The snap Spanish general election called on February 15th by Spanish Prime Minister Pedro Sanchez came about after the Catalan parties his minority government relied on rejected his budget.

It was always going to be difficult for Sanchez, who has been in the job for less than a year, to pass his budget. Deep tensions still exist in Spain and the Catalan Question has most certainly not been resolved. Unfortunately for Sanchez, the trial of the Catalan leaders, accused of rebellion and misuse of public funds, began at almost the same time as budged negotiations came to a head.

I last wrote about Catalonia and Spanish politics in late 2017 and early 2018. This was at the time of the Independence referendum and the subsequent crackdown by Madrid at the behest of the former Prime Minister, Mariano Rajoy. 

Rajoy was forced to resign on June 1st, 2018 when he lost a Vote to No Confidence, called by Pedro Sanchez, following the sentencing of a former People's Party treasurer for 33 years for money laundering, among other crimes.

The law in Spain dictates that the leader of the party who successfully pass a Motion of No Confidence must form the next Government. Incredibly, that led to Pedro Sanchez becoming the Prime Minister despite his Socialist Party having less than a quarter of the total Congress seats.

Since then, the Socialist Party have polled consistently somewhere between 22% and 28%. In fact, they have placed first in over the last 20 polls stretching back since the election as called. While it is not inconceivable that they will not win the most seats on April 28th, they certainly look set to do so today.

I think it's fair to say they have benefited from a buoyant economy as Spain had a great second half of 2018 with economic growth set to hit 2.2% in 2019 and 1.8% in 2020. There is a finally a sense of the "the good times are back" for many in Spain though this can rapidly change if Europe heads towards a recession.

The Socialist Party have benefited from a splintering of the right of centre vote. The Citizen's Party have taken quite a lot of former People's Party voters who became disillusioned with the corruption while the Vox Party, a more right-wing party, are now regularly polling at over 10%.

I will definitely start following the election campaign more closely as we reach the crescendo. I do believe that the Socialists will win most seats but forming a government will prove very difficult. We may end up seeing a coalition of the right, though it remains to be seen whether the People's Party or the Citizens would replicate their Andalusian coalition in a national election...

I reviewed my 2018 predictions here yesterday. I had a mixed bag in terms of success, but it really did give me some food for thought looking at the year ahead. It has been a year of some drama but on reflection, particularly in Ireland and Britain, it does feel like we’ve experienced a holding period. A major player in this has been Theresa May who has pushed every single major Brexit decision as far out as possible, the latest example was her delay of the Meaningful Vote to the week of January 14th. I think 2019 will be a year of events and drama with no road left for delay or obfuscation.

Beginning of a serious global economic downturn
2018 was still a good year for economic growth despite the growing uncertainty and pockets of geopolitical turmoil across the globe. The growth projections for 2019 are still mostly positive but these can quickly change direction. While I am not going as far as predicting the global economy contracts next year, I think by the end of the year it will be evident the current cycle has reached the end of its growth trajectory.

This should mean the financial markets face another tough year and could place further pressure on incumbent Western governments though I think this will become more of a factor in 2020.

Brexit to happen
I do not think Brexit will be reversed. Firstly, in my opinion, there is less than a 50% chance that there is a People’s Vote and even if there is the outcome is far from certain.

What I am now less reluctant to confidently predict is that Brexit takes place on March 31st, 2019, despite previously adding it to my Political Punts. It seems increasingly likely that there will need to be an extension to Article 50 to ensure a deal can be gotten over the line in Westminster. The issue with this is that so far, the EU have said this is only possible in the case of a General Election or a Second Referendum.

No British General Election
I don’t envisage a General Election in Britain next year. I can’t see the Tories losing a Confidence Vote and I also don’t believe Theresa May would be foolish enough to call another snap election, given her government’s atrocious performance in the run up to the last one. Yes, the Conservatives currently lead in at least half of the polls but as she will probably be leader until December 2019 (given she won the Conservative Leadership Confidence Vote) I don’t believe the party will want to contest another election.

Theresa May to be Prime Minister and Jeremy Corbyn still to be Leader of the Opposition on January 1st 2020
Since the last General Election in June 2017, British politics has been in an almost constant state of low intensity chaos. I do expect this to continue post Brexit but unlike many others I see many of the same figures involved at the end of year as are now.

This prediction flows from the previous one. Firstly, without a General Election it is less likely that there are party leader changes in general. Furthermore, Theresa May has just won a Conservative Leadership Confidence Vote. This does not mean it is impossible to dislodge her as a coordinated mass resignation by some of her senior cabinet members could also be deadly however as many of them are jockeying for next leader, it is less likely they will work together.

Finally, I think Jeremy Corbyn will still be Labour leader as the majority of the membership still believe in his domestic policies and that he can win the next election. The biggest threat to his continued supremacy is a membership revolt over a Second Brexit Referendum or if Labour back the Conservatives Brexit deal. I think this will be avoided and that I’ll be making predictions about both May and Corbyn’s respective years ahead next December.

Irish General Election to take place
Fine Gael and Fianna Fail have both recently agreed to extend the Confidence and Supply agreement to Summer 2020 so this is a contrarian position to take as the markets do not envisage a Dail election next year. However, I really think both parties are eyeing up the right time to force an election with the caveat that they will try and spin it to the being the fault of the other.

Fine Gael to win most seats, just…
Fine Gael have finished every single opinion poll in first place in 2018 as can be seen here. The economy is still buoyant and despite crises in both housing and health, there is still a feel-good factor in the Republic as the pain of the financial crisis recedes into a distant memory for many.

However, this a double-edged sword for Fine Gael as many of the Irish electorate still have Fianna Fail hardwired into their DNA. I got a shock when the last poll of 2018 only had 2% between the parties. I do not think Leo Varadkar is a good campaigner and if the gap is this low at the start of the campaign it could be a very fine margin of victory for Fine Gael.

Trump to still be President on Jan 1st 2020 even if impeached…
This is quite straightforward. I believe Donald Trump will still be President this time next year. I do not believe the Mueller investigation will uncover enough to force him to resign or lead to a criminal conviction. It is less clear whether he will be impeached by the now Democratic held Congress as they do not take control until January however I am confident the Senate will not vote by the 2/3 majority needed to remove him from office. An impeachment in itself would typically be enough to force a resignation but I don’t believe Donald Trump would be one to acquiesce to political norms.

No Northern Ireland Assembly
I am beginning to think the era of the Northern Ireland Assembly has passed. There are too many immovable barriers to getting it back in session. I also now think that the DUP sees its home at Westminster while Sinn Fein believes its future lies in Dublin. It is simply the next step in the ever-growing political polarization of Northern Ireland. Peace but division…

Arlene Foster to be replaced as DUP Leader
Arlene Foster has had a pretty miserable year between the ongoing RHI investigation leading to further embarrassment as well as the Conservative government backtracking on several commitments regarding the Irish backstop.

Ultimately, there will be a Brexit deal and it will probably have to involve some slight compromise from the DUP. I envisage Arlene Foster being the scapegoat for this and being replaced by one the 10 DUP MPs, with Nigel Dodds the most likely next leader.

Far-right gains to be disappointing in EU Parliamentary Elections
They may win a few more seats but it won’t be some massive breakthrough. With the exception perhaps of Italy, the EU countries where the far-right is strongest already did quite well in the last EU Parliamentary elections in 2014. I expect the media to whip up a frenzy beforehand and Matteo Salvini to get an awful lot of front-page interviews and Op-eds but when all the votes are counted the bigger surprise may be the success of the Greens and even the Left…

Social Democrats to win the Most Seats in Danish General Election
This is the first of my two predictions in national level EU elections next year. I predicted the Social Democrats to win the most seats in last September’s Swedish Election and called it successfully but it is still unclear whether I was also correct to predict their leader, Stefan Lofven, would be the next Prime Minister given the complicated coalition structure and ongoing negotiations.

This structure is also similar in Denmark so while the Social Democrats led in almost every poll in 2018, they may not lead the next government. However, I am confident they’ll win the most seats.

Socialist Party to win the Most Seats in Portuguese General Election
Ireland aside, the performance of the Portuguese economy has been one of the so-called post financial crash success stories. The Socialist Party is flying high in the polls and have drawn the attention of socialist leaders from around the UK with Jeremy Corbyn praising their governmental performance recently at the Congress of European Socialists in Lisbon in December.

The election is not until October though and their biggest risk is that an economic downturn has already started to impact the perception of the Portuguese electorate though as I mentioned at the start, I think the election will come too early for this to transpire.

That’s all from me on next year. I would love to hear any predictions you have in the comments section below. Thank for you reading throughout the year and I wish you all a healthy and happy 2019…

2018 has been a turbulent year with many political shocks. However, I think we may still look back at in in years to come as the calm before the storm. A year of political stagnation across most of the West, where poor leadership and decision-making was masked slightly by a still buoyant global economy, enjoying the final flourish of the recovery from the last financial crisis in 2008

While tomorrow I will make my predictions for 2019, this article will reflect on what I had written this time last year and how it held up. Having had a quick review already, my first thoughts are that I was a little vague in my predictions which makes it a little difficult to full assess how successful I was.
Some of them were quite thematic and general, as opposed to specific, quantifiable predictions. I will try and alter this slightly for next year but for now it’s time to assess how each prediction turned out.

Trump to continue his Erratic Foreign Policy but No War: 
It seems very obvious now that there wouldn’t be a “war” in 2018 but this can also be a case of selective memory bias. In 2017, Trump was involved in some very public threats and spats with North Korean leader, Kim Jong Un. In September, at Trump’s first address to the United Nations, he threatened “to totally destroy North Korea”. At this stage he had only been President for 9 months and we were still at the anything is possible phase. Since then, he has shocked the world by actually meeting Kim Jong Un in Singapore in June but most of 2018 his focus was on domestic issues including the US Midterm elections and the ongoing Robert Mueller investigation.

The Global Bull Market Run to Continue, Just About...:
Last year, I did caveat this with “just about”. However, nearly every global index has finished down in 2018 according to this excellent summary page from the Wall Street Journal so ultimately I got this wrong. I do think I was slightly correct in the sense that the ramifications of this haven’t filtered through to political discourse yet. I have a lot more thoughts on the global economic outlook, though I will save that for tomorrow’s predictions…

China to Continue its Steady, Low-Key Ascent to Global Hegemony:
This is an example of one of those predictions that are hard to quantify. Nothing has happened this year in China to contradict this assertion. Furthermore, continued stagnation by many of its closest Western rivals has also probably helped. It will be interesting to see if China can handle another economic downturn as aptly as they did in 2008, when their massive Chinese Economic Stimulus Plan not only helped to stabilize the Chinese economy but possibly helped to mitigate the global economic damage.

Tories to Survive and Brexit is Happening:
As of today, both aspects of this prediction are correct. The Conservatives will almost certainly finish 2018 still in government. They have had some challenging moments but ultimately, party loyalty and the threat of losing their seat in a snap election, helped keep Theresa May in power. Her prestige has been severely dented and since the Conservative’s annual conference we have started to see the potential next leaders jockey for position.

“Brexit is Happening” looks a lot less certain now than it did in the summer. There seems to be no clear parliamentary majority for any deal and the chances of a second referendum have certainly risen. I am going to carefully consider what I predict in 2019 though I genuinely believe anyone’s guess is as good as anyone else’s in British politics currently.

Fine Gael to increase seats lead over Fianna Fail in any Irish General Election: 
There was no election in 2018 so I suppose this prediction has to be rendered null and void. However, Fine Gael has polled very strong throughout most of 2018 and I think it’s pretty evident they “would have” increased their seats lead over Fianna Fail in any Irish General Election. That said, the last poll of 2018 only gave Fine Gael a 2% lead over Fianna Fail so it will be interesting to see if they do continue to enjoy strong leads, particularly if Brexit turns out to be particularly damaging for the Irish economy.

The Irish Abortion Referendum Campaign to be Brutal: 
It was brutal but there wasn’t quite the level of vitriol as I had envisaged here previously. It did not become our Trump or Brexit moment and the massive margin of victory for the Yes side has helped the country to heal quickly and move forward. It must be a sign of Ireland’s democratic and social maturity that the result has been respected by all sides. The Citizen’s Assembly process has rightly been given a lot of credit as it really helped the Irish electorate to understand the implications of their vote.

Iran to get even closer to Russia/China and avoid a Revolution: 
The revolution was indeed avoided. The renewal of the sanctions against Iran will certainly lead to further future unrest. I am also concerned that either Benjamin Netanyahu or Donald Trump will try and use Iran as a distraction from their own domestic challenges in 2019. To be honest, I think I will need some further time to read up and decide if Iran did move closer to Russia and China in 2018 as it isn’t always evident in the media sources I mostly follow….

In summary, I think I did OK overall. Upon reviewing this I do get the further feel that 2018 was a bit of a “holding year”. When I write my 2019 predictions tomorrow, one major dilemma I will have to contend with is whether I believe this will be the same next year or whether we really are about to enter a period of even greater instability and chaos…

Next Sunday, Swedes go to the polls of the first time since 2014. I see it as one of the most important elections in the European Union in 2018. The far-right Swedish Democrats have risen significantly since 2014 and may be able to derail, if not replace, the centre-left minority government led by Stefan Lofven and the Social Democrats.

It is impossible not to look at the election through the prism of immigration as it has been at the forefront of political discourse in Sweden since the Swedish government decided to loosen its immigration policy in 2014, in the face of a major refugee crisis.

Four years later and the impact of that decision is still sending shockwaves across European politics and Sweden in particular. Despite a buoyant economy (growth was 2.3% in 2017 and is set for 2.4% in 2018), there is a sense among a proportion of the electorate that Sweden has done too much and needs to pushback and further reform.

Crime rates have risen and many Swedish commentators have attributed this upsurge to immigrants. The data to back this up is very difficult to ascertain and there have been many accusations of “fake news” by both sides in relation to crime reporting.

This feeling and political train of thought has been seized upon by Jimmie Akesson and the Sweden Democrats. They have a enjoyed a prolific surge in popularity since the 2014 election, when they received 12.9% of the vote, today they are polling at approximately 20%.

The party combines elements of nativism and anti-immigration in their platform that is often disguised in “cute” Swedish outfits and a very innocent looking party logo.

The incumbent Prime Minister, Stefen Lofven also faces a significant challenge from the centre-right Moderate Party, led by Ulf Kristersson.
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The Moderates had previously been in government from 2006 to 2014 as part of the Alliance for Sweden, which also contained the Centre, Liberal and Christian Democrats. In most polls today, this coalition is polling behind the potential centre-left coalition of the Social Democrats, Green and Left parties.

The Left Party is not currently part of the minority coalition but they have been polling at approximately 10% and have made it clear they would like to be part of the next government. Prior to 2010, the Left party were also part of the centre-left coalition though it is not yet clear if they will be included in talks after the election. It seems highly unlikely that the Social Democrats can choose to exclude them and remain in power.

However, both coalitions regularly fail to reach 40% in polls and at best can hope to lead a minority government. The current polling numbers look chaotic and as mentioned, it is very difficult to see a majority government if any hue without the Sweden Democrats being included.

One further point when looking at the polling numbers above is that parties need to gain at least 4% of the votes to be included in parliament. This could have a big impact on the two coalitions if any of the smaller parties slip below this threshold.

So far, the notion of working with the Seden Democrats has been rejected by all the major parties but there are voices in the Moderates who would prefer dialogue with Sweden Democrats than to simply accept a further premiership led by the Social Democrats.

On that note, I do predict the Social Democrats to be returned as the largest party, despite their challenges mentioned previously. They have consistently led in the polls, with only an occasional poll giving the Sweden Democrats the lead while the last poll that showed the Moderates returning the most seats was on the 21st June 2016.

Perhaps the best thing for Social Democrats would be if the Swedish Democrats actually finished with more seats than the Moderates. There is no way the Moderates could support a government led by Jimmie Akesson. A lead of more than 5% points for the Social Democrats over the Moderates may also increase public pressure on Ulf Kristersson to back, or at least accept, a Social Democrat led government.

However, even if the Social Democrats claim the most seats, there is little chance they will equal their 2014 performance of 31% and Stefan Lofven may come under intense pressure to resign if the Swedish Democrats and Moderates both vote down the left coalition.

The final week of campaigning will be crucial in Sweden as one or two % points away from the left to right or from the Moderates to the Sweden Democrats or vice versa may drastically change the final composition of the next Riksdag and the political arithmetic.
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I will write a follow up review of the election on the Friday after, when results are known and the first political overtures have been made…

I wrote a preview of the Italian election a while back here that also looked at the overall state of the Italian economy. It didn’t make for pretty reading and I did reflect afterwards if I had been overly negative.

I predicted that Five Star Movement would win the most seats but would fail to get a majority. One interesting aspect of this election was that, unlike the Brexit or Trump votes, the results, though disheartening and alarming to many, didn’t come as a shock to many.

It was clear for at least 6 months that the Euro-skeptical parties were going to make major gains at the expense of the incumbent left-leaning Democratic Party. Furthermore, a hung parliament was also predicted by most polls.

What is less clear now is what follows. Italian politics is typically built on coalitions and in this campaign, there were three main groups; the centre-right coalition, the centre-left coalition and 5 Star Movement. As you can see from the results below, to form a functioning majority, this political landscape will need to be redrawn. 

I won’t spend too long speculating on the internal political machinations now at play as there are plenty of Italian commentators who obviously understand the internal dynamics a lot more than I ever will.

I see three probable outcomes. A Matteo Salvini led centre right minority government, a Luigi di Maio 5 Star Movement in coalition with the League or the Democratic Party.

Of these, the least desirable from my perspective would be a Salvini government. He is strongly anti-immigration and has crossed the line with some language that is close to hate speech and racist on numerous occasion.

It’s important to note that Italy’s challenges and problems haven’t now started because of this election. This election has only brought these issues closer for the forefront of many in Europe, as elections do.

I will hold off further comment for now until we get some further indications of what the next government will be and will then write a more focused article on what this means, in terms of poly and impact.

However, I don’t buy into the simplistic narrative that every election in Europe is now “the centre” v “populism”. There are elements of this in Italy but while immigration has played a role, youth unemployment and disillusionment with the status quo have played a more prominent role.

Unfortunately for Italy, these issues now seem to be part of the status quo. The key policies proposed by the main parties will not help address these issues and I continue to seriously worry for the health of the Italian economy and society as whole , regardless of who next sits in the Palazzo Chigi…
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In the end the week wasn’t quite as dramatic as I had predicted here. Further details did emerge from all sides but there were no major fallouts or political backlash, aside from a few belligerent comments from the DUP.  

It was a badly kept secret that Jeremy Corbyn would announce last Monday that Labour’s official Brexit policy would now be to seek “a customs union” with the EU. He also stated that the UK would remain in the single market during any transitional period before exiting it.

The speech received a mixed reception with many remain-supporters claiming it didn’t go far enough. Equally, some pro-Brexit Labour MPs were unhappy with Frank Field claiming a customs union would be “ratting” on leave voters.

Now that I’ve had a few days to reflect on the speeches, I’m not sure how impactful Corbyn’s intervention was. It has opened some clear divide on policy between Labour and the Tories but for it to be meaningful, Corbyn needs to cultivate some cross-party support to win any major votes against the government.

Fortunately for Corbyn, Anna Soubry and Chuka Umunna have already tabled Clause 5 in the Trade Bill, that will lead to a vote in parliament. Many analysts quickly jumped on Corbyn’s change in policy as the potential vote that could bring down the government.

May’s speech on Friday was well received by many as containing more detail. Personally, I didn’t see that. I did learn that it’s now highly unlikely that May will request a customs union, along with the responsibilities that come with it.

Her speech does seem to have appeased the Brexiteers. Jacob Rees Mogg, who leads the anti-EU European Research Group that contains enough MPs to force a Conservative leadership contest, gave it his qualified approval, writing in the Telegraph;

“There are inevitably a few small points that will concern Leave campaigners but we must all recognise that everyone will have to give up something to get a deal, so now is not the time to nitpick.”

I think May has done enough to fend off an attack from this faction of her MPs. If she holds firm on her red lines, she may not accomplish much but it is one less flank she must defend against.

The EU has so far shown very little appetite to compromise on its negotiating stance. The protocol it released on Wednesday, was very close to what was concluded in December, much to the consternation of those who thought that “nothing is agreed until everything is agreed”.

The next big challenge for May will come from the remainers. Any meaningful votes in parliament that pushed for a customs union, single market access in exchange for certain Brexit sacrifices could seriously hurt the government.

I do not see Brexit being reversed at this hour but it may end up being quite a light version. This will not be the case if the final agreement is concluded under Theresa May as she has firmly come down on the side of the brexiteers. The strength of the Brexiteer position is that they can maximise the power of their limited numbers by a clarity of purpose.

There is a broad church of pre-EU supporting MPs that would form the majority in the Conservative Party. Unfortunately for them, they have not found a consensus that they can use a rallying cry. In the future political historians would struggle to identify the zeitgeist of the post Brexit referendum vote period.

However, if, for example, the Anna Soubry bill ends up being this rallying cause it could easily win a vote in parliament. Theresa May must now quickly work to convince those within her own party that voting alongside Jeremy Corbyn and Labour for a customs union agreement would seriously undermine the government. I expect to see lots of “red” scaremongering (though done a little more subtly than the Czech spy smear).

Whether this will be enough to convince her own MPs that the UK’s best interests is now outside a customs union but with a bespoke trade deal remains to be seen.

My views on where we are heading have not changed significantly after the last week’s events. I see the UK exiting the EU with a deal that falls short of most expectations on both sides of the EU argument.

Unfortunately, I do not see it causing a general election in the next twelve months, as when push comes to shove the Tories will probably put power over the nation’s interest. I think Theresa May will not last until the summer of 2019 as Prime Minister but my view on whether her exit date is 2018 or 2019 varies almost by the week.

The next few weeks will focus on trade talks and the Irish question, both of which I’ve left aside for today and will come back to shortly. I will be writing quite frequently on Brexit over the next two months, as trade talks are soon going to reach their crescendo.. 

After four months, the German parties involved in negotiations have reached an agreement to conclude a new coalition, pending a vote from the members of the Social Democrats (SPD).

However, the key point to take from this agreement is how much Angela Merkel and her Christian Democrats/Bavarian sister party (CDU/CSU) had to concede to get it over the line.

To appease the previously sceptical Martin Schulz and his Social Democrats, she has given his party the Foreign and Finance portfolios, plus some others. The former are two major coups for his party.
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Schulz is expected to step down as leader of the party and take the role of Foreign Minister. He has been a major advocate of a more federal Europe and has even tweeted his desire for a “United States of Europe” by 2025. 

​Merkel is not expected to finish the next term and may even retire if the approximately 460,000 SPD members vote down the coalition in early March.

Even if it passes, she will not be able to lead and execute on her decisions in the same capacity as she has previously done. Her leadership has been characterised by a progressive approach to the many issues facing Europe and Germany over the last decade but in a timely and non-radical manner.

Merkel will have to balance all factions’ ambitions in this coalition as well as defending against the Alternative for Germany attacks from the opposition benches, who went from no seats in 2013 to  the current third largest party.

Their populist, anti-immigrant rhetoric and policies are resonating with more voters since the decision of Merkel to allow up to a million immigrants into Germany since the Syrian Civil War.

Contrast this with Emmanuel Macron, who has four more years until the next Presidential election and has a majority of 350 seats of a total of 577 in the National Assembly.  

He has so far been able to reform the previously impregnable French Labour laws , has political momentum and the French economy had its strongest performance in 2017 in six years, growing 1.9%.
There are challenges for Macron ahead. Things can change quickly in French politics and major protests may still erupt over the labour reforms or other legislative changes.

At the start of the year I did a quick scan of what elections are coming up in Europe in 2018. The Italian election on Mach 4th caught my eye and I decided to do a little research on the the Italian economy, the general state of Italian politics and the key political players and parties heading into the election.

All three areas really captured my imagination but I quickly became concerned about the direction Italy is heading in and what tangible progress it has made since the worst days of the Financial Crisis and the European Sovereign Debt Crisis.

I wrote a little about Italy a while back when discussing the current states of the PIIGS but it was quite high level and I didn’t delve deep enough to really get an insight into the current malaise troubling many Italians and its economy.

The first thing to note is that the current global economy overall is as strong as it has been in a decade. There is positive news emanating from all across the globe, boosted by stronger than predicted economic performance in China, positive economic sentiment in Europe and the continued stock market bull run in the US (Trump’s tax deal may be a factor in the very short term to this but will ultimately be damaging in the long term).
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However, the headline figures do not look good for Italy. The overall debt to GDP has continued to grow and stood at 132.6% of GDP at the end of 2016. This is dangerously high for a developed economy and compares very unfavourably to its peers in the EU (highlighted in red and blue in the chart respectively)

Other European nations had have had similar levels of debt but have benefitted from strong levels of growth recently as the overall EU economy enjoys a period of strong growth which has led to the lowering of their Debt/GDP ratios. Unfortunately, the growth in Italy has been quite slow and continues to lag most of its peers.

The Italian statistics office has estimated that YoY growth in Q3 2017 was 1.7%. This is the best figure since Q1 2011 and 2017 looks set to be the best year 2010. The growth is encouraging and has been welcomed by investors and pundits alike. If the growth continues like this over the next two to three years Italy may see itself in a more structurally strong state.

In relation to Italy, it does appear JFK’s old words hold slightly true; “a rising tide lifts all ships”. I say slightly as it more from those looking from the outside inwards than the feelings of every day Italians, many of whom still feel disillusioned and left behind.

The political situation is a lot more challenging. The current government is led by a coalition of centre-left parties under the leadership of Paolo Gentiloni and the Democratic Party (PD). The previous Prime Minister, Matteo Renzi, was performing well in polls and election. He may even have joined (in the eyes of the media at least) the ranks of young, progressive global leaders like Justin Trudeau and Emmanuel Macron. However, he fell on the sword of constitutional reform and resigned after the Italian electorate rejected his proposed changes.

In polls PD and its probable coalition allies are now significantly trailing the “centre right” coalition, of which the two largest parties are Forza Italia and Lega Norda.
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The former is led by Silvio Berlusconi, the comeback “kid” of Italian politics whose resurgence has been partly fuelled by his promise for a flat tax rate for all Italians, initially starting at 23% but eventually moving down to 20%.

A flat 15% rate has been a campaign pledge of their key ally, Lega Norda (under the leadership of Matteo Salvini) for quite some time. It has proven popular with the electorate but is seen as quixotic by their opposition and most economists.
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While austerity has certainly not been a purely positive factor for peripheral nations in the EU in recent years, abandoning fiscal prudence with such a policy like this could be absolutely devastating to the Italian economy, particularly when debt is already greater than 130% of GDP as previously discussed. 

Another factor that could potentially be detrimental to Italy is the Lega Norda’s stance on immigration and their ties with other right wing parties in Europe. Salvini has come out quite strongly against Muslims in Italy with quotes like;

“The problem of the Muslim presence is increasingly worrying. There are more and more clashes, more and more demands. And I doubt the compatibility of Italian law with Muslim law, because it's not just a religion but a law. And problems can be seen in Great Britain as well as in Germany, so reassessing our coexistence is fundamental.”

This sounds a lot closer to what we associate with leaders in Hungary and other Eastern EU states then Italy’s traditional place at the heart of Europe as a founding member of the European Economic Community.
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The X factor in Italian politics currently at the moment is the Five Star Movement. They are currently leading most polls to secure the most seats (I punted on them recently and the odds have dropped significantly since). They claim not to be a political party and neither see themselves on the left or right of the political spectrum.

They have dropped their pledge for a referendum on the euro but little else is known of their polices and aims apart from “transparency” and tackling corruption. In recent days, there has been more mootings for potential coalitions based on the numbers, though it is still difficult to envisage who they could go into government that would deliver a majority of seats in the Chamber of Deputies.

In all likelihood, they will get the most seats but the centre right will be the closest to forming a majority. In either case, it will lead to a stalemate with political uncertainty and paralysis until Italians go back to the polls or a centre right coalition with a heavy populist element and major tax cuts at a time when Italy has the second highest debt to GDP ratio after Greece.

The world is in a strange place currently where economic optimism is high and markets are performing well. Paradoxically, geopolitical risk is reaching levels not seen for quite some time. If Italy continues down the same path without clear reform or strategic direction it may be one of the biggest casualties globally in an economic downturn.

The good times cannot last indefinitely and ultimately it is the tough decisions you make in them that determine your ability to handle recessions.
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Unfortunately for Italians, their political leaders have not yet identified these challenges, let alone started to tackle them…

I sometimes place an over emphasis on individual leaders and how their decisions and interactions can shape and dictate global events. Please allow me to do so once more. For this article, I want to pick a few quotes from Emmanuel Macron and Xi Jinping during Macon’s recent trip to China that I believe capture the aims and attitudes of both men.

I have written in the past about Macron’s grand plans for France and Europe. I believe he sees himself as heading a France that is on the cusp of regaining its place as joint leader of the European Union, after allowing Germany to dominate proceedings since the financial crash in 2008.

To do so, while he tackles legacy domestic issues at home, he must also present a dynamic and confident France abroad. A large part of his election manifesto was to make France competitive again. To do this, he must increase French exports. China is naturally the most attractive market so this trip was a major test and opportunity for Macron.

For Xi Jinping, a man who has the world at his feet, Macron’s visit was an opportunity to host a leader of a still influential European nation while not being overawed as the realities of their respective economic strength becomes more evident each day. This visit carried a lot less pressure for XI Jinping but did give him the chance to project Chinese prestige and strength to Europe as it continues its Belt Road Initiative project.

Macron started his three-day tour in Xi’an, the ancient starting point of the Silk Roads to show his commitment to China’s “new silk road”, the afore-mentioned Belt Road Initiative.

“After all, the ancient Silk Roads were never only Chinese,” ……  “By definition, these roads can only be shared. If they are roads, they cannot be one-way,”

This was a clear message to China that current trade imbalances cannot continue indefinitely. He later referenced the exact figures of French imports and exports to China and it was a recurrent theme throughout his trip.

Macron pulled out all the stops in terms of flattering the Chinese with Chinese literature quotes, a visit to a very important but virtually unknown Buddhist pagoda in Xi’an and the gift of a white horse, Vesuvius.

Unfortunately for Macron, despite his Gallic charm offensive.  he struggled to deliver many major deals or positive “results” on the trip. He had urged caution before the trip and justified this on the trip stating;

“I don’t want to give the impression that we made this trip to obtain as many contracts as possible,” ……“We have secured unprecedented openings ... which are the result of much hard work.”

This did come across as a little Trumpesque and all it was missing were a few ‘great’, ‘tremendous’ and huge’ adjectives strewn in. France simply doesn’t have the economic strength to dictate favourable trading terms with China. While Macron believes he represents the undivided European Union position, this is simply not, yet at least, the case.

Only this week I wrote about the divisions emerging in the European Union. I failed to mention the economic divergence which became apparent in a summit hosted by Viktor Orban last November. It included leaders of China and sixteen eastern European nations (Hungary, Bulgaria, Romania, Poland, Bosnia and Herzegovina, Serbia, Croatia, Slovenia, Slovakia, Albania, Macedonia, Montenegro, Czech Republic, Lithuania, Latvia and Estonia).

China has already benefitted from these divisions by making major investments in peripheral EU countries like Greece, Hungary and Poland. It’s a smart move designed to create divisions in Europe (not dissimilar to what Putin’s Russia often orchestrates) and also to create exit and entrance points for the Belt Road Initiative in Europe. The major difference with Russia though is that China has the financial clout to build and sponsor major infrastructure projects. It’s a tired cliché but money still talks…

Macron and other EU leaders are aware of this. Macron went as far as almost rebuking Xi Jinping for this by stating the below, although it was very veiled criticism and probably aimed more at the leaders of sixteen nations who attended the November summit in Budapest;

“Europe has often shown itself divided about China,”….“And China won’t respect a continent, a power, when some member states let their doors freely open.”…“China, which is a great power, does not respect a country that sells its essential infrastructures to the lowest bidder,”

Ultimately this trip was a little underwhelming. It delivered little in terms of concrete results. Macron can console himself slightly by acknowledging that he did show a lot more sophistication and understanding of China than Donald Trump managed to back in November. However, this does not make up for the lack of political and economic power Macron has compared to the US.

While Macron clearly believes he represents both France and the European Union, I believe Xi Jinping saw him as a leader of a country of 67 million people, which would be the equivalent of the seventh largest province in China. When Macron returns to France and tries to follow up on some of the initiatives discussed in China, he may also come to this realisation pretty rapidly…
 
 
 
 
 

Unfortunately, this article is a little dated already. I first alluded to this divide back in June in an article about the PIIGs but then got pulled in a myriad of directions and topics. The evidence of this divide has grown since.

The recent demands of the Polish and Hungarian leaders for a greater say in running the European Union, particularly in the areas of budget and immigration, at a joint press conference was what reminded me that I not returned to this topic in some time. The image above of both men standing strong and divided will play well with their electorate, as well as populists across Europe.

I still think it is worth discussing now as it may be a key factor in the European Union in the near to medium term. There is a clear gap opening between the western EU states clustered around France and Germany and the Eastern states led by Poland and Hungary.

This is not a simple “them and us” divide and both camps do not neatly fit into sides. However, there are factors that are worth looking at. The easiest way is probably to look at the different tensions between the West and Hungary and Poland respectively, while looking at how they have aligned their interests in the meantime. Finally, identifying where they can find allies in the rest of Europe.

Viktor Orban is the combative, outspoken leader of the conservative Fidesz party. He has been Prime Minister since April 2010, though he was also previously Prime Minister from 1998 to 2002. He has passed a number of controversial laws, including an article in the constitution in support of traditional marriage.

However, the real fissure between himself and the many members of the western states stems from his views on immigration. In 2015, at the height of the migrant crisis, Hungary erected a border fence between itself and Serbia so that it could monitor the immigrants entering the country.

Prior to this, Orban had rejected the conditions of the Dublin Agreement in June and prevented immigrants being returned to Hungary. A year later he caused further controversy when he claimed that

“Hungary does not need a single migrant for the economy to work, or the population to sustain itself, or for the country to have a future,”

and

“every single migrant poses a public security and terror risk”….“For us migration is not a solution but a problem ... not medicine but a poison, we don’t need it and won’t swallow it,”

While deemed deplorable by numerous political commentators, this language resonates well with many across Europe, as the relative success of Marine Le Pen and Nigel Farage in France and the UK indicates. Orban also highlighted the fact that the western states did not have to face the “invasion” in the same way, as they were far away from the migration path.

Poland was initially, at least partially, supportive of the EU’s immigration measure and voted Yes in the European Union Justice and Home Affairs Council majority vote to relocate 120,000 refugees in September 2015.

In October of that year, the Law and Justice party came to power. It is also a socially conservative party, though it wasn’t perceived as quite as euro-skeptical party as Orban’s Fidesz party. It has publicly stated its admiration of the Fidesz party with one its founders Jarosław Kaczyński previously claiming

“a day will come when we have a Budapest in Warsaw.”

The Polish government, under the Law and Justice party, came into conflict with the European Union in 2017 over its plans to check the supreme court’s independence and to assume control of the appointment of judges. The proposed legislation would have immediately fired the majority of the sitting eighty-three judges on the supreme court subject to being re-appointed.

The attempted removal of the separation between the legislative and judicial elements of Polish society was met with a fierce rebuke by the European Commission. The vice president, Frans Timmermans, said;

“Judicial reforms in Poland mean that the country’s judiciary is now under the political control of the ruling majority. In the absence of judicial independence, serious questions are raised about the effective application of EU law,” 

The crisis reached a crescendo in December with the EU threating to invoke the most serious sanctions possible, including suspension of voting rights and blocking financial transfers.

This would have required the backing of all other member states. Viktor Orban declared at the time that Hungary would veto this under any circumstances. A defiant message to the Commission that they can’t bully member states into submission.

Looking forward, there is no doubt that both governments will work together on a number of strategic aims.
On immigration, they can find allies in nearly all oppositions across Europe (fortunately, Ireland does not have a far right, anti -immigration party, the reasons for which I hope to explore soon). The recent success of Freedom Party of Austria (FPO) which allowed them to enter Austrian government as the junior coalition partner is a boon, particularly for Victor Orban. While the FPO are a lot less bellicose about their opposition to immigration, there is certainly common ground to explore and expand upon.

EU interference in domestic issues is particularly irksome to both governments and it plays well to both electorates when they effectively tell the EU to “butt out”. Orban supported Spain’s Catalonian crackdown , claiming

“The Catalonian referendum is a Spanish internal issue, and accordingly Hungary is not commenting on the subject”.

The plans of Emmanuel Macron to further harmonize and integrate the European Union will be an area of opposition for both and they may be able to draw in allies here that would not necessarily agree on their views on immigration but feel threatened by further EU consolidation.

Ironically, the United Kingdom may have fallen into this category. Theresa May visited Poland in December to sign a military pact and it was notable that she claimed the judicial crisis was a domestic issue for Poland to decide.

The UK may still look to both nations for support in the latter stages of the Brexit negotiations. So far, the European side has shown itself to be united but any division would aid the UK’s negotiating hand.

In summary, a divide is opening up between the governments of some eastern and western EU nations. There are a number of challenges that need to hurdled. The European Commission and Parliament have to understand that dialogue is essential, while at the same time not pandering to populist, far right policies that threaten human rights or the rule of law.

Europe is finally enjoying a relative period of geo-political stability after a tumultuous decade. If this is to continue through 2018 and into 2019, a pragmatic approach is needed by all sides. I am not certain that this will be the case and will revisit this topic over the next eighteen months. Interesting times lie ahead…

I have been following events in Catalonia from afar since I last wrote about the violent reaction of the government after the independence referendum. Since then, my attention and focus has been a little closer to home with a relatively dramatic period of events and negotiations concerning Brexit and a scandal in the Irish government. On the international front, the decision of Donald Trump to recognise Jerusalem as the capital of Israel was a major talking point among the liberal, chattering classes.
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In this age of constant news, viewed and accessed through many devices and mediums, it is very difficult for a topic to dominate the headlines for more than a fleeting moment. The Catalan separatist movement suffered from this.

There was genuine outrage across Europe and further afield in the aftermath of the crackdown. The images of citizens being assaulted by members of the Spanish police as they attempted to exercise their democratic right to vote was abhorrent to most people across the world.

I wrote that Rajoy had astutely guessed that whilst he may initially face a global backlash, he would not face major challenges from his Spanish constituents and that the ire abroad would quickly dissipate.

A crucial victory for Rajoy was the muted response to the violence from the European Union leaders and leaders of the EU 27. A crisis like this can either cause a period of introspection where you analyse the issues that have caused it or a hardening of attitudes where the blame is focused solely on the other side.

On this occasion Europe, in the midst of a number of existential challenges, leaders were happy to call this a Spanish problem and wash their hands of any responsibility. This attitude was summed up by the words of Frans Timmermans, the First Vice President of the European Parliament;

“Let me be clear: Violence does not solve anything in politics. It is never an answer, never a solution. And it can never be used as a weapon or instrument. None of us want to see violence in our societies. However, it is a duty for any government to uphold the law, and this sometimes does require the proportionate use of force.”

I believe this deafening silence of condemnation further emboldened Rajoy to pursue criminal charges against the leaders of the Catalan Independence bid, as well as dissolving the Catalan parliament.  Arrest warrants were issued for at least ten Catalonian politicians. The majority of these were arrested and some remain in jail. Carlos Puigdemont and four former ministers fled to Belgium, where they remain. Spain initially tried to extradite them but has now withdrawn the five European arrest warrants.

The election on the 21st of December will be a decisive victory for Rajoy and Spanish unionist if they can break the majority currently held by pro-Independence parties. It is important to note that less than half of the electorate turned out to vote in the initial Independence Referendum in September.

The Spanish government claims that the silent majority have always favoured unity and may have voted for pro-independence parties in the past more to protect local interests as opposed to wanting an independent Catalonia. They can then state that the results of this election are a more accurate reflection of political desire for an independent Catalonia.

From the most recent polling data available, it does appear that the pro-independence parties will fall short of an absolute majority. The period of turmoil and uncertainty seems to have spooked much of the political centre ground. It is hard to imagine that was not the intention of the Spanish government.

However, a renewed majority for the separatist parties would be a crushing blow for the Spanish Government. It would be seen as a defiant rejection of political intimidation and violence by the pro-independence supporters in the region but met with fear by many others who see independence as a distraction from everyday life.

Unfortunately, I can only see the Spanish government extending the olive branch from a position of power. If the unionist parties break the majority or even gain a majority themselves, Rajoy can offer congratulations to the Catalan people for their pragmatism and for pulling Spain back from the brink, it will be labelled a victory for every citizen of Spain. He may even then adopt an apologetic tone for some the events that transpired over the previous four months.

The issue with this is that there are numerous secessionist movements across the European Union. Leaders of countries facing secessionist challenges may in future adopt the Rajoy model of delegitimizing regional elections and tacitly approving heavy-handedness and violence by national police forces, safe in the knowledge that the European Union will stay silent and call it a national, domestic issue.

After the admirable approach taken by the United Kingdom with the Scottish referendum, Europe may have now lurched a few steps right in its approach to regional independence movements. Coupled with the rise of far-right political parties, we may see a lot more political violence over the next decade.
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This will force politicians of all hues to offer innovative ideas and solutions to ensure the evolving European Union projects continues to contain a liberal, pacifist core. If not, Europe may fracture from future events and political causes that the average EU citizen is not even aware of today. The European leaders chose to ignore the violence in Catalonia but that may in time may be the catalyst for the collapse of the entire European project if a red line against institutionalised political violence is not drawn.

I recently wrote about how the Brexit deadlock was a perfectly destructive equilibrium of opposing aims and forces. The de facto vetoes held by the Irish Government on one side and the Democratic Unionist Party (DUP) on the other meant no viable solution was available that satisfied both sides. This led me to believe that heads would roll as one side was simply cast aside.

I was wrong on this for now. All sides were able to come to an agreement that allowed the talks to progress to the second phase, which will focus on trade. The impasse was broken mostly by vague language that was deemed acceptable by everyone as it was possible for a broad spectrum of interpretations of what the text actually meant.

“Regulatory alignment” was perceived as less constricting to the DUP than “no convergence” between the North and South that led them to effectively veto the agreement that had been decided on Monday last.  For most commentators the second iteration, which was agreed last Friday is not much more favourable to the DUP’s stated goals. They have signed off on a document that commits the UK to full alignment between the North and South unless there are prior, agreed solutions.

“In the absence of agreed solutions, the United Kingdom committed to maintaining full alignment with those rules of the internal market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy, and the protection of the Good Friday (Belfast) Agreement. In this context, implementation and oversight mechanisms for the specific arrangements to be found will be established to safeguard the integrity of the internal market.”

The breakthrough was greeted with guarded optimism by most sides, with the Irish government and Theresa May’s camps being the most vocal and ebullient. I wanted to wait until the weekend had passed to assess the fallout.

Furthermore, for Theresa May to navigate the talks and deliver a final solution, she needs to keep the hard right, anti-EU faction of her party onside.  The uniformity of the message delivered by members of her party over the weekend was a crucial acid test of whether she had been able to get all sides onboard. Cracks that appear already will possibly move to chasms as the trade talks will evolve from aims and goals to facts, laws and treaties.

David Davis spoke on the Andrew Marr show yesterday and appeared bullish on the United Kingdom’s trade deal prospects, while playing down the commitments agreed in Phase 1. Davis claimed the divorce settlement will only be paid if a deal is agreed and that the text agreed was more a statement than a concrete agreement;

"We want to protect the peace process and we also want to protect Ireland from the impact of Brexit for them. This was a statement of intent more than anything else.”

Michael Gove, the Environment Minister and prominent Brexiteer, went a step further when he stated;

“If the British people dislike the arrangement that we have negotiated with the EU, the agreement will allow a future government to diverge.”

To me, this means that if the Tories win the next election, they can renege on many of their commitments and start over. While he public supported May’s efforts, this undoubtedly undermines her authority and negotiating position.
 
This has sparked alarm bells in Ireland and Europe and backlash from members of Labour and the Scottish National Party.

The DUP response has already been quite toxic and has done the most to poison relations between North and South. Sammy Wilson made some deplorable comments about cowboys and Indians in the past few weeks. Arlene Foster grudgingly approved the deal with the caveat that nothing is agreed until everything is agreed. However, the most insidious comments came from Ian Paisley Junior who claimed the DUP “had done over” the Irish Government and Leo Vardker. This is almost Trump-esque language that will harden Irish resolve as well as cause consternation among many in London.

I won’t be writing about Brexit again until 2018, though there may be further breakthroughs and crucial details that emerge at the meeting of European leaders next week. For now, talks have progressed without real progress and I think all sides will be happy to park the key issues until the New Year. For 2017, disaster has been averted and jobs have been retained.

This agreement was akin so a small release of energy that has resolved the threat of a political earthquake in the very short term. Unfortunately, the underlying fundamentals have not changed and it is still my view that the Irish border is a catch 22 position that can’t be resolved with the current agreement. I expect the Spring to be a very turbulent time for Brexit and political volatility to greatly increase. That’s for later though, to paraphrase the Chinese proverb, “may we live in interesting times, but let’s enjoy Christmas first…”

The Symmetrical Power of the Irish Government and DUP will probably lead to a Political Earthquake…
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“Earthquakes are usually caused when rock underground suddenly breaks along a fault. This sudden release of energy causes the seismic waves that make the ground shake. When two blocks of rock or two plates are rubbing against each other, they stick a little. ... When the rocks break, the earthquake occurs.”

Yesterday was a disaster for North-South relations in Ireland. The DUP scuppered a deal that had been agreed by all sides AKA the Irish Government, the Tory Government (granted not the DUP, whose ten seats prop them up) and the European side.

By most accounts it appears that Theresa May had verbally agreed to a deal that committed Northern Ireland to “regulatory alignment” with the Republic and the European Union without consulting the DUP beforehand.
This was either a case of misplaced confidence or extreme naivete. We are now in a position where two opposing forces are pushing against each other in a state of equilibrium (aka stalemate in the negotiations). Unfortunately, the window for an agreement to be reached that appeases both sides has almost completely passed.

This equilibrium cannot last indefinitely. It is increasingly likely that at least one side will be forced under and burnt and the ensuing release of energy and emotions will have devastating implications for those involved.
At this stage, the most likely victim of this political earthquake is the British Government. Theresa May’s authority has been consistently undermined and her position looks untenable. Having said that, it’s looked untenable for months and nothing has dislodged her yet.

Nobody across the political spectrum has so far proposed a solution that is acceptable to all parties. I would hazard a guess and say that nobody so far has guessed correctly what will happen when either the Irish Govt or the DUP are let down or the talks collapse completely.

If Brexit has taught me one thing, it’s that logical outcomes rarely happen when this level of emotion is invested by all sides. As I have stated already, the British Government do look the most vulnerable to this potential, political rupture. However, the potential backlash could take down Leo Varadkar, Arlene Foster or even threaten the stability of the United Kingdom.

We are close to an earthquake that will be have devastating but unforeseen circumstances. Leadership and maturity must now be shown by all sides if we are to avoid this…

The last week has seen many spats and comments from Irish, British and European politicians on Brexit, trade and the Irish Border question. Theresa May travels to Brussels for a crunch meeting with Jean Claude Juncker tomorrow so negotiations and emotions should reach fever pitch over the next two weeks, after the relative phoney war of the Autumn.

The dynamics between parties and individuals is complex, fluid and dynamic. I’ve tried to summarize the position some of the groups involved below in terms of what they really want to happen in the coming weeks, red lines and relative power. It’s a contentious topic and certainly up for debate so feel free to comment or correct below;

Theresa May and the mainstream Conservatives;
2017 has been her annus horribilis. She started the year in a position of relative strength with Labour in disarray and massively trailing in the polls. Her Lancashire speech was met with muted praise by many in the British media. However, it’s all been downhill since including losing her majority in the General Election in June. This led to a supply and confidence agreement with the DUP which has massively impacted her negotiating leverage since.

At this point she would settle for concluding Phase 1 without her government collapsing or a heave from the Brexiteer side of the party led by Boris Johnson, Michael Gove or Jacob Rees-Mogg. To avoid this, she’ll have to do enough to satisfy both which will be difficult. The explicit backing of the Irish veto by Donald Tusk last week was a further blow and it will be almost impossible to keep everyone happy.

Pro – Brexit Conservatives;
While there is not a uniform position held by all those who favoured Brexit there are some clear demands that resonate with most of these members. They are already massively dismayed by the approximate 50 billion pound divorce bill. The fact that there wasn’t a heave against Theresa May then shows the fear they have now that it could lead to an election. They are not as pushed on what happens to the Irish border as long as progress to the next round of talks isn’t delayed further. The No Deal threat/demand has been mentioned but is still seen as the nuclear option. To be honest, they haven’t been able to impose their aims as much as I had feared back in July.

The Irish Government;
The Irish Government is in a position of strength since the unequivocal backing of Donald Tusk and the European Union last Friday. Their position seemed to be quite clear in that they would veto progress to the next round unless they have concrete guarantees from the British government that there would be no physical infrastructure on the Irish border. Their ultimate desire is that the UK remains in the Single Market. This now seems impossible but there is the potential that Northern Ireland will become a special designated zone.

Taking a hard-line publicly will also win votes. I think the Irish people have been quite riled up over the last few weeks. On the domestic front, there is no potential to be heavily criticised for being aggressive, this position does not to be defended on two fronts. Fine Gael do need a good PR story after what happened with Frances Fitzgerald and the upped ante of these talks is a welcome distraction as I wrote here.

Democratic Unionist Party;
Their position is possibly the most complex. Like the Irish government, they also want no physical infrastructure on the Irish border. They realize that this could potentially lead to backlash from the Nationalist community that could energize their voting habits and increase the nationalist turnout at Westminster elections, as well as any future Northern Ireland Assembly elections.

However, they have also said that any concessions or proposals by the Conservative party that leads divergence between the British mainland and Northern Ireland would force them to end the supply and confidence agreement. On paper, this also gives them a veto. In reality, if they did this Labour are currently polling ahead and a Jeremy Corbyn led Labour government would be a disaster for the DUP, on top of them losing their kingmaker position.

Jeremy Corbyn and Labour;
This is a very challenging position to describe and one really open for debate. Corbyn was heavily criticised for not campaigning hard enough for the UK to remain in the European Union prior to the Brexit referendum. For most of his political career, her has been a euro sceptic. I believe the government collapsing is their main aim today. The problem for them, is that they have no real way of making this happen. This is not to say that the government will not fall, I have outlined above how it could occur. If they did suddenly win a snap election, I don’t think they would try and reverse Brexit but would look for the softest version of Brexit possible, though probably falling short of complete free movement of people and goods.

The European Union;
I think at this stage they are quite happy with how things have proceeded. The initial shock and horror at the disarray of the British negotiating team has given way to a realisation that they hold most of the aces and are negotiating from a position of relative power. I was surprised at the level of backing given to Ireland on Friday though I suspect some of this was posturing and behind closed doors Leo Varadkar was encouraged to avoid using his veto. Their red line is that the United Kingdom will not have the same level of access to the single market with the free, uninhibited movement of people throughout the European Union.

Sinn Fein;
I think Sinn Fein’s position is worth analysing. With the Northern Ireland assembly not currently sitting, Sinn Fein are not directly involved in negotiations. That being said, they represent the nationalist community in Northern Ireland as expressed through both the Westminster and previous Northern Ireland Assembly elections. I don’t think they would like to see Brexit reversed tomorrow. Brexit has helped propel talks of a United Ireland in the mainstream conscious of the Irish people in way I haven’t seen in my (admittedly relatively short) lifetime.
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Equally, I do not believe they would want a disastrous Brexit either as they may suffer a backlash over not going back into government in the North. To be fair they have been outright in their calls for Northern Ireland to remain in the European Union from day one. This is unlikely but divergences between the British mainland and Northern Ireland would be publicly and privately welcomed, particularly if the DUP did follow through on their threat to pull down the government. 

So far, we have discovered very little about what the United Kingdom’s future relationship will look like with the European Union post Brexit. The formal declaration that the UK would be leaving occurred on the 29 March 2017 with the United Kingdom serving the withdrawal notice under Article 50 of the Treaty on European Union.

The negotiations really started on the 19th June 2017 when the British Secretary of State for Exiting the European Union (catchy title!), David Davis, landed in Brussels to negotiate the exit terms with the European Union’s head negotiator, Michael Barnier.

The British Government’s position had been strongly weakened less than ten days before when Theresa May and her Conservative government lost their majority in the House of Commons. This was after they had voluntarily called the election to consolidate their majority. In hindsight, it was a poor decision though at the time most pundits believed It would deliver a larger majority. It didn’t and was possibly the worst prelude to negotiations May could have imagined.

Since then, there has been plenty of back and forth from London to Brussels. Talks are ongoing but seem to deliver very little in terms of concrete results, at least for the public. In fact, I think many people are already suffering from “Brexit fatigue”. Maybe it’s part of the Tory strategy, deliver so little and trickle news to the media so slowly that people eventually stop caring. Unfortunately for them, this won’t work as the media continues to focus on every announcement.

It doesn’t help that the Tories are currently undergoing an internecine leadership battle between those who want to either reverse Brexit or at the very least mitigate its impact and those who believe Brexit will be the greatest thing to happen to the UK since they found oil in the North Sea. This allows the British tabloids to continue their desire for the hardest possible Brexit through mouthpieces like Jacob Rees-Mogg or Nigel Farage.

We have seen some battle lines drawn on divorce payment, the role of the European Court of Justice in any (yet to be agreed) transition period. However, nothing is confirmed. Personally, I believe it will be very hard to the UK to make real, concrete progress until either Theresa May is deposed and a new leader who openly represents one of the afore mentioned factions emerges or, even more dramatically, a General Election is called and Labour emerge, championing a soft Brexit.

Somehow the European Union has claimed enough progress has been made to move to the second stage of the negotiations in December. The Phoney War lasted eight months between the UK’s declaration of war on Germany in September 1939 and Germany’s first offensive on the Low Countries on the 10 May 1940. December will mark approximately eight months of the Brexit talks.

As each day passes with little progress and updates I think it is more likely that the EU negotiators will start the genuine war and publicly deliver some hard truths to the British Government. This is no not really in anyone’s interests (I haven’t even touched upon Ireland in this article though I have speculated on how the internal Tory struggle is dangerous before here).

The problem for the British is that while they bicker and postulate that any bad deal will hurt the remaining 27 EU nations more, the European Union is going about its business in a discreet and diligent manner. They have started to send out signals that they are losing patience with David Davis and co. but I still think they are yet to use any of the weapons at their disposal. Davis publicly calling his European counterparts the “enemy” gives them further justification for harsher measures. The phoney war is going to soon end and I believe it will be the European side who fire the first bullet. This bullet may even be the coup de grâce for May’s shambolic reign as Prime Minister.

Sometimes I really have to force myself to acknowledge an astute or shrewd move from a politician or a political entity that I dislike. Unfortunately, like many Millennials on the left, I can become a little over indignant at people or groups who espouse opinions contrary to my own views. This is an occasional affair and there are probably a lot more occasions where I can’t see the intelligence behind a certain action because its motive or impact is simply abhorrent or odious to me. This is purely a reflection on my own blinkered views. I have a lot to learn and I realize this more and more every day.

The Spanish Government’s reaction to the Catalan Independence vote was a clear example of me failing to be objective in my analysis. I simply failed to spot the reasons behind Rajoy’s decision to come down hard on the separatists. I lamented the violent reaction over Twitter and smugly ascertained that Rajoy and the Spanish Government are so stupid, that they’ve lost Catalonia forever.  

Now that the dust has settled a little, it’s time to take stock. Catalonia is still a part of Spain today. The violent reaction of Spanish security forces was condemned across Europe by many separatist and socialist parties, however the silence from Europe’s governments was deafening. The EU itself was happy to call this an “situation in Spain”. There were no calls for a boycott of Spain, no real tangible downside for Rajoy and his government.

On the contrary, Rajoy will probably experience a boost in popularity from some regions. His approval rating was already exceptionally low. He was never going to get many more votes in Catalonia so why allow them to question the authority of the Spanish Government. A soft approach would have made him appear even weaker to the rest of Spain and potentially exposed a soft underbelly to be attacked by opposition or the other parties who prop up his tenure.

“Upon this a question arises: whether it be better to be loved than feared or feared than loved? One should wish to be both, but, because it is difficult to unite them in one person, it is much safer to be feared than loved.”

He was never going to be loved by the people of Catalonia so he could try and create some fear and show them the government meant business. Similarly, Rajoy is not loved by the people of Spain but coming down hard on the separatists was never going to really hinder his support from his mainly conservative base. He also correctly guessed that the EU and other major powers around the world would be too busy with their own issues to wade too deeply into the crisis.

I don’t agree or like what Rajoy did. To me it was an attack on democracy and freedom to vote. It was government legalized violence. However, I am not a Spanish constituent, my opinion doesn’t matter to him. Unfortunately, there is every chance that Catalonia won’t be able to move further with their Independence bid despite the Yes result (most Catalonians still poll for remaining in Spain - they simply stayed at home) and that Rajoy will increase his parties vote in the next election.
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I am not praising Rajoy or lauding his government's actions but understanding the motives of those we disagree with is crucial to challenging their narratives of events and creating compelling counter arguments. I never want to accept that violence can win but at the moment, in Catalonia’s case, it’s looking pretty bleak. Franco died peacefully in his bed at the ripe, old age of 82, I doubt he disapproves of Spain’s actions last week…

*First appeared here on Slugger O' Toole

Since it became clear that Angela Merkel would be re-elected as German Chancellor, there has been a re-focused approach to tax harmonisation within the European Union, driven mostly by Emmanuel Macron's France, along with Germany. This has been covered by numerous media outlets and there is little I can add to the conversation. The argument is that France and Germany who are now both stable and revitalised after momentous national elections, will look to readjust the balance of Europe. It was a major talking point a few years ago and then seemed to die down with numerous crises occurring, like the EU sovereign debt crisis, followed by Brexit.
 
In fact, it looked like Brexit would deter these efforts for a number of years at the very least. However, the certainty of the EU position in the face of a disorganized and often contradictory UK position has probably alleviated some of the fear in Brussels that the EU will suffer more than the UK from Brexit. The buoyant economic situation across Europe has also added to this new-found sense of confidence. This is a welcome change from the near fatalism that pervaded much of the mainstream media concerning the European Project over the last number of years. Unfortunately for Ireland, this has exacerbated the return to the tackling the major thorn at the side of the two most powerful EU economies; the variance in corporation tax that has attracted a disproportionate amount of foreign direct investment to certain peripheral EU states.
 
Ireland is undoubtedly the most high-profile example of a country benefitting from a lower than average corporate tax rate in the EU. It isn’t the only nation though, with some of the so called peripheral nations also attracting companies in this way. These include Cyprus and Malta amongst others. Many of these have suffered in the past from poverty, emigration and elevated levels of unemployment, A story all too familiar to many of our own older generations. The access to the European Union has offered these countries the chance to invigorate their economies, some experiencing growth unheard of in the recent past.
 
Unfortunately for the small nations, now that Germany and France (with the support of some of the other large nations) have realised that the rules are not in their favour they have decided that they want to play a different game. The latest utterings coming from Paris and Berlin are that the Eurozone needs a finance minister, along with a uniform corporate tax rate.
 
The Irish government needs to be firm and stand up for itself here, along with the other smaller nations. Allegedly, we have a lot of goodwill over the unique challenges we face with Brexit. Surely, we can argue, this is not the time for such drastic changes to the daily functions of the EU. Furthermore, these actions would boost the dissenters against the European Union’s creeping power. Many of these protestors have fuelled far right movements in European countries in recent years.
 
Ireland needs to say this isn’t the time and tell Europe that they will use any veto powers available to them to block this. Ireland can then work with the other nations who are more discreetly opposed to a single tax rate to organise a bloc of countries. Ireland is one of the most pro-European nations. Varadkar will need to effectively vocalise that there is difference between being Eurosceptic and believing that these potential steps are a bridge too far.
 
A lot of Varadkar’s appeal to his supports revolves around his frank and outspoken method of communicating.  He is seen as someone who isn’t afraid to mince his words. This is often seen in sharp contrast to his predecessor, Enda Kenny. It’s hard to forget the image of Nicolas Sarkozy rubbing his head, this was not the action of someone speaking to their equal.
 
Varadkar has been a lot more forthright with his criticism of the British government for their approach thus far to Brexit. It would be a lot more of a challenge to be as outspoken against tax harmonisation. However, this does not mean it would be prudent to stay silent. Ireland needs to stay strong on this issue. We cannot back down and allow ourselves to be walked over and dismissed. Let’s hope we have a leader who will fight for Ireland and maybe we can be an inspiration for other nations struggling to find their voice in Brussels.
 

*First appeared here on Slugger O' Toole

A lot of eyes in Ireland and Britain will be focused on Catalonia in the upcoming weeks. The vote taking place on October 1st will be an acid test for the integrity of Spain and the aspirations of independence for a number of regions across the European Union.

The referendum was first called for in June 2017 and was formally approved by the Catalan Parliament on the 6th of September. Almost immediately, the Spanish Constitutional Court claimed the referendum was non-binding, stating the Spanish Constitution does not allow Spanish Regions to hold Independence votes.

This should then be a straightforward matter. If the vote is null and void, it doesn’t make sense for it to take place. In 2014, in Catalonia’s last bid for Independence, the Catalan government basically accepted a similar ruling by the Court and then used the ensuing vote for publicity and consensus building.

The Catalans seem a lot more bullish this time around. There is a determination to hold a legitimate referendum, which they will not accept as illegal, and then act on the results after. The interesting aspect for North Ireland will be the aftermath of a successful vote.

It is not entirely clear what will happen in this case. It seems almost impossible for Catalonia to gain independence without the explicit approval of Spain. They would certainly not be able to join the European Union, as every European Union member has a veto, through the Council of the EU.

If the vote allows the Catalans to gain additional leverage in future negotiations or indirectly lead to future approval for a future referendum by the Spanish Government, it may be soon as a very useful tool by Nationalists in Northern Ireland in future years.

This type of positioning and posturing is excellent PR for a cause and nothing gets the masses engaged like an Independence vote, as we saw in Scotland in the run up to their Independence bid.

There is almost certainly not a majority in Northern Ireland who would vote for unification with the Republic in a legal referendum which meets the requirements of the Good Friday Agreement today. There are probably though a few local councils where a Yes vote would be successful today, especially when the result of voting Yes is more symbolic than anything else. Even a Northern Ireland wide vote would be a lot closer in this scenario. There is nothing like telling people they can’t vote on something, that will make them want to.

I think the key point is that a successful Independence bid for Catalonia is very unlikely to come about from the upcoming referendum. However, if an illegal referendum is viewed in the future as the first step in Catalonia’s successful bid for independence, will this then be a precedent for Nationalists in Northern Ireland and further afield?
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If there is clear evidence in the future that a majority want Northern Ireland to unify with the Republican of Ireland, will the leaders of the Nationalist parties really wait for the tacit approval of the British Government or will we be hearing a lot more about the “Catalan way”.

​Emmanuel Macron has captured the imaginations of many outside of France over the last few months. His second round Presidential run-off with Marine le Pen in May was seen by many as an existential crisis for the European Union. There was a collective sigh of relief across Europe when it was announced that he had won quite comfortably (the final vote was 66% v 34%). During the campaign, his policies and manifesto were given a bit of a free pass as many people simply wanted Le Pen as far away from the presidency as possible. He then won a comfortable  majority in the Parliament a month later to consolidate his power.

His campaign slogan “En Marche!” (Onwards!) sounded very upbeat and dynamic but gave little indication of his views on the current state of France and his aims to change it. That’s why in the weeks after his election in mid-May I wrote a piece here where I was quite critical of Macron. The criticism was more to do with the lack of substance in his campaign, I compared it to Leo Varadkar’s in Ireland.

He did publish a manifesto, which I was able to find an English version of, which to me seemed quite similar to many of the policies of Nicolas Sarkozy’s Republican party in 2012. Sarkozy, who lost out to Francois Hollande that year, did run again for the Republican party nomination  for 2017 but was defeated in the first round.

The goals mentioned in the manifesto included cutting public service headcount by 120,000 and reducing the headline corporate tax rate from 33% to 25%. This would take it lower than Germany, whose total rate varies from 30-33%. He also intended to overhaul social welfare and provide employment insurance for all which includes provisions like necessity to prove a genuine attempt to find a job and mandatory loss of benefits if two suitable positions are rejected.

After just over 100 days, Macron has now announced his plan for transforming French labour laws, which are captured in the Code du Travail, a broad piece of legislation which encompasses nearly all aspects of French working life. This comes on the back of suffering the largest drop in popularity for a French President in a single month in July (from 64% to 54%) since Jacques Chirac in 1995. It does seem as if the French public have gotten a little bit sick of hearing “Onwards!” without seeing any actual progress.

Macron issued five decrees on Thursday which will dramatically overhaul elements of the Code du Travail. They have reported across media outlets and I won’t go into detail on them here.

This is going to be his first major test. Former presidents have crashed against the great cliffs of French labour and have been broken. Even Francois Hollande, Macron’s predecessor and a member of the Socialist party, experienced major civil unrest last summer when he tried to initiate reforms. Macron has the benefit of a fresh start and a clear, if shrinking, mandate. He has shrewdly issued these as presidential decrees , which should expedite the process. So far most of the Unions’ reactions have been measured. Only the CGT has called for a day of action. In hindsight, Macron’s plan of a ‘100 meetings’ looks to have taken some of the wind out of the sails of the more combative Union elements.

I think the ramifications of whether Macron can succeed will reverberate across the European Union. If he is able to successfully implement an overhaul of the domestic labour system without sending tens of thousands to the streets , he will emerge with a renewed vigour and confidence.

If he can further consolidate his position at home, he will be able to focus more on internationally. If the polls are accurate (for once) and  Angela Merkel also has a comfortable victory in the German Federal elections, Europe will see an emboldened and aggressive Franco-German axis leading the conversations and policy direction of the European Union. Macron has been involved in both Brexit negotiations and talks for a more integrated European financial system (for the Irish out there this means one corporate tax rate). While Brexit negotiations have been well covered by the press, the talks over the latter have been progressing discreetly behind the scenes. While the world watches the escalation of the North Korean crisis (I still believe an agreement will ultimately be brokered by China), real impact in European’s daily lives could be a lot more impacted by whether the French finally accept some changes to the long lasting Code du Travail.

I remember the first time I heard the expression “PIIGS”. I was in a finance lecture in Boston and the professor rather smugly asked who in the class was from one of these nations. It was a very diverse class with a lot of Europeans. The acronym was relatively new at the time so only a few hands rose gingerly. In my mind's eye the  professor  then took great pleasure in explaining the term, naming the five members and finally asking the class again. This time there were quite a few Spanish, Italian and one or two Irish hands raised. I spent most of my formative years growing up in the Celtic Tiger economy. I remember hearing how we had replicated the successful Asian economies and were one of the fastest growing in the Western world. It was almost a fait accompli. Ireland had made it. Then came the crash and that afternoon in Boston where I was condescendingly reminded that Ireland was now a basket case along with the other failures of Europe; Portugal, Italy, Greece and Spain.

I am sure there were very similar feelings of disillusionment and devastation amongst the citizens all five nations. While many argue that there was never really a clear commonality between the economic situations of all five there was undoubtedly a shared impact on the national psyche. The causes and details of the crash are well known so this post will focus on their current situation, the outlook for the countries and if the PIIGS acronym has any relevance today.

Across Europe there is a lot more optimism today than at any time over the last five years. There have been some shocks in recent times, like Brexit and Marine Le Pen reaching the French Presidential run off, but overall the news has been a lot more positive and today every country in the European Union is expected to see economic growth in 2017 (see chart below). The PIIGS acronym has mostly stopped being used and Ireland has actually led many of the economic performance indicators since 2014.

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The devastation the bailout packages had on the citizens of Portugal, Ireland, Greece and Spain is slowly passing into memory. Italy did not suffer the ignominy of a sovereign bailout being forced upon them so they didn’t quite reach the same depths of despair. The images of Greek riots will live long with many. I can’t imagine many Greeks will be able to ever forget the many editorials across Europe that had provocate headlines along the lines of “Time to Let Greece Sink” or “EU needs to eject Greece”. They say that in times of true crisis you discover your true friends, Greece won’t forget how they were treated by their counterparts when they were at their lowest point.

The debt levels of Italy, Portugal and Greece remain alarmingly high. Italy is also projected to grow by less than 1% this year which will keep the markets on edge. However all five of the nations are growing and benefiting from increased tourism numbers as well as a rise in employment levels. Politically the left parties flourished in the crisis years and came to power in some capacity in Portugal, Spain and Greece. The Greek party Syriza continues to be the most prominent and currently leads the government of Greece, albeit it with a toned down version of its earlier manifesto.

I think the North/South divide is less relevant in Europe than before. The North/South divide was frequently used to contrast the hardworking/thrifty northern states and the lazy/spendthrift Mediterranean states (Ireland was somehow plugged into the latter group - Costa del Kerry if you will). This is less obvious today as Europe grows overall, benefitting from a buoyant global economy.  I believe the 2004, 2007 and 2013 expansions of the European Union will become more evident in the next five years. There is a much clearer contrast between the economic performance of the East v West than any linear North/South divide. New groups or idea blocs will emerge that reshape the internal dynamics and policies of the EU. The reaction to the refugee crisis over the last three years is an early indicator of this. I will explore this thesis in the future through a number of political and social lenses.

So are there still the PIIGS today? I never believed in the validity of this acronym and today it makes less sense than ever. It was a convenient catch all for the countries who lost the most in the last financial crash. It was the classic example of the wealthiest in society differentiating their economic position from the poorest due to their supposed character traits and hard work. Hopefully this is a lesson that will be learned and Europe can move forward in a more unified fashion when facing the great challenges of tomorrow. This certainly remains to be seen...

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Finding out about the British Brexit referendum result was one of the most surreal moments of my life. I was following the Irish football team around France and we had taken a small detour to Ghent. We had found a barge to rent on AirBnb and when we arrived there it was huge. It was soon turned into the flagship of the joint Irish/Lebanese Naval Force (there was a Sean, Cathal, Abdallah, Jad and Maher aboard). When Abdallah announced first thing in the morning they had voted to leave I literally couldn’t believe it. We had drunkenly gone to sleep pretty early the night before, after a long day’s drive, confident that the polls were all correct in suggesting a Remain win. I immediately viewed it as a watershed moment for Western politic and have maintained a healthy distrust of polls since.

Trump being elected was a lot less shocking. I do concur with the view that there was a similar pattern of middle class voters disillusioned with mainstream politics who viewed drastic change as a positive. I didn’t believe he would ultimately win but I advised my brother (who enjoys a punt) to back him at 3/1 a few days before the election ( this was before James Comey came out and said that Hillary Clinton was still under investigation by the FBI - a moment many think had a major impact on the final result).

These two results could have marked the beginning of epochs of change in their respective countries. Brexit, in particular, was seen as a dramatic departure that would change the face of the European Union forever. I may be guilty of engaging in a little hyperbole here, but not more so than the British press in the days following the election.

However in recents months both Trump and Brexit momentum have definitely stalled. The key question in this article is which will collapse first. There is still a major  chance that Trump will successfully complete his term as President and may even get re-elected if he chooses not to return to the simpler task of selling golf holidays to wealthy pensioners. Similarly Brexit may turn out to be unheralded success that Nigel Farage has crowed about for a number of years. I don’t think this is likely.

Trump came to power on a wave of radical promises, including the memorable ‘drain the swamp’. However the swamp is fighting back. It looks to me like Trump has sent the last twenty years surrounding himself with sycophants and yes men. He seems to have a very binary view of the world and has so far proven himself to be very incapable of subtlety and nuance. These are two qualities that are crucial when you are the leader in a democratic country. The emphasis here is definitely on democratic. He is a self professed admirer of Putin and seems to wonder why he can’t simply sign off on laws the way Vladimir can.

The allegations of collusion with a foreign government are mounting. Every day it seems a new accusation or piece of evidence comes to the attention of the public (and the potential prosecutors). His supporters scream ‘fake news’ any time there is a major story from a broad variety of media outlets. They saying goes there is no smoke without fire and currently the Trump administration, in particular a number of his key clientele, are suffocating. I predict Trump will ultimately survive these allegations after lengthy, multiple investigations but his administration will suffer greatly. To be a little bolder I predict he will not get the backing of the Republican party (and will either announce his intention not to run again before this goes public) or run as the first ever incumbent, Independent Presidential candidate (someone may correct me if this isn’t legally possible).

Brexit is stumbling on without a clear mandate. I have no doubt that if the Referendum was re-run Remain would win. The Conservatives, and Theresa May in particular, are living on borrowed time. There may even be an early election called if the DUP pull the plug. This could result in a Labour minority government or the Brexit doves gaining the upperhand in the Conservative party. I think a very diluted Brexit will take place with the freedom of movement and access to the market intact albeit with a different title and an added layer of political spin. There may be a few caveats to please the hawks and this will be gained through some sort of divorce bill that is a lot lower than the sixty billion pounds that has been bandied about.

Events are moving so swiftly on both sides of the Atlantic that predictions can’t remain static but in the end I see Trump and Brexit being constrained by Realpolitik to the extent that little changes substantially. This would be quite appropriate for two campaigns that were distinctly lacking in substance. Maybe the real lesson we can take from the last year is that vision and bringing people together leads to lasting change, not divisive soundbites...

ps if anyone is interested I’ve posted a picture of the finest Irish/Lebanese vessel the world has ever seen….

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