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March 02, 2020

What the return of the refugee crisis tells us about the EU

The policy lesson the EU drew from the 2015 refugee crisis was to pray that it wouldn’t happen again. With that response the EU revealed itself as an impotent and also immoral actor. We have noted for some time a growing sense of despair as expressed for instance by Wolfgang Ischinger, the German diplomat who heads the Munich security conference. He yesterday made the point that non-action can also induce guilt. The EU had looked at Syria for nine years and produced nothing but sanctimonious appeals. This policy of inaction has clearly not been in the interest of 500m Europeans, he said.

Ever since we started Eurointelligence in 2006, the one recurring theme of our reports has been the EU’s innate complacency, be it on the eurozone, on technology shocks, on lack of innovation, or on Brexit. The 2015 Syrian refugee crisis was mitigated by Angela Merkel’s decision to let in almost 1m refugees that year.  That decision changed German politics in profound ways, not least because it turned the AfD into a permanent political party. 

In the middle of the crisis, the EU concluded a Faustian pact with Recep Tayyip Erdogan. It was evil in the sense that it was a ransom paid to a dictator to keep people out. It was also evil because it was not sustainable. The EU did not use the following five years to fix the gaps in its refugee policies. Now that Erdogan is channelling Syrian refugees directly to Greece, we find ourselves at the beginning of another refugee crisis. The big difference this time is that Merkel has left herself with no political room for manoeuvre to repeat what she did in 2015, especially as the battle for her succession plays out. 

We see the incipient refugee crisis as potentially more dangerous for the EU than covid-19. As we said last week, the EU failed on this point, too, with an ideologically-motivated refusal to close the Schengen borders temporarily. National border controls, even at that stage, would have been one of several effective containment measures because the infrastructure was already there. But, beyond this, public heath policy is the business of member states, not of the EU.

In contrast to covid-19, a refugee crisis is asymmetric in that it affects border states, mostly Greece and Italy, disproportionately. Both countries are economically weak. Italy is politically unstable too. 

The early stages of European integration - the customs union, the common agricultural policy, all the way up to the single market - created sufficient decision-making powers at the European level. The problem with the newer projects - monetary union, immigration policies, and foreign and security policy - is that they ended up as fair-weather constructions, high on ambition with insufficient follow-through. The ECB cannot, in our view, be relied upon as an institutional bail-out mechanism forever. Its statutory obligation is to follow a price-stability objective. Its freedom to support the eurozone, while technically unlimited, is legally and politically constrained.

The question we are asking ourselves is what lessons to draw from the EU’s multiple political organ failures. For us the test will be the process leading up to the next treaty change, starting with the conference on the future of Europe this year. If this fails to produce meaningful shifts, even as pro-Europeans we would have to conclude that the second phase of European integration, the one that started with the Maastricht Treaty, has failed. Such a conclusion, if it were widely shared, would have profound implications for the future of the EU itself.

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March 02, 2020

Does the UK really want a deal? Does France?

If the EU is good at one thing, it is at making impossible deals. The issue with the UK/EU trade negotiations is not whether there is enough time. Not even whether it is technically possible to find a narrow path to an agreement. We think it is possible. The issue is not even whether the two sides actually want a deal. They both do. But neither side wants it badly. Both place a higher value on other things than on the deal itself.

In his FT column Wolfgang Munchau observes that trade talks succeed when both sides frame them as positive-sum games, as happened for example during the EU-Canada talks. But the Brexit talks are different because the two parties are framing their negotiating goals as a zero-sum game. The EU wants the UK to subject itself to EU regulation. The UK wants regulatory freedom. Trade is not the main issue in these talks. If there is a deal, it will mean that one side will have to very visibly climb down, or maybe both sides will have. 

Munchau also makes the observation that Boris Johnson has been remarkably consistent in signalling a WTO-style future relationship: the prorogation of the UK parliament; the election manifesto's explicit pledge to deviate on competition policy; the legislation to refuse an extension of the negotiations; and the threat to end the talks in June. 

Yesterday, there was another pointer to the UK’s willingness to extricate itself from all things European. As the Telegraph reports, the UK wants to drop the European Convention of Human Rights. In its negotiation mandate, the EU has threatened to end all law enforcement co-operation if the UK were to repeal the Human Rights Act, which allows British courts to apply the ECHR. The story does not say that the UK will repeal the act, but it does say it does not want to be bound by the Convention. To clear up the usual confusion on this matter, the ECHR has nothing to do with the EU, but stems from the Council of Europe of which the UK will remain a member.

We also noted a number of aggressive comments in the UK media by Amélie de Montchalin, France's secretary of state for European affairs, who said the EU will reject a deal unless the UK kept fishing waters open and agreed to EU regulation. 

It looks to us that both sides may think, foolhardily perhaps, that they are better off without a deal. So, the no-deal scenario might play out.

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