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March 07, 2018

The PD - so much like the SPD

The similarities between Italy's PD and Germany's SPD go much deeper than the mere observation that both parties had a terrible election, and that this is part of a secular decline of the centre-left in European politics. Both statements are true of course. But we also see a similar post-electoral dynamic at play: A failed leader is hell-bent to go into opposition, but the perceived interests of his own party ultimately destroyed that strategy. Matteo Renzi's strategy is now to boycott any talks with Five Star, and then to force a new round of elections. It looks to us that his resignation is merely a tactical retreat. The problem is that this option is not necessarily in the best interest of PD MPs and senators. There is no rule that says that 19% is the lowest the party will ever poll. In Germany, support for the SPD continues to fall - the party now polls at 15%. The AfD - and the Lega in Italy - could end up bigger than the SPD - and the PD respectively - at the next elections. 

Officially, the party still sticks to Renzi's position, but there is now talk of a members' referendum like in Germany, as La Repubblica reports this morning. The party's establishment is still formally opposed to collaboation with Five Star, but the latter is considering making some rather tempting offers: presidency of the chamber of deputies, and inclusion of PD ministers in the cabinet.

We have entered the post-election phase in which most of the news consists of pronouncements and interviews where politicians make implausible claims. What we found interesting was the shift of view by Eugenio Scalfari, the founder of La Repubblica who was one of the quintessential pillars of Italian establishment thinking for several decades. He said on a TV show that he had this time supported Silvio Berlusconi, and previously considered Five Star and Lega aqually appalling. But he changed his mind on Five Star. He said that Luigi di Maio had demonstrated political intelligence, having turned Five Star from a disparate movement into a political party in a parliamentary tradition. He said Five Star was the party of the modern left. The PD is tried and confused. 

We actually agree with that sentiment. PD MPs will have to consider very carefully a strategy of boycotting cooperation with Five Star, which can take other forms than a coalition. The issue that no-one in Italy can get around is that the political centre is now in a structural minority in parliament. New elections could strengthen Five Star and the Lega, who between then could tweak those aspects of the electoral law that clearly benefit the PD.

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March 07, 2018

Why the EU is right to blackball the City of London

The FT has a story that will come as a shock to many in the City of London, but not to us. The EU will flatly reject market access by UK financial firms after the end of the transitional phase. In other words, the EU will not accept Theresa May's three baskets - one basket full of cherries, another basket of cake. The British idea was that the EU and the UK would sit together and agree regulatory outcomes, and the City would then have continued market access. Donald Tusk will issue guidelines to instruct Michel Barnier that the UK will get no more than a bog-standard free-trade agreement, similar to that of Canada. The paper reports that Bruno Le Maire will this week clarify the French position on this issue - which is that financial services cannot be included in a trade agreement on the grounds that financial services are not goods. The only route for the UK into the EU financial markets is through regulatory equivalence, a one-sided procedure under which the trading partner adheres to EU rules in their entirety, and which the EU can end at short notice. This is clearly not an attractive or acceptable proposition for the UK. 

We have observed before that the EU will take a purely mercantilistic position by restricting trading relations to areas where it has a strong surplus - like the trade on goods - while restricting areas where it has a deficit. But one thing confuses us about the EU's strategy: the EU's clarity of support for a Canada agreement as the only alternative to a customs unions also sits oddly with the EU's insistence of a customs union for Northern Ireland. 

Andrew Duff notes that there is an alternative, one that is based on the Ukraine association agreement. It creates a large trade area and wide alignment of Ukrainian sectors with the EU economy. It also incorporates WTO rules on non-tariff barriers. The deal gives Ukraine unprecedented access to the single market, including associate membership of various EU agencies.

The EU operates a wide variety of bilateral arrangements, like those with Switzerland, Turkey, Israel, and Ukraine. But all of these are economically tiny compared to the UK, which is why none of them can serve as a model outright. We agree with Duff than a association agreement would be a better option than membership of the EEA. But since May already rejected membership of the single market or a customs union treaty, we have now entered a territory where the Canada deal is the real alternative. We think that Tusk's position is thus entirely reasonable. A key moment will be the vote in the UK parliament on an amendment to seek customs union membership. If that vote is lost, the choices will be between Canada and no deal. If the vote is won, Theresa May will presumably resign and a new conservative leader will take over. That would open up the possibility of a new strategy or elections, which could open up alternative goals for the post-Brexit relationship.

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March 07, 2018

Car companies don't deliver on diesel upgrades

Tagesschau reports this morning that the German car companies are struggling even with the modest software upgrades they promised to deliver this year - to allow some 5m diesel cars in Germany to reduce their emissions by some 25-30%. This was also seen as the car industry's big gesture to ward off the increasingly likely bans of diesel cars in German cities. But the industry will not be able to deliver on their promise, according to information from Bavaria's state broadcaster. 2.5m diesel cars have been upgraded following a court order, but the companies have made no progress whatsoever on the voluntary software upgrades. They are waiting for instructions from the government, while the government blames the companies for inaction. The article concludes that it is now likely that several cities, including Hamburg, will press ahead with diesel bans before a software upgrade is available. And this means that the bans could affect many modern cars as well.

The software upgrade only affects cars that meet the Euro 5 and Euro 6 emission norms. Older models would require much more intrusive mechanical upgrades, which the car companies have refused. 

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  • What can go wrong now?
  • April 13, 2018
  • German support for eurozone reform next to zero...
  • ... and no support for France on Syria either
  • A French sermon
  • Why the euro endures
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • January 06, 2020
  • A decade that started with a bang
  • What to expect of Spain's next government
  • Divide et impera: Macron's pension reform strategy
  • January 29, 2019
  • What comes after plan B fails? Plan C, of course. C for cliff-edge
  • Gilets jaunes, how to structure a movement in free flow?
  • European Court of Auditors criticises Juncker’s investment fund
  • February 26, 2018
  • Angela Merkel's cabinet
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • August 17, 2020
  • How Putin could divide the EU over Belarus
  • The impossible mission of forming a federal government in Belgium
  • September 23, 2019
  • Corbyn’s last big battle
  • Germany’s CO2 compromise meets all targets - except the climate targets
  • November 13, 2018
  • Peak Salvini?
  • Protest uberisation
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • February 28, 2017
  • Is Hamon losing the right wing of his party?
  • Something we just don’t understand
  • Solve the problem
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • March 23, 2020
  • Orbán seeks to extend his powers
  • UK as the double counterfactual
  • June 10, 2019
  • How to create Brexit facts
  • The new Alde is already in trouble
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • November 13, 2017
  • A pro-European list: Wauquiez' nightmare
  • Catalan separatism isn't going away
  • Why oh why does Germany behave the way it does?
  • Why the four freedoms matter
  • February 01, 2017
  • Do Republicans have a plan B if Fillon falls?
  • Unforgiven
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 14, 2020
  • Why the far-right might win in the end
  • October 27, 2019
  • German political centre is melting
  • Train drivers in all-out confrontation with Macron
  • Erdogan makes threats again
  • February 11, 2019
  • SPD dumps Hartz IV
  • Macron's revival
  • May 31, 2018
  • Hans Werner Sinn demands German euro exit
  • The politics of the SPD’s links to Russia
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 20, 2020
  • What will happen on January 1
  • December 09, 2019
  • The next three days
  • May 01, 2019
  • Labour votes against obligatory second referendum
  • On the link between output gap measures and the rise of political extremism
  • Berlin's inconclusive Kosovo conference
  • September 21, 2018
  • SPD ministers want to continue grand coalition
  • February 12, 2018
  • What the euro debate is really about
  • How Brexit can still falter
  • July 05, 2017
  • Europe’s next migration crisis
  • Philippe: French need to kick spending addiction
  • November 28, 2016
  • And now what Monsieur Fillion?
  • The inescapable logic of an interim agreement
  • On Germany's foreign policy post-Trump
  • How to lose against the populists
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • April 08, 2020
  • Is Greece ready for virus spread in migrant camps?
  • On the future of the EU - the final part 12 of our series
  • October 07, 2019
  • What did Conte know?
  • April 08, 2019
  • Welcome to the new Brexit grand coalition
  • Waiting for Macron's next move
  • October 08, 2018
  • A renewed willingness on both sides to cut a Brexit deal
  • Latvian politics in turmoil after huge populist gains
  • April 09, 2018
  • Orbán gets his supermajority
  • Riding the wave of resistance
  • The EU’s self-defeating strategy
  • October 09, 2017
  • UK is starting to prepare for a no-deal Brexit
  • Why Germany will resist meaningful eurozone reform
  • April 13, 2017
  • Did Russia influence the Brexit vote?
  • All good between Germany and the US now?
  • October 18, 2016
  • The self-destruction of Francois Hollande
  • Brexit psychotherapy
  • At least three candidates for the PvdA leadership
  • The unbelievable hypocrisy of Mario Monti
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 22, 2020
  • Why we don’t think this deal is historic
  • March 10, 2020
  • Virus math
  • October 29, 2019
  • People's Vote descends into Civil War
  • CDU at odds on dealing with extreme parties
  • June 19, 2019
  • What the US-Iran standoff tells us about the EU
  • Is Germany withholding information on right-wing extremism?
  • February 08, 2019
  • Macron turns stand-off with Italy into a game changer
  • Is there a strategic intent behind Macron's decision?
  • October 01, 2018
  • After the referendum, more turmoil in Macedonia
  • What will happen if the UK parliament votes No?
  • Barnier's no-thanks works much better than a yes-please
  • May 25, 2018
  • Rejected by US, Germany is turning towards China...
  • ...and France is turning to Russia
  • UK ties Galileo to security partnership
  • Germans are discovering miniBoTs
  • January 17, 2018
  • Labour smashes No Brexit dreams
  • A new political bargain in Portugal?
  • September 13, 2017
  • Why the Turkey negotiations will continue
  • May 10, 2017
  • PSOE primary campaign in full swing
  • Czech government crisis escalates
  • Backroom dealing on electoral reform in Italy
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 25, 2016
  • The costs of Brexit
  • Redefining corruption
  • Greek government shocked, shocked...
  • The costs of Brexit
  • Redefining corruption
  • Greek government shocked, shocked...
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 07, 2020
  • The far right is gaining ground in the Netherlands
  • Is there an exit to the conflict with Turkey?
  • July 27, 2020
  • Germany is one of the most unequal countries in Europe
  • June 15, 2020
  • US and Germany step up fight over NordStream 2
  • Macron's agenda for the next two years
  • May 05, 2020
  • Germany's cash-for-clunkers
  • What about the summer holidays?
  • March 27, 2020
  • Watch out for the coalition of the south
  • The race to save jobs
  • February 19, 2020
  • Degrowth isn't enough to stem climate change
  • Is Renzi finished?
  • Welcome to Germany, Tesla
  • January 13, 2020
  • Libya - the new playground for diplomatic posturing
  • NI has a government at last
  • December 09, 2019
  • The next three days
  • November 04, 2019
  • Brexit tactical voting is happening - on both sides
  • Merkel promises 1m charging stations - but doesn't tell us how
  • September 30, 2019
  • A pyrrhic victory for Kurz
  • Will there really be UK elections?
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 25, 2019
  • What should the EU do now?
  • Could the grand coalition break down over defence spending?
  • June 25, 2019
  • What’s behind the dispute about Weber
  • May 27, 2019
  • The rising chances of a no-deal Brexit
  • April 29, 2019
  • Labour's national executive to vote on second referendum
  • What the debate about electric cars says about Germany
  • April 01, 2019
  • Meaningful IV
  • Caputová elected: a turning point for central Europe?
  • March 06, 2019
  • Weber toughens his stance against Orbán
  • The European loneliness of Emmanuel Macron
  • You really should not take EU's willingness to extend for granted
  • February 08, 2019
  • Macron turns stand-off with Italy into a game changer
  • Is there a strategic intent behind Macron's decision?
  • January 14, 2019
  • Our Brexit predictions
  • 1789 - Macron's version
  • Tsipras calls confidence vote after Kammenos pulls out
  • December 19, 2018
  • May’s strategy and the consequences of failure
  • Belgium loses its government
  • November 27, 2018
  • Responding to the yellow-vest protest
  • The New Hanseatic tensions are a foretaste of things to come
  • November 05, 2018
  • Macron trails behind Le Pen in European elections poll
  • How the CDU will organise leadership campaign
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • September 06, 2018
  • City of Frankfurt bans diesel
  • A fairytale meeting for Macron in Luxembourg
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 25, 2018
  • Future of euro debate: can the ECB do the heavy lifting?
  • July 09, 2018
  • German panic about Target2
  • AfD level with SPD
  • How the EU could fail
  • June 25, 2018
  • Trump's car tariff to come early
  • On the lack of a sharp focus in the eurozone debate
  • June 12, 2018
  • The new Italian battle lines
  • A Brexit rebellion squashed, for now
  • Wauquiez - a party leader without followers
  • May 30, 2018
  • Italian pro-Europeans repeat UK Remainers' error
  • Commission shakes up structural funds
  • Democracy lessons from the Irish referendum
  • May 18, 2018
  • Ciudadanos pressures Rajoy on Catalonia
  • The EU's bluff on Iran sanctions
  • What the Brexit deal will look like
  • May 08, 2018
  • Macron and the technocratic republic
  • Philippe's silent offer to the SNCF unions
  • On the ordoliberal utopia of a debt-free state
  • April 26, 2018
  • Philippe and the protest movements
  • Scorched earth on Galileo
  • A customs union option
  • And finally, the emission-less diesel car
  • April 17, 2018
  • CDU's executive committees reaffirms eurosceptic position
  • Macron in Strasburg
  • April 10, 2018
  • A mood of radicalisation in France
  • The German far right makes inroads into trade unions
  • On the absurdity of a new centrist party in British politics
  • April 03, 2018
  • Is the time for Brexit revocation running out?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • March 19, 2018
  • Waiting for Germany
  • Russia’s friends
  • Can the Commons force an extension of the Art 50 period?
  • March 15, 2018
  • Miro Cerar resigns over railway
  • Taking on trade unions over the rail reform
  • How strong is the EU's solidarity with the UK really?
  • March 12, 2018
  • German industry is starting to panic about Brexit
  • March 08, 2018
  • EU will not offer UK a financial services deal
  • What if the DUP implodes?
  • Has Mario Draghi expropriated German savers?