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July 18, 2019

Will Johnson's first action on coming to office be to call elections?

The Times reported yesterday that the team around Boris Johnson is preparing for early elections. We think this is a plausible story, but it does not mean that elections will necessarily happen. Our sense is that a discussion is going on within the Johnson camp. The perception of those within the Johnson team who argue in favour of an early election is that they stand a good chance to win it while Jeremy Corbyn is still around. The article also mentions that the Conservatives were planning a recruitment drive next week to put their party on an election footing.

We have argued before that an immediate election would be the least risky of all options for Johnson. It is the only scenario in which he could conceivably win an election before having delivered Brexit. An election right after a no-deal Brexit could be potentially catastrophic. We would expect Johnson to fight on a Brexit-delivery theme, nailing the 31-October leaving date to his mast. We would agree with the Times' assertion that Labour in its current state is unlikely to do well at an election.

There were also more signs of a hardening approach to Brexit. Johnson appointed a no-deal advocate as senior adviser to his EU team. Daniel Moylan is a former aide to Johnson when he was mayor of London. Again, we would not overplay the significance of the appointment on its own, but it is consistent with a hardening of Johnson’s Brexit position. After Johnson’s clear rejection of Theresa May’s withdrawal agreement, we see few obstacles now to a no-deal Brexit in October. However, Johnson may find it expedient to call elections beforehand to avoid an open confrontation with the House of Commons.

We also found it interesting to read an article in Buzzfeed about the disarray of the second-referendum campaign. Their most senior staff are divided over whether the should keep neutral, or whether they should openly back Remain. We think this is a storm in a very small teacup. Everybody knows that the second-referendum campaign is a Remain project. This is about tactics - a battle based on different perceptions of the gullibility of voters. Those who argue in favour of neutrality say this would increase the chances of success for their campaign, and the early-election chances of parliamentary candidates supporting a second referendum. We have argued consistently that a second referendum is unlikely to happen, except in a case of a Labour-led government. Even in that case, we would expect voters to endorse Brexit again.

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July 18, 2019

EU Commission will monitor rule of law in all member states

The European Commission has unveiled a new rule-of-law surveillance framework widening the scope to all member states.

The decision and its timing raise several questions. Coming immediately after the election of Ursula von der Leyen with the critical help of Poland’s PiS raises the question whether there is a link. Perhaps to counter this impression, the Commission opened a further Art. 7 infringement procedure against Poland on another aspect of its judicial reform. The as-yet unanswered question will be whether the von der Leyen Commission will be more lenient in its enforcement policy than the current one.

The Commission said it would not hesitate to seek an injunction from the European Court of Justice against a member states as an infringement procedure unfolds. This follows a recent precedent regarding an ECJ decision on Poland. 

Another issue was raised by the Greens in the European Parliament, who want rule-of-law monitoring entrusted to independent experts. They also want it to include human rights.

A major political problem for von der Leyen is that she owes her majority to the active support of both member states where the rule of law is under threat. She will be flanked by Frans Timmermans and Margrethe Vestager as Commission vice-presidents. They can be expected to oppose any softening of policy towards Poland or Hungary. Even so, one of the consequences is be that the Commission’s policy in this field will start off under a cloud of suspicion. 

Another interesting aspect is that the older EU member states will face an unprecedented degree of scrutiny from the EU. Until recently, the notion that the European Commission would set up a mechanism to monitor the enacting of laws, the judiciary, the separation of powers and the capacity to fight corruption in member stares like France, Germany, Italy or Spain would have caused major outrage in these member states. Some governments must brace for embarrassing findings about their judicial and detention practices. 

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July 18, 2019

Dijsselbloem, not Carney, is the European frontrunner for the IMF job

Opinion among EU finance ministers for the succession of Christine Lagarde at the IMF is shifting away from Mark Carney towards Jeroen Dijsselbloem, reports the FT. Carney is clearly the more qualified candidate, but this appears not to be the key criterion. The article quoted one diplomat as saying Carney was not European enough for some of the finance ministers. It also said that Leo Varadkar was not making much of an effort to back him - despite his Irish citizenship. It appears that a majority want a eurozone candidate.

What speaks for Dijsselbloem is the fact that he is a Social Democrat, and that the Social Democrats didn’t get much in the EU's recent jobs lottery. This would suggest that finance ministers regard the IMF role as relatively unimportant. They will discuss the appointment at tonight's G7 meeting in Chantilly. The article quoted one observer as saying that there was a risk of excessive haggling - which might cost the EU the job in the end. 

A question we have is what the position the Johnson administration on this issue will be, after it comes into office next week. Will the new UK chancellor accept a eurozone candidate, perhaps as a sign of goodwill? Or will they see this as an opportunity to align with the US and other members against the EU, to demonstrate Brexit-Britain’s new powers?

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