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October 02, 2019

What Boris wants...

The issue for now is not whether Boris Johnson’s proposal on the Irish border is workable or not. It will almost certainly not be accepted the way it is. Nor do Johnson and his advisers expect that it will. The sole issue is whether it can serve as a basis for discussions, or whether the whole exercise is intended to fail from the outset. 

Despite of the extremely negative reaction to the leaks from the usual Brussels sources, we think there is a chance that the UK and the EU will talk over the next two weeks in the run-up to the meeting of the European Council on October 17. 

One indication that this might be so came from a Bloomberg report earlier in the day, according to which Berlin and Paris appeared to have indicated willingness to discuss a time-limited backstop. We are cautious about this report, as we doubt that the EU is willing to act on this matter without consulting the Irish government. But it is possible that the issue was raised and discussed. We are not as dogmatic as some Brussels observers who are confident that the EU would never compromise on the backstop. The EU is often more flexible than it appears. Germany in particular has a lot to fear from a no-deal Brexit at a time when its manufacturing industry is in a full-blown recession. We think that Merkel will urge the EU at least to engage in the talks with an open mind. And so will Emmanuel Macron.

The proposal foresees a hideously complicated border infrastructure - a north-south customs border, with virtual border posts away from the border, and a single all-Ireland market for some categories of goods. In 2025 - four years after the end of the transition - the Northern Ireland assembly would decide whether it wants to align its economy with the UK or with Ireland. Peter Foster’s report, contains more details of the proposal. But we don’t think it is worth obsessing too much about these details because the whole purpose of this exercise is for Johnson to be able to present a materially different deal to the one obtained by Theresa May. Once the Tory party conference is over we presume that he and the EU will engage in detailed talks, in which both sides will have to compromise if a deal is to be reached.

One additional demand Johnson is almost certain to make for a deal is for the EU to rule out categorically a further Brexit extension. This way he will confront the House of Commons with a straight choice of either accepting the deal, or accepting a no-deal Brexit. That will also get him off the hook of asking for a Brexit extension. What is the point of asking for a Brexit extension as he would be requested under law, if the other side has already rejected it? This is the one gaping hole in the Benn bill, which we think is otherwise solid.

We argued last year that it was Theresa May’s fateful error not to have done precisely this. Instead she came home from Brussels with a three-way choice between deal, no-deal and no-Brexit. The three-way split allowed the hard Brexiters and the hard Remainers to squeeze out her deal. Johnson will not repeat that mistake. We don’t think that there can be a deal without the council explicitly rejecting extension in case the deal is defeated. 

The European Council could defend a decision to end the extensions by pointing out that the opposition parties have not been able to secure either a second referendum or an election. Without the encouragement of the EU, we don’t think that the current UK parliament could deliver any form of Brexit.

Will the EU give such a pledge? There are clearly some EU leaders who would like to help the Remainers with an extension, in the hope of securing a second referendum. But once you think through this strategy, as EU leaders no doubt will on Oct 17, the potential risks become obvious. They would be accused of undue interference in a member states’ domestic affairs. They might even risk a higher probability of a no-deal Brexit if Johnson were to win an absolute majority at a snap election.

Likewise, if Johnson stages a dramatic walkout on October 17, we see no chance that he could produce a no-deal Brexit on October 31 without breaking the law. His bluff would have been called. 

And then there is the ever-present risk of mutual ignorance. We think it was extremely unwise for Dominic Cummings to say the following, as quoted by the Telegraph:

"To be clear we won’t be hanging around waiting for them to negotiate with us...If they reject our offer, that’s it." 

This is not how you get a deal done with the EU. Once the Tory party conference is over, everybody will have to pipe down or otherwise risk the situation quickly spinning out of control.

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October 02, 2019

Ditched again - the decline and fall of Manfred Weber

Frankfurter Allgemeine reports this morning that the EPP will not allow Manfred Weber to become its president - a role that is now likely to be occupied by Donald Tusk after his departure as president of the European Council in November. Weber has reportedly abandoned his ambitions for the job. 

One reason cited is that Germans should not occupy the jobs of Commission president and EPP chief. This strikes us as an odd juxtaposition. The other argument is that Weber never held a government job - which seems to be his curse in everything he tries to achieve. We would not be surprised if Weber, who is also a deputy CSU chief, might ultimately return for a stint in German domestic politics.

The current EPP chief is Joseph Daul, a Frenchman. His successor will be elected in late November. It is expected that, if Tusk runs for the job, there will be no other candidates. The EPP is very much a top-down party, where elections are fixed by the party elders in advance. Tusk certainly has the seniority, but we wonder whether he is the right man to arrest the secular decline of the European centre-right and to come up with new ideas. The EPP is still the largest faction in the European Parliament, but it is punching below its weight. We think the party's problem is not a lack of former prime ministers, but a failure to modernise.

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