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September 17, 2019

Beware of the diplomacy of humiliation

There is a rule in journalism, not known to many, that you never show an empty chair when an interviewee or discussant does not show up. We assume the same rule applies to diplomacy. This is not only about fairness, but just as importantly about self-interest. Once journalists and diplomats resort to humiliation as tools, they close down their communication channels. Xavier Bettel seems to have forgotten this when he pulled the stunt of an empty-lectern press conference with Boris Johnson after the British prime minister decided he did not want to face an open-air press conference with demonstrators in the background. We believe that stunts like these will ultimately reinforce the Brexiters' determination. And we do not think that all Remainers will be happy about this either.

Even without such gestures, there are many obstacles to a successful passage of a withdrawal agreement. Jean-Claude Juncker is right, of course, that the negotiations cannot start in earnest until the UK makes serious proposals - which has not happened yet. It is quite possible that Johnson is really not seeking a deal at all, only the satisfaction of walking away from it. Be as it may, the EU should try its utmost to seek a deal. Luxembourg may be one of the few all-round beneficiaries of a no-deal Brexit, but this is not true for those parts of Europe that are currently experiencing a deep manufacturing recession from a fall in exports. Imagine what the sudden imposition of a 10% car tariff would do to German auto sales. Hans-Werner Sinn called a hard Brexit a medium-sized catastrophe for the German economy. We agree with him. The EU may have reasons not to reopen the withdrawal agreement. But it is politically a grave decision, because it will have costs.

If you look at Brexit from a narrow UK electoral point of view, we believe that the two winning strategies are those of a no-deal Brexit and outright revocation. We sense an overwhelming desire by the electorate to get this over and done with, one way or the other. This is why we think the position of the LibDems is electorally smart. We don’t think that the Labour Party and the SNP will support a withdrawal deal, except perhaps a small group of Labour MPs around Stephen Kinnock. If there are more than 10 hardline Tory MPs to reject it, the game is up. This means no-deal Brexit is still very much on the table. 

The Benn legislation has not really changed this. We noted yesterday an interesting legal conspiracy by Remain lawyer Jolyon Maugham, who thinks he found a hole in the legislation. The Act compels the prime minister to seek a Brexit extension by October 19. But if the House of Commons were to pass the withdrawal agreement by then, the obligation to seek an extension would fall away. However, a previous act of parliament stipulates further pre-conditions for a Brexit agreement. If these are not met, the UK will leave the EU without a deal.

We don’t think that this will be the course of events, but Maugham’s legal analysis makes one thing clear: no legal act is without loopholes. The House of Commons would probably find a way to pass supplemental legislation to plug this particular gap or others that might arise. But we think the real issue is that the hand of the prime minister in this standoff is ultimately stronger. Maugham imagines a wider conspiracy as part of which Johnson plots together with his eurosceptic MPs to pass a reheated version of Theresa May’s withdrawal bill, but then frustrate further passage of the bill before the end of October.

We have no idea whether this or another one will be the preferred route to frustrate the Remainers’ anti-Brexit tactics. But we think there is more than one route to it.

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September 17, 2019

Germany’s climate hypocrisy

A reader recently reminded us that it was Angela Merkel who frustrated more ambitious EU climate targets in 2014. The various cans she kicked down the road during the middle of this decade are now hitting us on the head. Failure to prepare is the main reason why the German car industry is in the mess it is nowadays. Even with new policies in place, there is no chance whatsoever that Germany can meet its agreed climate change targets because it did not take the needed intermediate steps.

We are therefore not surprised to read that the grand coalition is in the final stretch to agree a set of climate-change policies, whose main goal will not be to meet the agreed targets but to keep the fiscal surplus. Olaf Scholz said there would be a final deal by the end of the week. Süddeutsche Zeitung reports that the government is planning an annual budget of €8-10bn. German politicians and journalists like to impress people with large headline numbers, but this is only 0.2-0.3% of GDP. We will report on the details of the package when we have them rather than follow the various rumours. But it appears that the package will have several components, including new taxes.

The German media are full of climate-change deniers, of the passive-aggressive variety. Die Welt is a good example of a paper that seems to be allergic to anything remotely damaging to the German car industry. So is the FAZ. Jasper von Altenbockum, the conservative political commentator in FAZ, says the deal was a compromise between climate hysteria - as he calls it - and anti-hysteria. He writes that the goal of the political compromise can and should not be to meet the climate targets. That chance has already passed as Germany is way off the trajectory it would have needed to be on to meet the agreed Paris goals. Unsurprisingly, he supports the CDU’s approach of a third way - one that takes into account the interests of German industry. We quote him not in support, but merely to demonstrate what the EU will be up against in its attempt to meet climate goals. Many Europeans have been blinded by Merkel’s climate-change diplomacy and are ignorant of what is happening in Germany. By the time this mismatch comes to head, Merkel will probably be gone.

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