Friday 8th June, 2018

In this week’s news on Friday, we’ll be discussing the prognosis for eurozone reform in the context of the new Italian government, the comments of the US ambassador in Berlin, human-trafficking from Romania to Sicily, and more Brexit news.

 

The distant dream of the southern coalition

ROME – Wolfgang Münchau wrote on Monday (4th June) in his weekly FT column about the relevance of the new populist Italian government for the state and survival of the eurozone, something which will hinge on the 5 Star-Lega coalition’s style of confrontation with Brussels and Frankfurt. Naturally, it cannot fail to be noted that the Italian establishment and consecutive governments, fully backed by technocrats and central bankers in the European institutions, have brought this potentially disastrous government about. Likewise, Münchau wants us to take note that the approach taken by the government so far appears both uninformed and reckless. Instead, if Conte and his populist backers want things in Europe to change, they should stake out a strong pro-reform position in the European Council coming up this month and make allies of reformist French President Macron and Spain’s new socialist Prime Minister Pedro Sánchez.

I have been a fan of Mr Münchau’s read on European politics for quite a few years now and feel this is another thoroughly reasoned analysis. Of course, it relies on the idea that the new Italian government want a constructive solution to the predicament we are in here in the eurozone. If they do, and one might think certainly Conte and perhaps Di Maio and a significant portion of the 5-Star Movement do want a real solution, then Münchau’s suggestions are fully valid. Finding allies in other eurozone states (more likely to be found in Latin rather than Teutonic Europe); a fiscal stimulus not quite as large as so far proposed and coupled with reforms in the public administration and judiciary (to demonstrate good will and willingness to compromise); and finally, preparations for euro-exit as a genuine plan B, (which no doubt all eurozone finance ministries, financial institutions and major corporations have). Those who remember well will see similarities here between these proposals and the approach taken by Yanis Varoufakis when he was given a chance to face off against the Troika as Greece’s Finance Minister in 2015.

But those were simpler times, and believe it or not, times with more political manoeuvrability on both sides. As Varoufakis himself has stressed, he was committed to the European idea and determined to keep Greece in the eurozone – the same cannot be said of Matteo Salvini, the new Interior Minister, his Lega party or much of the 5-Star Movement. Salvini also relies on support from Europe theoretically on the matter of the Refugee Crisis, which he rightly pointed out in the election campaign Italy has had to deal with over the past year all on its own after the closing of the Aegean-Balkan route in 2016. His plan to deport around 500,000 of these new arrivals may also lead to confrontation with Europe, though in this matter Brussels is less equipped to resist the Italian government. On this matter by contrast, Greece’s SYRIZA was also determined to actually cooperate with the rest of the Union in managing it effectively. However, since 2015, the space for cooperation has closed dramatically, rhetoric has become even more incendiary, those seeking sensible solutions with a willingness to compromise are losing power and influence in public discourse. The players, Scholz and Di Maio, hollow replicas of their predecessors Schäuble and Varoufakis; their mandates coming from more intransigent and less patient electorates who perhaps no longer believe reasonable discourse can achieve anything. Brexit has shown how a population can spit in the face of all the EU stands for whether they have benefited from it or not. Now Italy may well be approaching a similar 0-hour and be forced to choose to either go all in on Europe or bail out before losing everything. I hope the FT is delivered to the Palazzo Chigi because right now the alternative is leaving Europe to Salvini and his ilk who will destroy everything that has been gained here over the past 7 decades.

On another note, I can’t fail to notice the return of the fabled social-democratic Mediterranean coalition of the South (+France), who will rise to the challenge and confront finally the Teutonic austerians of Frankfurt and Berlin. The amount of times we have seen this floated, referred to, begged for by commentators and others who’ve written on the crisis since 2010, beggars belief when compared to what it’s achieved. President Macron himself talked of catholic vs. protestant Europe; Germanic rigour vs. Latin verve. However, whilst the North – the Netherlands, Finland, the Baltics and Slovakia – have formed ranks behind its heavyweight Germany, the South has been less successful. Social Democrats were in power in Paris and Rome in 2015 when Varoufakis needed support in the Eurogroup council meetings, and yet neither, the second and third largest states in the eurozone, provided any support. ‘France is not what it was’ as Michel Sapin said in 2015. Spain was been under conservative control since 2011. 2015 ended with a broad-left coalition in Lisbon, too late and too little on their own.

Clearly, Macron represents a shift in terms of rhetoric if nothing else. He has given 4 speeches on Europe at the Humboldt, the Acropolis, the Sorbonne and in Strasbourg since the beginning of 2017. From Varoufakis’ own record of the events of 2015, Macron demonstrated his understanding of the problem and support for the Greek Finance Minister’s efforts to affect change. Münchau reckons Conte should see the sense in getting behind Macron, hopefully with the support of Sánchez in Madrid. However, we cannot pretend that these forces are united on what they want from Europe. Sánchez is a socialist from a party that’s part of the old guard of European politics; whether he’s further to the left than what we’ve seen from these parties recently or not, his vision for Europe if he has one will be wildly different from that of the populists in Rome, many of whom want the Union to collapse. The Lega in particular is looking for a confrontation with Europe that will cause a permanent rupture between Brussels and Rome. And finally, there’s Macron. We must remember he is a centrist of the first order, as he has shown with his mix of open, pro-European image combined with anti-immigrant migration reforms and a continuation of the neoliberal agenda when it comes to workers’ rights and pensions. Hence, we might assume, regardless of his rhetoric, he will put achieving a result higher in priority than pursuing any specific purpose or principle. We can of course hope for more, and hope the regime changes in Madrid and Rome are not a mere changing of the guard, but a change in course. Having several democracies trying to control a single economy is only driving them apart, and time is running out to turn things around.

 

Mrs Merkel, tear down this wall (against populism)! 

BERLIN – News this week that the new US ambassador to Germany, Richard Grenell, has caused a bit of a stir in polite circles in Berlin, when he recently said in an interview that he intends to strengthen conservative and populist forces in Europe. The FAZ reported on Tuesday (5th June) that having declared his support for European conservatives and populists, he made reference to Sebastian Kurz, Austrian Chancellor, who he has invited for dinner and will host him on 13^th June. This comes hot on the heels of Mr. Grenell’s previous order to German firms to end their activities in Iran, following the termination of the US involvement in the Iran Nuclear Agreement, and the return of US sanctions. In typical American style these days the order came on Twitter. In response on Tuesday, Martin Schulz the former SPD chairman and Spitzenkandidat in last September’s election, said that what Mr. Grenell was doing was unparalleled in international diplomacy and that he hopes the Kurz visit becomes a more lasting sojourn from his duties as ambassador to Germany. Now of course, this and Schulz’s recent activity on Facebook calling for renewed belief in the European project are attempts by the former party leader to stay relevant when in truth most have gladly forgotten about his uneventful run at Chancellor last year that led to nothing more than yet another grand coalition in Berlin. But I can’t fail to notice the circumstances of his minor re-emergence; Mr. Grenell, representative of the US government, declared that he effectively would like to influence the outcomes of elections in Europe, which sounds very similar to what the Russian government has been accused of doing in the US in 2016 and in other elections in Europe over the past few years. The interview he gave was to Breitbart, a far-right propaganda outlet, and he was appointed by Donald Trump precisely for his political views. Of course, it’s easy to forget that diplomats are an arm of foreign policy and the current policy of the US government is to undermine the central pillars of liberal democracy. But more than that, US policy has for decades been to maintain the primacy of US influence in Europe. This is a more unpolished view of the state of affairs here in Europe, that Washington acts and expects Europe to follow. Now the gulf between Europe and America is clearly visible, will our politicians realise they need a new playbook, or stick to the old one and do as they are told?

 

Justice delivered across borders

RAGUSA – A story on Thursday (7th June) by The Guardian reports the busting of a human trafficking ring from Romania to the Mediterranean island of Sicily by local police, and the arrest and charge of five Romanian men with human trafficking, labour exploitation and exploitation of prostitution. An Observer article last year detailed the exploitation and slave-labour conditions of thousands of Romanian men and women who had been recruited to work on Sicilian farms and then forced into exploitative conditions by their employers in a trafficking ring based in the city of Ragusa. The Sicilian police who finally made the arrests paid tribute to the investigative journalism performed by the Observer, which helped kick-start the police investigation, which has now led to the arrest of 15 men and investigation of 40 others over the past year.

There are two points which I want to make on this story. Firstly, the fact that the Guardian/Observer was able to perform the initial investigative journalism and publish the details of this horrific situation is something I think needs to be thoroughly applauded, and the more of this cross-border journalism by those with the resources should be encouraged. When academics talk about a ‘European public space’, this is part of the reality of it. Without a firm with the resources and reputation of the Guardian to put effort and time into this sort of investigation, perhaps the full details would not have emerged for much longer, if ever. The second point reveals the darker side of this pioneering endeavour we’re engaged in here in Europe. Not the human trafficking of course, for that, whilst perhaps made simpler by the Schengen Accord within Europe, is something to be tackled in any case – refugees trying to get to Europe from Africa and Asia are also the victims of human trafficking and there are certainly not open borders between this continent and our neighbours to the south and east. No, the darker side I’m referring to is that despite last year marking 10 years since Romania herself joining the Union and almost 30 since the Iron Curtain fell, Central & Eastern Europe is still massively disadvantaged, in terms of living standards, wages and so on, compared to the Western Europe.  But now, because of the Union, the living standards in places like Transylvania and Silesia are now bound to those in the West and the economic forces which have free reign across the continent. Wages remain repressed there whilst expensive products from the West flow in, and so in order to live on a proper wage many from the East migrate westwards. These Romanians in Ragusa would not have migrated if they could find a decent paying job in Romanian Moldavia. Not all migrants end up enslaved of course, but in Britain for example they are confronted with hatred from xenophobes, but also resentment by people who themselves no longer have a decent job because firms have moved those jobs east in search of lower wages and taxes.  The end result leaves one thing clear: all of us Europeans are now responsible for the economic conditions of the whole Union, not just our little patches of land. If corporations no longer respect borders, neither should we who believe in a robust and humane welfare state and the guarantee of human dignity in the quality of life we live. These objectives have to be promoted across borders by those of us who can, by people who follow the DiEM25-school. Because trying to achieve things in our own divided nations will not work, and now bound together in Union, is almost impossible.

 

Brief backstop without backing from Brussels

BRUSSELS – Michel Barnier announced today (8th June) scepticism towards the recently proposed plan by the May government to ensure the Irish border remains open when Britain leaves the European Union. The BBC reports he also rejected any idea that there could be an end-date amended to the existing backstop proposal, which would preserve the open border between Northern Ireland and the Republic by maintaining regulatory alignment between the two territories and NI remaining a part of the EU customs union. This has always been a temporary arrangement which would come into effect in the absence of a more permanent border plan from London; such a plan has not been forthcoming. Instead, the British government released on Thursday (7th June) a 6-page note analysing what they wanted the already agreed-to backstop to look like, specifically the addition of the whole of the United Kingdom and not just Northern Ireland remaining in the customs union and ensuring regulatory alignment on trade in goods. The note ended with the intention to have formed a new trade arrangement which will maintain the open border but allow Britain freedom in its trade policy by December 2021 when the transition period will have ended. Details on that point were conspicuously absent however; Mr. Barnier himself said the note leaves more questions than answers on the Irish border, but what was certain was that the backstop could not be time-limited and the Single Market could not be partially extended over the whole of Britain because the four freedoms (Goods, Services, Capital & Labour) had to be kept indivisible.

My overwhelming impression from reading the note released yesterday was the utter lack of detail or substance in it. The British amendment proposals amounted to editing out ‘with respect to Northern Ireland’ and replacing it with ‘The United Kingdom’ – keeping the whole of Britain partially in the Single Market for the duration of the backstop, which the EU has already said it has no intention of doing, and that Northern Ireland is a special case given the end of the Troubles in 1998 and the Good Friday Agreement.

What has characterised the whole of the negotiations is a lack of understanding of the terms of what’s being negotiated by London. May’s government has simply spat out statements of what it wants with no concern for any potential contradictions therein. For example, no border in the Irish Sea or on the island of Ireland; unhindered access to the Single Market without being a part of it or the customs union, without oversight of the laws of the market by the Court of Justice in Luxembourg and without free movement of people; and a Britain that remains strongly bound to Europe in matters but also looks to the world. And then it expects Brussels to come up with effective solutions to these conundrums. The most painful thing about watching all this unfold has been the constant parroting of old lines, which resurfaced again today. ‘The 4 freedoms are indivisible’ (you’d have thought May and the three Brexiteers would have worked this out by now) ‘Brexit means brexit – and backstop means backstop’ (didn’t see that one coming did you Davis) ‘we will never accept a customs border between Northern Ireland and Great Britain’ (well, it’s going to have to go somewhere, and we already know it can’t go in the English Channel or along the Irish border itself). The mind-numbing monotony and absence of creativity or energy in this whole process is absolutely soul-crushing. And yet we have to pay attention because our lives will in some ways be transformed by the outcome of this negotiation. For some their whole lives will be.

The spinelessness of the DUP and their pig-headed unwillingness to look facts in the face is another major issue I have. They are of course the supporting prop of the current government, without which it would not be able to pass any legislation. They are also the foremost protestant-unionist party in the Northern Irish province, and the legacy of fundamentalist protestant minister Ian Paisley, who founded the party in 1971. The DUP responded to Mr. Barnier’s comments today, saying he had “no respect for the principle of consent or the constitutional integrity of the United Kingdom”. I hate to break it to them but London has had little to no respect for the constitutional integrity of this country for much longer with the total patchwork mess that is the devolution settlement being the result, along with calls for Scottish Independence and Sinn Féin’s ascendance in the north mirroring the steady climb in support for Irish unification since the Belfast accord was agreed 20 years ago. At the same time an isolationist and xenophobic English nationalism has spread across the water.

I am far less viscerally hostile to Brexit than many of the people I see online levelling unceasing salvos at any and every mention of the subject on a daily basis. And yet who can ignore the total failure that is the beginning of this wonderful project of national renewal that May’s Cabinet, the European Reform Group and all the other Brexiteers across the country would like this to be? Who can ignore the total lack of preparedness, the totally pathetic unfit nature of our standard bearers, and the absence of imagination and creativity they have shown in failing to solve the problems which have come up in the negotiations to allow Brexit to begin – god knows what will happen when it actually gets going. Boris Johnson was recorded this week saying the Irish border wasn’t a real problem and that Donald Trump would to a good job of negotiating. Typical of Johnson, and yet I despair. Trump wouldn’t know what regulatory alignment was, or even that there was a border in Ireland. He would get a result of course, but the partition of India was a result too – which led to the deaths of millions. That’s Donald Trump’s idea of a result. Mr. Johnson, the Irish border is now a problem because both Britain and Ireland were together outside the Union and then together joined it and at no point since Irish independence have we had a situation where Ireland was politically and institutionally tied closer to the continent than Britain. What’s hilarious is that Westminster would forget Northern Ireland and allow the border to be in the Irish Sea at a shot if the DUP were just the 10-MP irrelevance they usually are. They of course couldn’t give a damn. Even when the Troubles began British governments were reluctant of doing anything to get involved. You could even say Belfast has been a more distant outpost in the minds of London elites than New Delhi under the Raj. And so this is where we are left, waiting for London to make barely thought through proposals only to have them thrown back in their face by a Brussels that in many ways holds all the cards and yet would rather not be playing the game at all. The state of it.