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January 08, 2019

Brexit drama - then and now

The big Brexit discussion in the UK this morning is last night's Brexit film on Channel 4 - An Uncivil War - a brilliant epic about Dominic Cummings, the leader of the Leave campaign. It is one thing to give a rational explanation of the social demographics behind the Brexit vote. What this film succeeded in is to show the political and personal alienation behind the vote. The author is James Graham, one of Britain's best known political dramatists, whose most recent work included the West End play Ink, about Murdoch's takeover of the Sun newspaper. 

Back in the real world, the main Brexit news this morning is a story in the Daily Telegraph that UK and EU officials are talking, for the first time, about scenarios for an extension of the Article 50 deadline in case Theresa May's deal is voted down. These were described as discreet diplomatic contacts, reinforced by the comment of a junior government minister, who yesterday raised the prospect of an extension. 

The situation is likely to arise if, as expected, the House of Commons were to vote down May's meaningful vote - assuming it goes ahead next week. The article made the point that the EU's position on the extension has been evolving. If an extension were needed to secure to support for a deal the EU has spent two years to negotiate, then so be it. The main issue is not about the length of the extension, but what it should accomplish. We still think that the most likely scenario is for the process to go to the brink - the point in March when Remainers will blink and support the deal. After that - and only after that - it would make sense for the EU to agree a short extension to conclude the ratification procedure.

As the paper writes, another constraint on the process are the UK local elections in May. If the UK has still not exited the EU by then, the Tories might be in for a nasty electoral shock. 

We also see a short extension as likely to make way for two political events that have yet to take place. Theresa May has yet to present the promised assurances on the Irish backstop. The EU will not give her much except a letter to state what has already been agreed verbally, that it is the intent of the EU to conclude the trade talks by 2021. 

But looking beyond, we think it is possible that the EU could also amend the political declaration in a way to make it easier for pro-European Labour MPs to support the deal, for example by stressing that alternative negotiation outcomes are possible. In this context we noted an interesting comment by Andrew Duff, who will today publish a paper for the European Policy Centre explaining how this can be done technically. What struck us the most is his assertion that it is possible, contrary to claims by the European Commission, to give the political declaration a legally-binding framework. 

"Mrs May asked the December European Council to upgrade the legal status of the Political Declaration to make it binding. It was explained to her why this is not possible under EU law. Nevertheless, the prime minister has a point. The document can be regarded as a measure of EU soft law, the breaching of which would have serious political consequences for both parties. In the event of any litigation, the European Court of Justice would be bound to have cognisance of it. In a gesture towards the British, the EU should now agree to accord the Political Declaration formal recognition in the preamble to the Council decision that is required under Article 50(2) to conclude the whole legal process of British secession from the Union."

The other interesting article we discovered yesterday came from the Labour-supporting website Skwawkbox, which went into the gory detail of what it would take for the parliament to force a Brexit revocation or a second referendum. The article notes that it is already almost too late for Labour to trigger an election. The only way forward would be for Labour to abstain in the meaningful vote - as a result of which it would pass. Labour would them immediately call a vote of no confidence in the House of Commons, a vote that would most likely be supported by the DUP. Elections could be held on March 21, just a few days before the Brexit deadline.

We think this suggestion is pie-in-the-sky, but it is useful in one respect. It is spot on in the analysis of the heavy lifting needed to move away from the deal-vs-no-deal reality of Art. 50.

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January 08, 2019

Scholz' illusionary power grab

A full-scale row has erupted within the SPD on what is almost certainly an academic question: who is going to be the next candidate for chancellor in the party. Olaf Scholz, German finance minister, put his hat in the ring by saying in an interview that he would consider himself qualified for the position. 

With a poll rating of about 15%, the SPD is not in a position to form a government, and is unlikely to be again by 2021 even if it were to recover a little. Andrea Nahles, the hapless party leader, would have been the presumptive candidate for chancellor as Nico Fried points out in a commentary for Suddeutsche Zeitung. At the very least, she should be the master of ceremonies. If Scholz ever was the candidate, it should be for Nahles to propose him. Instead, Scholz has put himself forward not even making a reference to her - as though she does not exist. This is not just a diplomatic misstep, but a clear power grab. He wants the job.

We think Nahles should let him have it. Nahles may find that a Scholz candidacy would strengthen her position. Despite his apparent popularity in the polls, Scholz is too right-wing for a party that is extremely unhappy about being trapped in a grand coalition. With Scholz as candidate, the left wingers would have an opportunity to flush out the most right-wing among the party's senior politicians. We would expect Scholz to score the worst election result in the SPD's history. If he runs and is soundly defeated, the SPD would then be in a position to shift to the left. As we have argued for some time, this would constitute an important opening in Germany's crowded political spectrum. It would allow the CDU/CSU to form a coalition with the Greens or the FDP (or possibly with the FDP and the AfD at some point in the next decade), and it would allow the SPD to command the leadership of the left - in alliance with the Left Party and possibly the Greens. 

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