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February 05, 2019

Pressure on Varadkar rises - the EP turns up the heat

Let's consider the worst-case scenario for a moment: without a backstop Ireland would be legally bound to start moving towards a hard border on the day of Brexit: reinventing the impossibly intricate, 500km-long, now invisible border as one with more than just a few police and customs checks. Since this would clearly destroy key benefits of the Good Friday agreement, Dublin is reluctant even to contemplate such a scenario, let alone debate it openly. The Brexit steering group in the European  parliament did exactly that, much to the irritation of the Irish government. Dublin's position is that, according to the 1998 peace agreement, it is up to the British to ensure that the border can remain open and it is therefore up to Brexiting London and not Remaining Dublin to come up with a solution.

For the European parliament and its Brexit steering group there is a further consideration, namely that the integrity of the single market must be assured no matter what happens to the Good Friday agreement. Spiegel Online quotes veteran MEP Elmar Brok with a stark warning that an open border plus Brexit could mean that cheap chlorinated chicken à l'américaine would infest the shelves of EU supermarkets, a scary image not just for German voters. Philippe Lamberts, another prominent member of the committee, warned that if the Irish were to refuse to patrol and control the 500km-long border the EU might have to consider installing the border checks on the continent. This would de facto exclude Ireland from the customs union, so it is up to the Irish to chose between an open un-patrolled border and the single market, so Lamberts. 

With such tough love, if love it is, the pressure on Ireland to open itself up to an alternative to the current backstop formula is rising. Expect more heat between now and and March. But, after all, spring is coming.  

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February 05, 2019

When grounds shift - literally

For the past twelve years since we started Eurointelligence the main issues that drove Europe's political economy have been financial crises and their political and economic consequences. Looking forward, we still see most of these issues unresolved, but likely to be superseded by even bigger issues. The biggest worries for the EU and the eurozone will probably not be the big macro crises of the past, but technological and environmental shifts of unprecedented scale. 

One is the geopolitics of technology. On this point, we noted a comment by Niall Ferguson in his Sunday Times column that the big issue that defines bilateral relations between the US and China is no longer trade, but technology. The arrest of Huawei's finance director and the fears of China's domination of 5G networks matter more than mere trade tariffs. Even Germany has been getting more defensive on technology transfers, but beyond competition policy the EU is ill-equipped for this struggle. The designs of China's New Silk Road initiative already reach deep into the EU, and are likely to turn into a source of political and economic tensions on our continent. 

The second and probably even more important development relates to climate change. We noted a disturbing report in the Guardian on what one expert called the climate crisis you have not heard of: melting glaciers in the Hindu Kush and the Himalaya ranges, with the potential for a mass dislocation of some 2bn people. Those glaciers constitute a water reservoir for much of central Asia reaching deep into China, which is dependent for its water supplies from rivers that flows from those mountains. The impact of the melting is catastrophic - floods, monsoon rains, and insufficient water pressure for the hydro-electric dams that provide much of China's energy supply.  

A massive report just published on this issues notes that, even if global warming were limited to a rise in average temperatures by 1.5 degrees celsius, 36% of the glaciers will have disappeared by the end of the decade. If temperatures go up by 2 degrees, that percentage rises to two thirds. It it is not hard to see that these foreseeable catastrophes could lead to mass migration and even war on the Eurasian continent this century. The geological effects will start kicking in by in the middle of the century (which is only 30 years away), but the political effects are likely to hit much earlier, as those dramatic changes are being anticipated.

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