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February 10, 2020

A new era in Irish politics with Sinn Féin

This is no doubt a historic moment for Ireland. Sinn Féin has emerged as the winner of the popular vote, backed by younger generations ready to move on from the past and to embrace radical change. Vote counting still goes on until later today, but according to the results so far Sinn Féin reached 24.5% of the first preference votes, followed by Fianna Fail with 22% and Fine Gael with 20.8%. Out of 160 seats, 77 have already been filled with 29 seats for Sinn Féin and 12 seats for each of the two parties that used to define the mainstream in Irish politics. Sinn Féin's victory was a spectacular event. They came on top of the polls even in the constituencies of Leo Varadkar and Micheál Martin, the leaders of Fine Gael and Fianna Fáil. Some forecasts predict Sinn Féin to end up with 39 seats in the assembly, out of the 42 candidates the party was running. The question now is where to go from here.

Sinn Féin's leader Mary Lou McDonald said she would first seek a coalition government without Fine Gael or Fianna Fáil. Mindful of the experience of Labour, surging to 37 seats in 2011 just to be wiped out in the 2016 elections after entering a coalition with Fine Gael, this sounds like a clear first choice. But the numbers might not add up if she needs to get another 40 MPs. The Greens have had a disappointing run in these elections, and Labour has not recovered much ground.

The second option is to explore a coalition with Fianna Fáil. Its leader Micheál Martin shocked his party with a U-turn yesterday, signalling that he would be open to start coalition talks with Sinn Féin. Senior Fianna Fáil MPs publicly rejected this, and insisted they would not break their promise to voters. So this is not going to be an easy choice.

The third option, Sinn Féin in opposition to a Fianna Fáil government supported by Fine Gael, was firmly ruled out yesterday. Sinn Féin is poised to govern as Fine Gael categorically rejects the idea of propping up a Fianna Fáil government.

The fourth option is that none of the parties has enough seats or the willingness to form a coalition government. Sinn Féin only runs half of the number of candidates that Fine Gael or Fianna Fáil do. This could end up giving the traditional largest parties more seats than the most popular Sinn Féin. Deadlock could lead to another election. Whether or not such a scenario helps Sinn Féin, either by allowing it to run more candidates or by emphasising the break with the old traditional party politics, depends on how the party will fare in the coming weeks.

The other question is what London is to expect from a Sinn Féin government. Boris Johnson can always fall back on a no-deal option for trade talks, if Sinn Féin were to oppose a trade deal. This would be far worse for Sinn Féin in Northern Ireland than it would be for Tories in the UK. But a Sinn Féin government would pursue Irish unification in the next few years and this would lead to fragmentation within the UK. 

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February 10, 2020

More fish, please

This has all the qualities of a slow-moving train wreck. As the Daily Telegraph reports, EU member states want to retain the same access to fishing rights in British waters as they enjoy now. Member states want to tie Michel Barnier’s hands in the negotiations, and strengthen the passage on fish in the EU’s negotiating draft. The complaint about the existing draft was brought by France, Belgium, Ireland and the Netherlands, who said that the existing draft’s language was too weak.

We believe that fishing is a potential area for a late compromise as the UK does not have the capacity to exploit its ample waters alone. Also, the UK would lose access to the EU’s market if there were no reciprocal access for EU fishing boats. Both sides have an interest in a compromise. But we think the compromise is more likely to be based on a system of generous quotas, rather than on a continuation of the status-quo. It is also noteworthy that Johnson has retained flexible language on this point: that British fishing grounds are first and foremost for UK boats. 

While the economic significance of fish is not large, do not underestimate the politics of fish. 

As Wolfgang Munchau writes the differences in these trade negotiations are not the usual ones, about diverging interests sector-by-sector. In this case, the EU is seeking a maximum degree of regulatory alignment, while the UK wants regulatory independence. These negotiations are very much about incompatible fundamental principles. It will not be easy to fudge them with a straight face. Munchau points out that the EU’s increasingly assertive competition policy could also become a major obstacle. This is because the EU’s negotiation draft demands dynamic alignment, the semi-automatic adoption of EU rules by the UK. As we pointed out on a previous occasion, another big problem will be data protection. The UK government’s fledgling industrial policy, involving financial support of the North, of the artificial intelligence and biotech industries, and of new pockets in financial services, may all require deviations from EU rules on state aid, merger control, data protection or financial services regulation.

As seasoned observers of EU politics we know, of course, that any negotiations start out with the negotiators at opposing ends. The Maastricht Treaty, for example, looked impossible until the moment it was agreed. So did the agreement with Greece in 2015, and also the UK withdrawal agreement itself. Boris Johnson will weigh very carefully the gains he could achieve by regulatory sovereignty, against the losses his voters would suffer as a result of an extreme degree of trade friction. As with Donald Trump, we need to take Johnson seriously, but not literally. He will shift in another direction if he sees a political advantage for him. And, while regulatory independence is a big deal for the Brexit diehards, the minutiae of competition policy do not matter for the electorate nearly as much. As a political subject, Brexit is oddly deflated. This gives Johnson room for manoeuvre. But, so far, he has moved in the other direction: away from a close deal.

Our sense is that he will take this matter to the brink, or close to it. At that point, it will depend on the dynamics of the last moment. If Johnson shifts position and the EU is ready to outvote some of its members, using qualified majority, a deal is possible. But it’s a highly contingent scenario.

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