On the French Presidential Election First Round

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Do you feel nervous about May 7th in France or hopeful? The result of the first round on April 23rd was a welcome boost for everyone who favours openness and the preservation of Europe’s core values. But it would be premature to assume that a victory for Emmanuel Macron in the second round is a foregone conclusion.

Huge efforts can be expected to try to discredit the 39-year-old leader and founder of En Marche (“Forward”), the movement that during the past year has surprised the nation through its vigour, popular appeal and rapid growth. Social media, in the use of which the Front National has proved adept, will be buzzing with stories, with rumours, with accusations.

Macron’s opponent, Marine Le Pen, is trying to recast herself as a statesmanlike figure by leaving the leadership of her Front National, trying to channel General Charles de Gaulle as a politician above petty party politics. But this will cut little ice, since the Front National’s campaign will continue to try to divide France and not unite it, to demonise and destroy Europe rather than to build it.

Macron now needs both to stay cool and to stay a unifying force, a force of hope and constructive reform. His strong belief in Europe will be a vital weapon too, not as a belief in Europe for its own sake but rather as a belief that European collaboration is essential in France’s own interest.

No election has been more important for the future of the whole continent than this one. Europeans everywhere, even in Brexit-obsessed Britain, are waiting anxiously for a positive result on May 7th.

It is a cliché to describe elections and other events as being “a turning point” but in this case it could really be true. This is far more important than Britain’s referendum last June. That decision to leave the EU was dramatic, but need not damage the EU fundamentally. If France were to choose Marine Le Pen as president it would cause catastrophic damage to the whole European Union and to NATO too.

​In The Great European Disaster Movie, we envisaged the possibility of a President Le Pen. Make no mistake: we hope this prediction will not come true. 

​Even if, as we hope, France elects President Macron instead, the dangers facing Europe will not be over. He will need to deliver results, of better lives for all French citizens, of new hope and opportunity, if the 2022 election is not again to present the possibility of President Le Pen.

​The need, in France as in Italy, Germany, Spain and all its neighbours, will be for a programme of inclusive reform that releases the great energies of creativity that currently lie trapped, while preserving and extending the sense of equality, security and social trust that have been such an important achievement in past decades.

By Bill Emmott 

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The wind is changing in Europe

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We have grown used to political earthquakes, as once inconceivable electoral outcomes turn into reality. Yet this year’s greatest political shock could turn out to be a positive one. It is time to think seriously about the possibility that Angela Merkel may be defeated in September and be replaced as Germany’s chancellor by Martin Schulz.

Since Martin Schulz, former president of the European Parliament, became leader of Merkel’s coalition partner, the centre-left Social Democratic Party, a little more than two weeks ago, the SDP has surged in the opinion polls, even in some polls overtaking Merkel’s centre-right Christian Democrats/Christian Social Union group.

Novelty is a powerful force in politics. So is being seen as an outsider. Of course, this momentum for Schulz may not be sustained over the seven months between now and the federal elections. But the possibility should be taken seriously because it fits in with major doubts and criticisms of Mrs Merkel being voiced privately not just by her opponents but her own supporters. 

Since the election of Donald Trump, many commentators have described Angela Merkel as the last great hope for liberal, western values. Yet is she really such a figure? By the time of the German elections she will have been in office for nearly 12 years. That makes her hugely experienced and respected. But it also makes her stale. And it inevitably means she has made some big mistakes.

Her own supporters are beginning to think, and even to say, that she has stayed Chancellor for too long. From their point of view, she is unavoidably associated with two historic mistakes: her decision to allow Greece to remain a member of the euro; and her decision to open Germany’s doors to more than one million migrants, a decision that weakened European solidarity at a time when it desperately needed to be strengthened.

To others, she is associated with a third historic mistake: the decision to insist upon the 2012 fiscal austerity treaty for Eurozone members. That decision remains popular with her own supporters and many German voters, but it has damaged Germany’s relations with other Eurozone countries. Most critically for the election, it also opens up a space for a serious competitor such as Martin Schulz.

No one can accuse Schulz of being in any sense anti-European or even soft on EU issues. So he can run as being a strong defender of Europe while also offering alternative economic policies, and new thinking about the migrant crisis.

It is far too soon to make predictions. Even if they beat Merkel’s party, Schulz and the SDP might face difficulties forming a coalition government with the Green Party and the Left party. There are many uncertainties about the coming seven months, to say the least.

But let us think of the potential, in any case. A few months ago, the brightest outlook from a pro-Europe point of view this year was the idea of France being led by a President Francois Fillon and a Germany led by a re-elected Angela Merkel succeeding in reviving the Franco-German “engine” of the EU. Yet this prospect, bright as it may have seemed, came with some doubts, over Merkel’s continued energy after 12 years in office and over differences between Merkel and Fillon over Russia.

Now, the brightest outlook is a much sunnier, more invigorating one: of France electing the centrist independent Emmanuel Macron and of Germany changing chancellor to Martin Schulz. Such a combination would be fiercely pro-European. It would combine a liberalizing, reforming zeal with a progressive, centre-left instinct, one likely to be more favourable to economic growth. And it would be fresh and well able to stand tall to represent Europe in any confrontations with either Donald Trump or Vladimir Putin.

Yes, a President Le Pen would change everything. But let us think more positively. Politics in all European countries is in turmoil. The times, as the Nobel-prize-winning Bob Dylan told us many years ago, are a-changing. Yet that change need not only be negative. The possibility of positive change is also rising.

By Bill Emmott

This article first appeared in La Stampa Feb 9 2017

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Reaction To May's Speech: Clear for the 27. Less so for Britain.

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Well, at least the uncertainty is over. Some commentators had labeled the British government’s six months of dithering about its plans for Brexit as “constructive ambiguity”, a phrase used by Henry Kissinger 40 years agoMuddle was the better term, but now there is clarity: Britain, Prime Minister Theresa May has announced that the UK will be leaving the EU single market and the EU customs union.  

It is a gamble, but a logical one. Even last summer, Mrs May had indicated that her priorities were to put limits on EU freedom of movement into Britain and to end all jurisdiction of the European Court of Justice in the UK. That requires Britain to leave the single market, since European laws govern that market and free movement is a core principle. So it is logical to stick to that plan.

One can easily dispute whether these are the right priorities, even on political grounds, let alone economic ones. Mrs May clearly thinks that it would be too politically risky for her to agree to retain freedom of movement. She is thus saying that she is willing to risk economic damage to Britain by leaving the world’s largest single market in order to avoid that political risk to her Conservative Party. 

During the six months of muddle and ambiguity over Britain’s Brexit plans, the prime minister allowed her ministers and her party to engage in an open public debate about whether this was the right choice. Her own position on the issue has been consistent. But by letting the debate happen, and waiting to see what other EU governments’ attitude would be, she allowed uncertainty to prevail.

The end now to that uncertainty is good for the other 27 EU members. They no longer have to worry that Britain is going to try to persuade them to give up the core principles of the European Union. Britain would not have succeeded in that effort, though some British politicians and intellectuals clearly believed that some other countries might be eager to limit immigration and that keeping Britain, the world’s fifth largest economy, inside the single market could be so valuable that a deal could be done.

A lot of time could have been wasted proving that this was a delusion. The process of doing so would also have risked creating even greater divisions between EU countries and a even more bitter relationship with Britain. 

So achieving clarity on that issue is of benefit to Europe. The celebration of the 60th anniversary of the signing of the Treaty of Rome, in March, need not be overshadowed by this issueThe EU can get on with trying to develop its own policies on the much more important issues of refugees, economic policy and relations with Russia. 

For Britain, however, even Prime Minister May’s speech does not bring full clarity about the country’s future. The UK knows it will in future negotiate a free-trade agreement with the EU, just as it will also seek to do so with the United States and other countries. What it doesn’t yet know is how far the British government is willing to go in fulfilling Prime Minister May’s vague promises of creating a “Global Britain” that will be a leading advocate of open trade.

We know, for sure, that Britain is not going to follow Donald Trump down a route of isolation and protectionism. The Brexit vote was more a vote of nationalist arrogance than on the sort of anger about globalization that Trump tapped into. But what this means for the British economy we still do not know.

Mrs May says her objective is free trade with the EU. Does she include agriculture in that ambition? Is she going to abolish all subsidies and other trade protection for British farmers when we leave the EU and give tariff and quota-free access for EU farm produce? 

Or, to take another example, we know that by leaving the EU it will be possible for the UK to lower its tariffs on imports of cars to zero if it wishes to do so. The EU’s current tariff is 10%. That is what Mrs May implies when she argues that by being “free” of the EU we will be able to become bigger advocates of free trade. But do the Japanese, Indian and American carmakers producing in the UK agree with this excellent idea?

All this is still unknown. So the net result of the British prime minister’s clarifying speech has been to produce much greater clarity for the other 27 EU members but not much more clarity for Britain itself.

By Bill Emmott | 17/01/17

This article first appeared in La Stampa Jan 17 2017

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Europe in 2017

General Charles de Gaulle would be proud. For the future of Europe will be shaped in this new year not in Germany, not in Italy, not in troublesome Russia, not in Brexiting Britain, but in France. Others will play a role, could even produce shocks. But France will have the most decisive influence.

De Gaulle wasn’t really a collaborative believer in European solidarity. After all, he notoriously held the young European Community to ransom in the mid-1960s by boycotting meetings in order to foster his own vision of an intergovernmental, rather than supranational, Europe. He was what Donald Trump might call a “France Firster”. But still, he wanted Europe to make France more powerful in the world, which is about to happen, again.

One reason is well known: the possibility, shocking even that it can be called a possibility, that the Front National’s Marine Le Pen could be elected president in May. Who hasn’t heard the gloomy, speculative logic? That after Brexit and Trump, the next blow to rational predictions and conventional wisdom, the next victory of populism, must be President Le Pen?

If that were to happen, the European Union would be for the scrapheap. Unlike Trump, Le Pen has been in politics for 20 years already and her policy positions have a consistency that means they have to be taken seriously: she would want France to rebuild trade barriers, leave the euro and restrict immigration tightly, none of it compatible with the EU as we know it. And she really means it.

The result is that there is no point in any EU country – Britain negotiating Brexit, Italy contemplating a general election – taking serious action until after the second round of France’s presidential poll has taken place on May 7th. The result is simply too important for all of us. But it is important also for another reason, beyond fear of a President Le Pen.

This other reason why France will be influential is a much more positive one. It is that in its 60 years of existence, the European Union has never made progress, never been able to act credibly and decisively, except when the governments of France and Germany have thought together, planned together and worked together. During the five-year term of President Francois Hollande, this Franco-German motor has ground to a halt. Neither side trusts the other, and the Germans think President Hollande is weak and incapable.

Without that Franco-German motor, management of Europe’s multiple crises has been disastrously slow, ineffective and divisive. Yet the interests of France and Germany are shared: the Berlin killings on December 19th, just over a year since the Bataclan massacre and five months on from an identical truck attack in Nice, showed that the two countries face the same terrorist threat; having conceived the euro together when Presidents Kohl and Mitterrand were in full co-operation, they share a deep interest in making the currency system work; and with America potentially turning hostile to Europe under President Trump, they need each other more than ever in geopolitics.

If the much likelier outcome of France’s presidential election in May occurs, namely a victory for the centre-right candidate Francois Fillon, the stage would be set for a new era of Franco-German collaboration. Fillon, who is an economic liberaliser but a social conservative, is far more compatible with Chancellor Angela Merkel and especially with her Christian Democrat and Christian Social Union party supporters, than has been President Hollande. He would even stand a chance of convincing Merkel and the German parliament to relax the tight fiscal constraints that have been holding euro-zone economies back.

But will the likely outcome actually transpire, after a 2016 during which the supposedly likely outcomes in Britain and America have both failed to occur? The key dangers, in France as in the Netherlands, which has a general election in March, and in Italy, whenever its election takes place, arise from the combination of high unemployment, stagnant household incomes and fear of immigration.

Hillary Clinton’s problem was that she represented too closely the American establishment that had brought the 2008 financial crash and then had failed to oversee an equitable recovery from it. Brexit is a very different case, given Britain’s long history of semi-detachment from Europe, but it still can be explained by alienation from the powers-that-be, which crucially included a Europe that, thanks to the loss of the Franco-German motor, now looked like a problem rather than any sort of a solution.

To win the argument during 2017, political parties and intellectuals that favour open, liberal societies and European collaboration will have to show that they offer more hope for the future of citizens of all ages than do the advocates of closure and of rejecting Europe, such as Le Pen and the Netherlands’ Geert Wilders.

That means that they will need to convince voters that they can make Europe work again, make it part of the solution for national ailments rather than a problem in itself. Above all, however, they will need to convince voters that they can restore national economic dynamism, removing obstacles to growth and to the creation of jobs.

Francois Fillon is a good person to lead this argument, since he is capable of appealing both to young voters who want jobs and opportunities and to older voters worried about traditional French values. Both the other two mainstream candidates, Manuel Valls of the left and Emmanuel Macron as an independent, also have the chance to inspire the young, though as former members of President Hollande’s administration they are also tainted by recent failure.

The stakes, for Europe and for the world, could not be higher.

By Bill Emmott

This article was originally published in Italian by La Stampa on January 9th 2017

 

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Italian referendum: some populists are worth listening to

Shaking up the system: Virginia Raggi, the new Five Star Mayor of Rome ©Marco Bertorello/AFP/Getty Imagesin

Shaking up the system: Virginia Raggi, the new Five Star Mayor of Rome ©Marco Bertorello/AFP/Getty Imagesin

The long, slow fuse on Italy’s time-bomb has been lit. The crushing defeat of Prime Minister Matteo Renzi’s constitutional reform proposals in the national referendum on 4th December has left the whole country—indeed the whole of Europe—wondering whether the anti-euro Five Star Movement might soon come to national power.

Five Star, the internet-based political party led from outside parliament by the comedian Beppe Grillo, is frequently described as populist, but it is cut from quite different cloth from France’s Front National, Britain’s Ukip or even US President-Elect Donald Trump. While those have got their core support from older, non-college-educated, often working-class voters, Five Star’s base is young, university educated and professional.

That is exactly the group that Renzi sought to appeal to when he landed suddenly on the national stage in 2013, when he decided to hurry from his base as mayor of Florence and compete first for his Democratic Party’s leadership and then prime ministership following the inconclusive general election of February that year.

He won his prize in February 2014 through a coup in his centre-left party through which he ousted his colleague, the incumbent prime minister, Enrico Letta. He did so largely on the twin arguments that he could credibly offer the country radical reform, under his self-anointed nickname of il Rottamatore, the demolition man; and that, at 38, as the country’s youngest prime minister since unification in 1861 he could symbolise change and appeal to young, university-educated professionals like him.

So he presented himself as Italy’s insurgent change-maker. Trouble is, he largely failed to bring change, at least the sort of change that Italians could feel in their lives and their incomes. The economy has barely grown during his nearly three years in office. Unemployment is stuck at 11.7 per cent of the workforce. Ambitious young people are still emigrating to find opportunities. The justice system remains a national disgrace.

The reforms he did bring—for schools, for labour contracts, some minor tax changes—will only produce detectable results after a delay. Meanwhile, he made two huge mistakes: he shied away from calling a general election when he was popular in 2014, and so had to govern through a coalition with small centrist parties; and he used most of his political capital to push through constitutional reforms with the aim of making a future government more effective—a government he had intended to lead.

It is that second bet that failed so resoundingly on 4th December. His plans involved ending the duplicative bicameralism of Italy’s parliament—by cutting the Senate’s powers and replacing elections to the upper house with appointment by regional assemblies—abolishing provincial governments, and centralising powers over big infrastructure projects. All this will now die.

The most pressing task is to reform the electoral law that Renzi brought in back in 2015 for the lower house, the Chamber of Deputies. It is still on the books, but it won’t stand politically, since it was part of a package with the overhaul of the now-reprieved Senate. It flowed from the same “let the government govern” impulse which the voters have just rejected, and would—if enforced—see a single set of elections yield very different results in the two chambers. But elections must still take place before May 2018 at the latest, and none of the mainstream parties want them to be held until electoral reform is agreed.

Why? To hobble the Five Star Movement. That 2015 electoral law was designed to enable British-style single-party government by handing bonus seats to the party that leads after two rounds of voting, to guarantee it an absolute majority.

Previous electoral laws have essentially encouraged or necessitated the formation of coalitions, either before the election or afterwards. The Democratic Party, its current centrist allies, and Silvio Berlusconi’s centre-right Forza Italia now want to return to that sort of system. Their reasoning is simple: Five Star will find it much more difficult than them to form coalitions.

In fact, Five Star has shunned coalitions in the past, on principle, and for the time being it has no natural partners. That is a natural consequence of running on a stance of a plague on all existing political houses—or, in Grillo’s fruitier slogan Vaffanculo!, which basically means “fuck off, the lot of you!”

So a new electoral law is likely to be negotiated, by a caretaker government, a process which could take up much of next year. Meanwhile, Italy’s economy will remain stagnant and unreformed, and its banking system will remain tottery, loaded down as it is with unperforming loans which get bigger the longer that the economy fails to grow. Any hope of substantial reform will have to wait until new elections.

Neither politics nor popular anger will stand still while this happens, however. The Five Star Movement will gain new energy and new adherents as a result of the referendum defeat. Doubts over its coherence and effectiveness, which grew following the chaotic start in June by Five Star’s mayor of Rome, former lawyer Virginia Raggi, could now be replaced by a growing feeling that it is really the only game in town for anyone wanting change.

The implication is that this is a timebomb that has to be taken seriously. Even with a new electoral law, Five Star has the potential to gain a very large share of the votes and so in theory could even form the next government alone. There is nothing certain about that—13 months is a very long time in politics—but the party is undoubtedly going to be a force to be reckoned with.

That is by no means entirely a bad thing. Five Star stands for a lot of sensible things, alongside some more explosive ones. It is building up a good record in municipal administration, with the young mayor of Turin, Chiara Appendino, drawing particular praise.

Rather than condemning it as a bunch of reckless populists, it would be more sensible for business, the media and academia to engage with it seriously. Such a process could even end up defusing the time-bomb, and turning Five Star into the change-maker that Italy does need—what Matteo Renzi should have been, but wasn’t.

Article first appeared in Prospect 12/12/16

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Italy and Austria

Pro-Europeans may have been sad to lose Matteo Renzi, after the Italian prime minister’s crushing defeat in his constitutional referendum, but were relieved that Austrians rejected the far-right candidate in their re-run presidential election.

Neither reaction is sound, at least not for the longer term. The battle to save Europe is on. Winning it requires sobriety and determination, not sentimentality.

Matteo Renzi had failed. That is why he lost his referendum, with the “no” camp made up both of pro-Europeans and of the sort of young, university-educated professionals that Renzi once considered his core supporters.

Virtually zero growth, unemployment stuck at 11.7% and a poor record on reforms of the sort that had a chance of making a difference in the short term: that is Renzi’s failure. He put too much of his political capital and energy into constitutional reform and too little into bringing dynamism back into the Italian economy.

Given a stronger position in the Chamber of Deputies after a general election, and with the blocking powers of the Senate removed, he could have moved on to more significant reforms had he won the referendum. But he failed to convince voters to trust him to do that.

So the new task is now clear: to convince the millions who voted against him that saving and reforming Europe should be part of their agenda too.

Many of the Five Star Movement’s supporters are natural Europeans: the sort of young people who see Europe as their own cultural and economic space. The movement is dangerous just because of one policy position: its call for a referendum on membership of the euro, which may well be unconstitutional, but in any event would be enormously destabilizing to financial markets and Italy’s creaky banking system, regardless of the likely result.

All of us who care about Europe and the future of its nations need to work hard to persuade Five Star to drop its referendum proposal and to press for reform of the Eurozone instead.

That could be doable. Austria however is a less comforting prospect than it looks.

Before celebrating Alexander van der Bellen’s victory too cheerily, we need to remember that the far-right Freedom Party still won 46.7% of the votes.

This bodes very badly for the much more important parliamentary elections that Austria is due to hold by September 2018 but are widely expected to occur sooner.

Current opinion polling indicates that if the election were held now, the Freedom Party would stand a good chance of being the largest party and so even of choosing Austria’s new Chancellor, a far more powerful figure than the largely ceremonial president.

This is not to diminish the pleasure at Mr van der Bellen’s victory. But the argument still needs to be won. The tide of populism and xenophobia has not turned simply because Brexit and Trump were not followed by Austria.

The battle remains on.

Bill Emmott

Chairman

The Wake Up Foundation

Dec 5 2016

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Vote "yes" on December 4 in Italy (with a "but")

A time-bomb is ticking away in the heart of Europe, carrying a label marked ‘Made in Italy’. It could yet be defused. But if it goes off, it would make Brexit look like a lot of fuss about nothing.

 

            The time-bomb has been laid by Italy’s young, reformist prime minister, Matteo Renzi. The potential trigger is the referendum he has called for December 4th on reforms to the country’s constitution. The explosive content is that his fiercest and strongest opposition, the Five Star Movement, is also young, reformist, and wants a referendum held on Italy’s membership of the euro. And it is running neck and neck with Mr Renzi’s party in national polls.

 

            Five Star is campaigning for a “no” vote, even though it is a big potential beneficiary of a related reform that is not on the Dec 4 ballot, namely a new electoral law that would make it possible for the party led by former comedian Beppe Grillo to win an absolute majority in a general election – and so hold its euro referendum.

 

Wake Up Europe believes a “yes” is the right vote next Sunday. But it should be a “yes” with a strong call, from all political forces and citizens groups, to have the electoral law changed by Parliament as soon as possible.

 

            The stakes couldn’t be higher. Populism and Euroscepticism are all the rage, throughout Europe. But that matters most when a party pursuing such anti-establishment goals has a serious chance of entering government. That is where Italy comes in: if a general election were held tomorrow, the Five Star Movement would have a serious chance of winning. If it were to do so, the mere hint of a referendum on the euro would send financial markets haywire.

 

            A general election does not have to be held tomorrow: the next one is not due until 2018. However, that is not far away, and an early election could become conceivable if Mr Renzi were to lose his referendum on December 4th.

 

            On the arguments, he doesn’t deserve to do so. The December referendum – which is required under Italy’s constitution – concerns a set of changes to the country’s political institutions that are designed to make it more governable, and to open the way to liberalizing, pro-growth reforms that are long overdue.

 

            Quite reasonably, Mr Renzi proposes to abolish the elected upper house, the Senate, and replace it with a house with reduced powers made up of nominees from regional assemblies. Until now, the Senate has held identical powers to Italy’s lower house, but generally with a differing political complexion, so it has blocked many major items of reform.

 

            Mr Renzi also proposes, quite reasonably, to abolish one of the country’s four layers of government, the provinces, which lie between cities and regions and simply reinforce the country’s susceptibility to corruption. Moreover he wants to shift decisions over major items of infrastructure up from lower levels of government to national level, to make them less prone to blockage by local interest groups.

 

            Italy is a country which passes an abundance of laws, but fairly few of which make a real difference to policy or society. Mr Renzi wants to change that. The trouble is, that in order to do so he wants to make his own office, the prime ministership, more powerful. He has done that in part through the new electoral law for the lower house, the Chamber of Deputies, passed in 2015 and designed to ensure the country has strong governments by handing out a bonus of extra seats to whichever party comes top in an election.

 

            It makes sense in theory. But in practice this, in combination with the Senate’s abolition, will greatly reduce the checks and balances in place. This raises fear of a new Mussolini coming to power. Perhaps, ill-wishers think, that could be Mr Renzi himself. Or it could be the Five Star Movement.

 

            The referendum is complicated and raises plenty of causes for concern. But the background to it is worse. Italy has been the worst-performing euro-area economy since the 2008 crash, barring Greece. Nothing Mr Renzi has done has changed that. The economy is still bumping along the bottom, with unemployment above 11% of the workforce and incomes flat or falling.

 

            No wonder he is not popular, especially in his own party, and no wonder that current polls imply he will lose the December 4th referendum. Before the summer, he recklessly promised he would leave politics if he loses in December, a promise he has since tried to wriggle away from.

 

Whatever his view, the choice may not be his. When he entered office in February 2014, it was by a party coup, in which he unseated his predecessor, Enrico Letta, without a general election. The same could happen to him, after December 4th. The first aim would be to replace him with a safe, technocratic prime minister, or someone else from his own Democratic Party. But a general election could soon become unavoidable.

 

The risks to Europe and to the world are huge. The Five Star Movement is not a party of far-right devils along the lines of France’s Front National, nor of Donald Trump. It is peopled by young professionals desperate to drive out corruption and renew their country. It deserves sympathy and support. But it is a party without coherent policies or organization, led by a comedian, Beppe Grillo, and driven by naïve dreams of internet-based participatory democracy.

 

Those dreams have already been exposed as mere chaos by the Five Star mayor of Rome, Veronica Raggi, elected in May and who has struggled even to form a full council, let alone to carry out any reforms.

 

This has not yet had a noticeable impact on Five Star’s national polling. That is because it is a pure protest movement, against the establishment of which even the young Mr Renzi forms a part. Five Star remains strong because Italy has, so far, proved immune to radical change.

 

There is still time for Mr Renzi to defuse this time-bomb. To do so, he would need to convince his country that he is the one who can bring radical, prosperity-enhancing change, not Five Star. Most of all, though, he needs to reform his own constitutional reforms, altering the electoral law to make it less prone to bring to power a new Mussolini. We can all remember how he ended up.

 

Bill Emmott

Chairman The Wake Up Foundation

 

 

This is an adapted version of an article that appeared in the December edition of Prospect

 

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May's support for openness is welcome

After all the talk over the past week that Britain has a great opportunity to get close to, and do deals with, a man who stands against free trade and for building walls, Theresa May’s speech tonight at the Lord Mayor’s banquet is to be applauded.

 It is always useful in politics to define your enemies carefully and clearly. The public – and your own Cabinet – can learn as much from a clear definition of what you are against as from any efforts to outline a positive narrative.

 The implication of wishing to be “the strongest global advocate for free markets”, as briefings indicated she would say this evening, is that Mrs May’s biggest enemies are now Donald Trump and Marine Le Pen. Plus, of course, their close friend Nigel Farage.

 It should be noted that on Saturday Marion Marechal-Le Pen, niece of the leader of France’s far-right Front National party, accepted an invitation to “work closely together” with Stephen Bannon, the chairman of Breitbart News who headed Trump’s campaign and has now been appointed the president-elect’s chief strategist.

 Her aunt Marine Le Pen, on BBC’s Andrew Marr Show on Sunday, spoke of her admiration for Vladimir Putin’s model of “reasoned protectionism”.

 This is no time for illusions or wishful thinking. The battle for an open world is well and truly under way. Britain needs to make sure the battle is won.

 In the minds of commentators as well as the general public, Brexit, Trump and the chances of Le Pen in France’s presidential election next May are all moves in the same direction: towards closure and isolationism. So Britain’s prime minister needs urgently and forcefully to show that this is wrong.

 Defining President-elect Trump not as “someone we can do business with”, as her foreign secretary has said, but rather as someone we desperately need to persuade to change his mind and his policy ideas is a good start.

 Next, Mrs May needs to do what she has so far been resisting, with all her might: show her true intentions with Brexit, or at least an outline plan of how to achieve them.

 She has wanted to play for time and to get a grip over her own party and Cabinet. But by delaying she risks allowing Cabinet divisions to overwhelm her.

 If she truly wants to be the world’s greatest advocate of free markets, she needs to show how. Whatever she thinks of Brexit, she must by now understand that in the first instance Brexit will unavoidably represent a stride backwards from free markets and free trade, since leaving the customs union and the single market will necessitate the erection of new barriers to trade with Britain’s biggest export and import market.

 So the country, companies investing in Britain, and indeed the world, need to know what is to be put in its place. She says Britain will be open and will be a great force for free markets. So let us know how – before it is too late.

 

This article by Bill Emmott was also published by InFacts on 14 November 2016

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Is the European Union its own worst enemy?

So it would seem given the shambles over the Canada-EU trade agreement, now held up, even potentially torpedoed, by objections in the Wallonian regional parliament in Belgium.

If the Walloons really destroy the Canada-EU trade deal, it would, at first glance, confirm all the darkest views of British Eurosceptics about Europe’s incapacity to make trade deals, about the awful fate of being “shackled to a corpse”.

The Canada-EU trade agreement was supposed to be a model for the hoped for bigger prize of the Transatlantic Trade and Investment Partnership with the United States.

I must confess a personal role in this. As co-chair of a body called the Canada-Europe Business Roundtable, I brokered a meeting in 2008 with the then European Commissioner for trade, Lord Mandelson, that kicked off the whole process.

So just as my friend and former colleague Chrystia Freeland, once Kiev correspondent for The Economist, then deputy editor of the Financial Times, and now Canada’s international trade minister, was reportedly tearful about the Walloon blockage, I feel like shedding tears myself.

I hope that this can still be sorted out. But while that does, or doesn’t, take place, let us go beyond the first glance and see what this really signifies.

What the Wallonian blockage tells us is that the pressure to “take back control” is disastrous. Either EU countries share sovereignty, or they don’t. Giving a regional parliament a veto over an EU trade deal is tantamount to the European Union packing its bags and going home. Or, to put it more brutally, committing suicide.

The whole point of the European Union is to be stronger together than we would be separately, and to do so by transferring some powers to a central body, the European Commission. We can debate which those powers should be. But once they have been transferred – as with trade, or competition law, or state aids – the power needs to stay with the Commission, come what may.

Should we give a regional assembly or council in Hamburg, Barcelona, Rome or Manchester a right of veto over the European Commission’s competition enquiry into Google, say, or its assault on Apple over its tax arrangements in Ireland?

To do so would be to abandon co-operation and all the strengths that have come with the European project.

That is what is represented by the Wallonian attempt to veto the Canada-EU trade agreement. It is the most powerful and disturbing symptom yet of the disintegration of the European Union. It is the most potent proof of how national governments’ demands to act separately, to seize back decision-making power from the Commission, is destructive.

it is a tendency that Britain has encouraged, even motivated. But given that the eventual UK-EU trade deal will have to be ratified by all 27 EU countries, Britain should be careful what it wishes for.

If Britain celebrates Wallonia’s blockage of the Canada deal, it should look forward to its own deal being blocked by a regional parliament in Slovenia, say, or in Hungary, or perhaps in Belgium too.

The point of the EU is to make the whole more than the sum of its parts. That cannot work if each of the parts, even the sub-parts, holds a veto.

European governments need to decide whether they want the EU to work, or would rather kill it.

Bill Emmott

Chair, The Wake Up Foundation

October 22nd 2016

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Brexit will replace simplicity with complexity

Theresa May, her officials briefed as she travelled to Brussels for her first EU summit as prime minister, wants her Brexit to be not hard, soft or dog’s, but “smooth”.

If she wants it to be smooth for business as well as government, let us hope she paid close attention to a paper presented earlier this week to her cabinet’s Brexit committee that, according to the Guardian, outlined the distinctly un-smooth consequences if Britain decides to leave the EU’s customs union.

One of the main arguments presented for leaving the EU has been the desire to cut red tape – the urge to have fewer, simpler regulations on business of all kinds, domestic and international.

Liam Fox, the international trade secretary, is reported  to favour an early British departure from the customs union so as to free his hands to negotiate new trade deals with non-EU countries such as Australia, China and India.

Be careful what you wish for, is the message of the studies presented to the Cabinet by the Treasury, the National Institute for Economic and Social Research, and the London School of Economics.

In place of the simplicity of sharing a trading system with 27 other countries would come complexity, which will be costly for business and thus the British economy. Leaving the customs union would also bring uncertainty - any future government, of whatever ideological stripe, could then change the country’s trading rules, following the political winds of the time.

It was the study’s reported prediction of a fall in GDP of 4.5% by 2030 if Britain pulls out of the customs union which made the headlines. But it is the complexity that would come with leaving the customs union that was arguably its more significant conclusion. 

Any economic forecast spanning 13 years can be taken with a huge pinch of salt. Moreover, the consequences for the patterns of Britain’s trade – how much with the EU, how much with other countries – will depend chiefly on what new trade regime the country adopts after Brexit.

The study’s claim that trade with non-EU countries would have to rise by 37% to substitute for potential declines in EU trade should therefore be taken just as an indication of the orders of magnitude of what is at stake.

But what can be said with certainty is that leaving the customs union will create new forms of complexity for business, adding to red tape rather than cutting it.

This is becoming a constant Brexit theme, encompassing immigration controls as well as new trade arrangements: mooted ideas such as regional visas for immigrants would also add to the need for paperwork and inspectors. Taking back control is becoming redefined as reinventing complexity.

Sharing the same tariffs, standards and other rules with our principal trading partners, the EU, is a force for simplicity, just as is freedom of movement.

It means that goods passing through British seaports and airports, or crossing the Northern Irish border, do not need their own customs inspections, paperwork or tax filings.

Leaving the customs union will mean that all goods entering or leaving Britain will need special documentation and special customs checks. 

This is much more complex than simply a matter of tariffs on cars or beef. Trade agreements with other countries, whether by the EU now or Britain in the future, are intricate affairs, providing preferential access that has to be accompanied with detailed rules of origin to avoid such preferential access being exploited by companies from other countries.

Every new trade deal that Mr Fox negotiates for Britain will add to that complexity. The EU will rightly insist on clear rules and enforcement to ensure that Australian companies, say, cannot route their exports through Britain so as to get into the EU preferentially, or vice versa. Britain will have to insist on the same.

So red tape is destined to increase if Britain leaves the customs union, as will the length of the queues of lorries at Calais, Folkestone and other ports waiting for clearance.

Moreover, the case for customs checks on the Northern Irish border, with their potential of acting as flashpoints for new sectarian conflict, will be much harder to avoid.

One thing it won’t be, for business at least, is smooth.

Article first published by InFacts on October 20th 2016

 

 

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