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July 16, 2019

What next, after EU sanctions Turkey?

EU foreign ministers decided yesterday to impose financial and political sanctions against Turkey over its drilling activities in the territorial waters of Cyprus. This is certainly a step up in the diplomatic stand-off well beyond mere threats, but have they thought this through? It seems like there is some backtracking as the publication of the list of sanctions, scheduled for 10pm last night, was postponed.

What we know so far from Kathimerini and AFP sources is that sanctions include a freeze of pre-accession assistance worth €146m, and the suspension of negotiations on the Comprehensive Air Transport Agreement. There will also be some downgrading of high-level dialogues in the fields of economy, energy, transport and agriculture. The European Investment Bank has been asked to revisit the conditions for providing financial support to Ankara.

Turkey responded with a statement saying that it will continue and even increase its activities in the eastern Mediterranean, insinuating a not so innocent coincidence of the decision with the third anniversary of the failed coup against Recep Tayyip Erdogan. Erdogan and his people see this standoff with the EU clearly as part of Erdogan's domestic survival battle. 

It is easy to see how this stand-off can get worse. The two drilling ships have been escorted by the Turkish military, including drones, F-16 fighters, and warships. For some time now Cyprus likened Turkey's move to a second invasion, referring to the military coup that led to the breakaway of the Turkish Republic of Northern Cyprus in 1974. If Turkey enforces its drilling activities or its vessels meet with Greek or Cypriot vessels, the EU and Nato would be called to step in more forcefully. 

What options are there to de-escalate the situation? Turkey refers in its statement to a comprehensive cooperation proposal the Turkish Cypriots submitted on July 13. They insist on equal exploitation rights for Turkish Cypriots. Peace talks between the two parts of the island collapsed in 2017. While negotiations to reunify the island have not restarted, Cyprus has moved to start gas and oil exploration by issuing licences.

Turkish also often refers to the protection of its own rights to the continental shelf. This is about the legality of Cyprus' exclusive economic zone, 200 miles off the Cypriot coast, where it has rights over the natural resources. It is less clear how far Turkey would go other than to issue threats from time to time. What is clear is that Turkey won't accept to settle the issue of who has the exploitation rights under international law, or any international dispute-settlement mechanism. 

The EU is far from a unified position on how hard to clamp down on Turkey. Some member states are more cautious given Turkey's efforts to keep the flow of refugees out of the EU. 

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July 16, 2019

What to make of Johnson’s four-point Brexit plan

In the last few days several commentators came out with proposals for an extended transition period as a potential technical solution for an agreement with a new Boris Johnson administration in the UK. The idea is beguilingly simple. Allow for a long transition, for example until 2023 with the possibility of renewal, until new arrangements are in place which could take up to ten years. We can see why the transition period might have to be extended to accommodate the seven-month Brexit extension. But we are cautious about the politics of a transition that extends beyond the next UK general election date. We recall that the end-2020 transition was convenient for Theresa May as it ended well before the scheduled election day of 2022. Given the narrow majorities in the House of Commons, there are a number of early-election scenarios, but we find it hard to believe that Boris Johnson will want to fight an election with the UK still de facto an adjunct member of the EU.

The best rendition we have read about what Johnson actually plans to do came from Peter Foster in the Daily Telegraph, citing from a recent event in which Johnson went into some of the details of his Brexit strategy - if you want to call it that. It consists of four planks: no withdrawal agreement in its existing form; the part on citizens rights will be accepted in full and legislated unilaterally; suspend the €39bn payment, and unfreeze the sum if the EU agrees to new transition outside Art. 50; no Irish backstop - border issues to be dealt with in trade talks; prepare for no deal.

So this is essentially a no-deal scenario since we cannot see any circumstances under which the EU would accept this. The overarching point Foster makes is that the EU would have the better cards even in a no-deal scenario. But Foster also points out that Johnson’s plan might work politically for him as it appears reasonable - offering to look after EU citizens, pay for a transition, and then work hard on the technology needed to create the border infrastructure in Ireland.

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July 16, 2019

Galileo fails, and nobody notices

Galileo was conceived as a geostrategic instrument to make the EU independent from the US in one key technology - satellite navigation. Conceived in the good old days of the 1990s, and originally earmarked to become fully operational in the last decade, the system has only been operational for three years. It has now emerged that it failed several days ago - and nobody noticed. The few European users of Galileo have been diverted back to GPS and the competing Russian and Chinese systems.

FAZ writes that the Europeans had claimed their system to be the most advanced technology, which makes this latest setback particularly embarrassing. All we know of the nature of the fault is that it relates to a computer coding issue at Galileo’s base station. The paper also notes that the US, Russia and China operate their navigation systems through the military while the EU has chosen a decentralised civilian structure. The latest plan was to have Galileo fully operational by 2021. Since last year, new cars in the EU are equipped to received Galileo signals - alongside GPS - but most people continue to rely on GPS which is more robust.

In many respects Galileo has proved to be a fitting symbol of the modern EU, which remains high on ambition but weak on follow-through. Galileo is another smokes-and-mirrors project where claims and reality do not meet - like the banking union, the EU’s immigration policy, Jean-Claude Juncker’s investment plan, and the special purpose vehicle Instex to maintain trading relations with Iran.

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