhaps more important, the UK parliament is also moving away from what appeared to be its intractable position on a no-deal Brexit. Nicholas Watt, the political editor of BBC Newsnight, said last night that the majorities in the UK parliament in favour of a Brexit-stopping no-confidence vote are simply not there. We always wondered whether MPs would really be ready to end their careers in a single heroic act. Some would, but not as many as needed. Over the weekend we heard a warning from Matthew Parris in the Times, a strong pro-Remain newspaper columnist and former Tory MP, who said he feared that Tories MPs would not go through with it. Watts has the numbers: there are 12 Labour MPs ready to accept a no-deal Brexit. On the other side there are only 6 Tory MPs who are ready to vote down their government over no-deal. With the current majorities they would need at least 15 or 16. Yesterday John Bercow, the Speaker of the Commons, ruled out another no-deal wrecking amendment brought by Dominique Grieve. The UK’s archaic parliamentary rules also conspire against MPs. They will have only few opportunities after the summer break to set legislation in motion that could stop a no-deal Brexit. But if they manage that - which we think they might - we don’t think the majorities are there for the few instruments that could stop a no-deal Brexit in October: outright revocation, legislation for a second referendum, or a no-confidence vote. In any case, the House of Commons is not in charge of its own timetable. The opposition has a few allocated days, in which it could take charge.

The reason for this shift is an overwhelming desire in the country to get Brexit done with. We have argued that it was a grave strategic error by MPs in favour of a customs union and/or the single market to vote against the withdrawal agreement - especially when that was offered as a separate choice without the political declaration. The EU is, of course, right to say that the withdrawal agreement is the only deal on offer. Where the soft Brexiteers and second-referendum supporters miscalculated was the idea that they could take no-deal off the table. There has never been any evidence to support that view. We see no majorities in favour of a Brexit revocation, so this leaves no-deal as the legal and political default position. We also believe that the European Council has underestimated the probability of a no-deal Brexit throughout - having relied too much on what they have been told by Theresa May and Olly Robbins.

Most recently, we noted that support for the Brexit Party has fallen, but be careful not to arrive at premature conclusions. People will vote for whoever they think will deliver Brexit by end-October. That is Boris Johnson for now. The reason Hunt is shifting his position is that he realised he would have no chance to win the Tory leadership contest otherwise. He is now picking up Brexit-supporting Tories who despise Johnson for personal reasons. But, even in the unlikely case that Hunt were to win the contest, Brexit politics will be the same. If the next PM doesn’t deliver Brexit, Tory voters will desert massively to the Brexit Party. If he does, the Brexit Party will fade away. It really is that binary.

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