Garvan Walshe: Merkeldammerung. Germany’s polls put the Greens within striking distance of government.

1 Apr

Garvan Walshe is a former national and international security policy adviser to the Conservative Party

No leader gives up the job entirely on their own terms, but Angela Merkel, who will step down as Chancellor after what will be at least fifteen years in power, came closer than most.

She had the skill to keep the coalition of voters behind her Christian Democratic Union (which governs with its Bavarian sister party, the Christian Social Union) sufficiently broad to dominate German politics for a decade and a half. She’ll leave office as one of the great centre-right Chancellors of modern Germany, along with Konrad Adenauer and Helmut Kohl.

Known for waiting for what seems to everyone too long before making darting radical jumps, Merkel overcame the financial crisis, the refugee crisis, and even dealt effectively with the first wave of the Covid pandemic.

She saw off rivals internal (Wolfgang Schäuble) external (the AfD) and a man best described as standing just inside the tent, peeing in (Friedrich Merz).

Yet she was unable to find a successor. Karl Theodor zu Guttenberg imploded in a plagiarism scandal, Ursula von der Leyen’s mediocre efforts at the defence ministry would be repeated at the European Commission, Annegret Kramp Karrenbauer proved the dampest of squibs, while Armin Laschet was left holding the Coronavirus pandemic as the vaccination programme foundered.

Like every other centre-right party in proportional electoral systems, the CDU/CSU is struggling in a fragmenting political landscape. Party activists worry that she’s losing votes to her right, to the AfD (or, in a more liberal direction, the FDP), while larger numbers of voters defect to the Greens, who have governed impressively in Baden Württemburg (in coalition with the CDU), and who also increased their seats at the CDU’s expense in Rhineland-Palatinate.

The “Union” has a backup plan in the form of Markus Soder, the leader of the Bavarian CSU, who could replace Laschet as the centre-right’s Chancellor candidate in September’s elections, but he is now also suffering from the terrible vaccination campaign and PPE procurement corruption scandals. The Union is now polling in the mid twenties, ten points down on the beginning of the year. This doesn’t look like an election where “more of the same” is a winning formula.

The latest opinion polls have narrowed the gap between the CDU/CSU and the Greens to less than five points, and if the trend continues the Greens could even top the poll in September.

This opens up two new possibilites for post-election Germany. Until this month, it had seemed likely that a coalition between the CDU/CSU and the Greens, headed by a Union Chancellor, would have been the only way to avoid letting either the AfD or the post-communist Linke into national government.

But the green surge increases the options. A “traffic light” coalition, between the Greens, SPD (the social democrats, whose colour is red) and the liberal FDP (yellow), or a Jamaica coalition (after the Jamaican flag, because the CDU’s colour is black) involving Greens, Union and FDP would also add up to a majority. In these scenarios it is the Greens, not either of Germany’s two traditional parties, who could choose who to form a government with.

Germany’s Greens started as a conventional green party emphasising environmental politics, but have evolved into a centre-left formation without the industrial baggage of the SPD, which allows them to take clearer stances against polluting industry or in favour of immigration and accommodating refugees.

If their representation in the Berlin city government is radical (favouring rent control, for example) their adminsitration in prosperous Baden Würtemberg, home to much of Germany’s car industry, has been decidedly more pragmatic. Their independence from German industrial politics has also led them to take stronger stances against Putin’s Russia (remember that Gerhard Schröder, Germany’s former Chancellor, serves as chairman of Rosneft), and Orban’s Hungary.

A green-led government would, perhaps astonishingly, tilt German geopolitics closer to that of the United States. Transatlantic friction over Russia’s Nordstream pipeline to Germany, which both the Greens and Washington are against, would disappear. Leading the govenrment would, however, pose problems for the party in relation to nuclear weapons, with which much of its membership is deeply uncomfortable.

Nevertheless, the German Greens, which hse co-leaders, Robert Habek and Annalena Baerbock, would pursue international policy in step with the UK’s focus on addressing climate change, and upholding international human rights norms against Moscow and Beijing.  Nonetheless, they are strongly pro-European, and a Green-led German government would put renewed energy behind deeper European integration.

In September, the test for the Greens will be whether they can provide the right combination of reasssurance and change for an electorate that prized the stability and integrity Merkel provided them, but is now ready to give the system a bit of a jolt.

The AstraZeneca-Oxford vaccine. A run down of the developments across Europe extreme caution takes hold.

15 Mar

Over the past few months, there have been lots of issues across Europe with the vaccine roll out. From the EU’s difficulties in acquiring vaccines, culminating in its attempt to control exports across the Irish border, to Emmanuel Macron casually deriding the AstraZeneca-Oxford jab (AZ) and causing vaccine hesitancy, it’s been problem after problem. Today there was more trouble on the AZ front, with leaders concerned about whether it leads to blood clots. Without further ado, here’s a round up of some of the developments:

  • Germany has made the headlines today for two reasons. For one, Angela Merkel’s centre-right party, the Christian Democrats (CDU), suffered its worst ever results in two regions it once considered strongholds. The drop in support has been attributed to Germany’s problems obtaining vaccines, and will have huge implications for the CDU’s fate in September’s election. To complicate matters, this afternoon it was revealed that Germany has suspended use of the AZ jab, citing fears that it could lead to blood clots.

  • Soon after Germany’s decision, it was reported that France had also suspended the AZ vaccine. Macron already has one of the most dreadful records in regards to vaccination strategy. He claimed the AZ vaccine was “quasi-ineffective” in over 65s – based on no evidence. With reports of intensive care units filling up in Paris and with France having the world’s sixth-highest total of Covid-19 cases, it is extremely troubling that European leaders are planting more doubt about the vaccine. On Twitter, political pundits did not hold back when speculating about the reasons for Merkel and Macron’s decision to suspend the vaccine.

 

  • But Germany and France are not the first to suspend the AZ vaccine. The Netherlands has paused roll out until at least March 29 for the same reasons (worries about blood clots). In the meantime, the country has had some of the most extreme lockdown protests. Over the weekend, the Dutch police used a water cannon and other shocking methods to control protesters (see the video below). So who knows how much worse this will get with the vaccine roll out being so slow. All of this has happened three days before the country’s election, in which Mark Rutte, the Prime Minister, will stand for a fourth term in office. Unlike the CDU, his party is expected to do well – and build even more seats than it did in 2017.

  • One big surprise is that Italy’s Piedmont region has stopped using the AZ vaccine. This is in spite of the terrible time Italy is having, with it recording 27,000 new cases and 380 deaths on Friday, and going into lockdown. Luigi Genesio Icardi, head of regional health services, stood by Piedmont’s decision, suggesting that suspending AZ roll out was “an act of extreme prudence, while we verify whether there is a connection”. After a teacher died from a vaccination shot, authorities have been trying to find the batch responsible to examine it.
  • Lastly, Austria has suspended the use of a batch of AZ vaccines after a 49-year-old nurse died of “severe blood coagulation problems”, and four other European countries (Estonia, Latvia, Lithuania and Luxembourg) have stopped using vaccines from the same batch. It was sent to 17 European countries and consists of one million jabs.

So all in all, there is still huge scepticism about the AZ vaccine. Are leaders right to stop the AZ roll out? The European Medicines Agency and World Health Organization have both said there’s no evidence of a link between the jab and blood clots, although the EMA is apparently going to advise further tomorrow. In the UK there have been 37 reports of blood clots among 17 million people (and there is no strong biological explanation of why the vaccine would cause a clot). So it all looks slightly strange.

Leaders are using what is known as the “precautionary principle”; a scientific method that means you pause and review something if you’re unsure about it. It’s the ideal thing to do, of course, but the consensus from scientists elsewhere seems to be that leaders need to press ahead given the urgency of the pandemic situation. Suspending AZ can mean that many more lives are lost from the direct impact of the virus. Either way, you get a sense that “extreme prudence” may not have been the right move.

Macron and others played politics with AstraZeneca. The consequences for many EU citizens are fatal.

24 Feb

In January this year, many will remember Emmanuel Macron telling reporters, in no uncertain terms, what he thought about the vaccine developed by AstraZeneca and Oxford University.

Today we think that it is quasi-ineffective for people over 65”, he said, hours before the European Medicines Agency recommended it for adults of all ages. “[T]he early results we have are not encouraging for 60 to 65-year-old people concerning AstraZeneca”, the French president warned, as well as criticising Britain’s strategy of delaying the second dose of the vaccine to get the first one out quickly – in another act of incredible diplomacy.

Days earlier a German newspaper incorrectly claimed the AstraZeneca jab is only eight per cent effective in the over-65s. While the figure was quickly dismissed, several countries haven’t exactly inspired confidence in AstraZeneca’s efficacy. Germany advised that it should not be given to people aged 65 or above, citing “insufficient data”, and France, Switzerland, Denmark, Sweden and Norway have also recommended it only for younger people.

Ursula von der Leyen, the European Commission Chief, even went so far as to accuse the UK of compromising on “safety and efficacy” safeguards in delivering its vaccines. And Clément Beaune, France’s Europe Minister, warned “the British are in an extremely difficult health situation. They are taking many risks in this vaccination campaign.” You don’t have to be a Brexiteer to get the idea: British vaccines = bad. Even John Bell, a medical professor at Oxford University, accused Macron trying to reduce demand for vaccines to cover up the EU’s huge issues with procurement, culminating in its dangerous attempt to control vaccine exports across the Irish border.

So one wonders what the mood is in Brussels now that research has revealed just what a success the much-attacked AstraZeneca vaccine has been. A study in Scotland, where 1.14 million people were vaccinated between December 8 and February 15, showed that both the AstraZeneca and Pfizer vaccines led to a “very substantial” drop in serious illness across all adult age groups.

Critically, researchers found that by the fourth week after receiving an initial dose of each vaccine, the risk of hospitalisation from Covid-19 reduced by up to 85 per cent (Pfizer) and 94 per cent (AstraZeneca), in a result that will please people who’ve had it – but raise serious questions about the language and policies of EU leaders.

Their actions have fuelled vaccine hesitancy. In Germany, for instance, people have failed to turn up to appointments for the AstraZeneca vaccine. As of Friday, only 150,000 out of 1.5 million doses of the vaccine had been used – leaving the country with less than six per cent of its population immunised (compared to 26 per cent for Britain).

There are also reports of hospital workers in France and Belgium demanding that they be given the Pfizer jab instead of AstraZeneca (one nurse in a Flemish hospital even told a publication she would go on strike if offered the latter). Politicians have failed to convey the bigger picture; that everyone is lucky to be offered one vaccine with high efficacy rates (50 per cent protection would have been a good outcome), let alone that several have been developed.

As Ryan Bourne and Jethro Elsden have already written for ConservativeHome, the EU’s difficulties in procuring vaccines is dangerous enough in itself – Bourne estimates the UK has saved around nine thousand lives by choosing its own vaccination programme, and Elsden says the country has gained approximately £100 billion from doing this.

The fact that some EU leaders have added to this chaos by planting doubts about AstraZeneca’s vaccine makes the situation even more alarming. The vulnerable are less protected, and – on a global scale – if we do not get transmission of the virus down, it can mutate and mean that the current vaccines do not work.

Some leaders realise the seriousness of the problem. Michael Müller, the mayor of Berlin, has warned that people could be sent to the back of the queue for vaccines if they refuse an AstraZeneca job. “I won’t allow tens of thousands of doses to lie around on our shelves while millions of people across the country are waiting to be immunised”, were his words, and Angela Merkel’s spokesman has pleaded with Germans to take the “safe and highly effective” jab.

It’s a start, but terrible that so much damage has already been done. Some might remember that in November 2020, MPs here debated whether social media companies should be doing more to remove anti-vaccine disinformation. Never could they have imagined it would be Macron spreading some of the most troublesome ideas.

Daniel Hamilton: So we have a new CDU Chairman. Will a CDU-Green coalition follow after Germany’s federal election?

18 Jan

Daniel Hamilton works in international business consultancy and was a Conservative candidate at the 2017 General Election.

In September, Angela Merkel will step down as German Chancellor after sixteen years in office. Regardless of how one may judge her record, Merkel’s influence over the substance of European governance has been immense; from stamping her mark on EU fiscal rules to her open-doors policy during the migrant crisis to her final ascent for the UK’s post-Brexit deal.

The cast of names that have come and gone during her term in office – Tony Blair, David Cameron, Theresa May, Jacques Chirac, Francois Hollande, Nicolas Sarkozy, George W.Bush, Barack Obama and Donald Trump– is without modern compare.

Partly because of constitutional constraints and partly due to post-war caution and conservatism, stability is a feature of German politics.  Since 1982, Germany has had only three Chancellors.  In the same period, the UK has had seven Prime Ministers.  Italy has had twenty-two.

The Große Koalition between the Christian Democrat Union (CDU) and Social Democrats (SPD) has now largely served in office since 2005.  This has effectively resulted in the two main parties adopting a similar, centrist persona, with disagreements tending to focus on tweaks and cadences of policies rather than fundamentals.

This has arguably hurt the SPD most, whose traditional platform, once grounded in patriotic labour unions and cosy accommodations with big businesses, has fractured as Germany has become more ethnically diverse, more start-up friendly and more ecologist in its views.  The party won 41 per cent of the vote in 1998, yet polls around 15 per cent today.

The CDU has its own problems.  Distinct from what “voting Merkel” meant – centrism, no surprises and the social market, with a strong nod to environmentalism – the CDU’s platform has a rather hollow feel.  It is accepted, for sure, that the party stands for the defence of Germany’s social market economy and a punchy approach to German influence at an EU level, yet its pro-immigration stances and seeming intransigence on tax cuts and deregulation have separately irked working class voters and entrepreneurs.

With the CDU and SPD unable to define their appeal effectively, an opportunity exists for other parties to gain ground.

While the hard-left Die Linke and market-liberal Free Democrats (FDP) are polling well enough to have a respectable presence in the next convocation of the Budestag, it would be wise to follow the public remarks of Die Grünen, Germany’s Green Party.

Overseas perceptions of the Greens are somewhat outdated and tend to revolve around images of the “68ers” – a radical student movement founded on ending the military draft, opposition to the Vietnam war and the modernisation of a stodgy political system still inhabited by the wartime generation.

Their march to the mainstream has, though, been a long one.

The decision in 1998 of Joschka Fischer, a veteran 68er and the country’s Foreign Minister during the Green coalition with the SPD, to advocate NATO airstrikes on Yugoslavia over the Kosovo crisis upended the party’s pacifism-at-all-costs agenda, and led Germany into an overseas conflict for the first time since World War Two.  A Green Minister-President, Winfried Kretschmann, has governed the manufacturing-dominated state of Baden-Württemberg in coalition with the CDU for more than a decade; implementing a pro-business, R&D-friendly agenda that feels more modern than the SPD’s staider rhetoric.

The issue of immigration is as polarising or more so an issue in Germany as in other European countries, yet polling suggests that recent-naturalised Germans and the descendents of the Gastarbeiter generation which moved to the country from Turkey and Yugoslavia in the 60s and 70s lean strongly towards the Greens.  This offers the party another electoral advantage over the SPD.

There is much to dislike – or even, given the party’s more extreme factions, fear – in the Green Party’s platform, but the fact remains that the party appears to be on the verge of stitching together arguably the most electorally-appealing platform in German politics today.

With the CDU on course to win roughly a third of the vote when September’s elections come, the Greens on upward or around 20 per cent of the vote and all other blocks trailing far behind, the prospect of a CDU-Green, Schwarz-Grüne coalition is a distinct possibility.

The election of Armin Laschet as the new Chairman of the CDU on Saturday morning would, on the face of it, appear to represent a “safe” choice for the party.  Coverage of his victory has focussed on his jolly nature, centrist political brand and stewardship of North Rhine-Westphalia, one of Germany’s most important manufacturing hubs.

A debate will take place in Germany during the coming months as to whether Laschet will be the party candidate for Chancellor (he faces a potential contest including the guttural Bavarian Governor, Markus Söder, and the liberal Health Minister, Jens Spahn), yet this is a battle he is likely to win.  The fact he was able to see off the socially-conservative, immigration-sceptic Friedrich Merz and media-friendly Norbert Röttgen to win the top job suggests the party is looking for stability, not revolution.

There is little debate about whether the CDU and its Bavarian affiliate, the Christian Social Union, will win the plurality of votes in September.  With Laschet as their candidate, a Große Koalition with either the rump remainder of the SPD or resurgent Greens would appear to be both mathematically and politically possible.

CDU/CSU voters have proven to be a loyal block, yet their combined 45 per cent vote share in 2013 is a distant memory.  They now poll 35 per cent.  The price of such a fall in support is that no clear path exists for Laschet to pursue a coalition with the CDU’s traditional partners, the liberal FDP.  His only options are on the left.

Given the recent momentum of the Greens, it is not beyond the realms of possibility they could further erode support from the SPD and Die Linke, leading to an electoral percentage showing in the high twenties.  In this scenario, the pressure from both Green insiders and those on the left, battered by sixteen years of losses, for a leftist GroKo may be insatiable.  The price of such a coalition, particularly for Die Linke, would likely be the shelving of Green moderation in favour of a distinctively leftist agenda.

The implications of such a centre-left coalition would be profound – for both the UK and EU.

Notwithstanding recent Coronavirus-related speeding, a coalition of this kind would see the abandonment of the ‘Schwarze Null’ fiscal policy that mandates a balanced budget domestically and higher taxes on personal incomes and business.

For a post-Brexit UK, seeking to steer a path as a low-tax, regulation-light economy, a malcontent leftist coalition in Germany would likely serve as a Trojan Horse in the European Council for policies designed to disadvantage and undermine UK interests.

For all the criticisms of Laschet’s unambitious centrism and the gap that exists between British conservatism and the CDU’s social market economy orthodoxies, the preferred outcome for the UK is clear.

Vaccine strategies in Europe. France battles anti-vaxxers, while Merkel is blamed for procurement failures.

7 Jan

With the Government under enormous pressure to accelerate its vaccine programme, it’s easy to believe that the UK is unique in the difficulties it faces in upscaling quickly. 

But across Europe, and indeed the world, many others are facing similar operational challenges, from delays in manufacturing, to questions over where to issue vaccines, to whether people will have a jab in the first place.

One country that has had particular difficulties is France, which delivered just 516 vaccines in the first week of their availability, and only 7,000 by late Tuesday (since the started on December 27). Emmanuel Macron has apparently likened the pace of the vaccine roll out to a “family stroll”, “not worthy of the moment or the French”.

So what’s the hold up? The consensus seems to be that bureaucratic barriers have stopped France from progressing more quickly, starting when the government issued 45 pages of guidance for the Pfizer-BioNTech jab. 

Procedures at nursing homes, in particular, have been criticised for taking too long, as they often involve managers having to obtain consent from residents’ personal doctors, who have to sign off the vaccine at least five days before it’s given. France’s health minister has promised to speed up these processes, as well as saying that 500 to 600 vaccination centres will be set up by the end of January.

Even if France is able to overcome these bureaucratic challenges, it’s worth pointing out that it could face more of a challenge with anti-vaxxers. A poll by Ipsos Global Advisor, in partnership with the World Economic Forum, shows that only 40 per cent of French people want the vaccine, compared to 77 per cent in Britain, so the Government will have its work cut out trying to get them on board.

One of the ways France plans to do this is via an online platform, which will allow people to register for their jab. No doubt ministers hope this will cut out some of the red tape, as well as countering some of the scepticism.

Another country that is fighting hard to speed up vaccine roll out is Germany, albeit it has moved much faster than France, with 239,000 people receiving a vaccine starting on December 27. Its government has been accused of not obtaining enough vaccines, and of being too slow at moving forward with the inoculation campaign.

Angela Merkel has been attacked in particular for not having the right strategy in place. Olaf Scholz, the Social Democrats finance minister, presented her with a four-page list of questions about her handling of vaccine management, in what was described as “more like a committee of inquiry”. According to one newspaper, Merkel blocked an initiative by German, Italian, French and Dutch ministers to order more vaccines. After her intervention, they agreed to drop their plan and hand over control to the European Commission.

There are signs that Germany will speed up its vaccine process; it expects to receive over 5.3 million doses of the Pfizer-BioNTech vaccine by mid-February according to its health minister, and BioNTech is also said to soon open a production site in Marburg. 

It is also reported to be considering the strategy now being used by the UK, which involves administering as many doses of the Oxford-AstraZeneca or Pfizer-BioNTech shot as possible, with second doses planned for 11 or 12 weeks’ time, rather than the originally planned three week window.

Given Germany’s previous successful handling of Coronavirus testing, it could be the case that it moves forward very quickly vaccines – but much of its issues have been attributed to the EU’s vaccination strategy. Even Özlem Türeci, BioNTech’s co-founder and Chief Medical Officer, has criticised its strategy, telling one magazine the EU had assumed there would be “a basket of different suppliers… But then at some point it became clear that many would be unable to deliver so quickly” and by “that time it was too late to make up for under-ordering.”

To add to tensions in the EU, Karl Lauterbach from the Social Democratic Party recently accused the French government from preventing it from buying more Pfizer-BioNTech jabs, so that French competitor Sanofi would have an advantage, whose vaccine is still in development.

The French Deputy Minister for European Affairs has called the accusations “unacceptable and false”, adding that Europe “played as a team”. But clearly the vaccine procurement programme has raised questions over that idea.

The biggest decision has already been taken. We have left the EU. So let’s treat whatever comes next as an opportunity.

14 Dec

The EU is right.  If in future it changes its social laws and we don’t change ours; and if then it slaps tariffs on our exports, and raises non-tariff barriers too, this in no way lessens our sovereignty.  We do what we like.  The EU does what it likes.  Brexit is uncompromised.

Having cleared that up, on to present obscurities.  The texts of a possible treaty, which some claim is “95 per cent done”, haven’t been made public.

So few outside the negotiating room, and certainly neither this site nor its readers, are able to pronounce authoritatively on exactly who or what is preventing agreement – assuming that disagreement is real, a supposition we’re inclined to make – or why.  Or whether a deal will have been agreed by December 31, the real deadline.

Nonetheless, the general contours of the difference between the two sides of the table in this negotiation seem clear enough.

As far as can be seen, both accept a level playing field based on “non-regression” – in other words, that neither party should lower the social standard, as it were, that existed within both the UK and the EU on the day that Brexit took place.

But what happens if either side in future wish to raise that standard?  The EU wants “dynamic alignment”.  The UK does not.  And they disagree on whether the non-binding Political Declaration includes commitments to it.

The EU reportedly wanted arbitration in the event of either the UK or the EU raising its social standard in future.  It seems that the UK resisted this particular arbitration proposal, though other reports suggest that the Government is not opposed to arbitration per se – and indeed that a potential solution may now be taking shape.

At any rate, it is agreed that the EU then went further – proposing that it be entitled to respond unilaterally if it raised its own standard and the UK didn’t follow.  It is this change in approach that plunged the talks into their recent crisis, which has not been resolved as we write.

Did Emmanuel Macron raise the stakes, mindful of his own domestic elections – and convinced that the UK would crack under pressure?  Was Angela Merkel actually the key mover?

Was it the Government’s declared intention to break international law that made the difference, inflaming EU fears of the unpredictability and waywardness of Boris Johnson?  (And if so, why – given that the EU itself is, as Ambrose Evans-Pritchard has pointed out, a “serial abuser of international law”?)

Such are the most convincing explanations we have of how we got where we are on the crucial issue of a level playing field – leaving the other main ones: state aid and fishing policy.

Fear on both sides is clearly a key factor.  The EU sees itself as offering the UK unique quota-free, tariff free access to its Single Market, and worries that we will get the best of both worlds – privileged access and lower standards.

As Catherine Barnard pointed out on this site last week, this reflects a curious lack of confidence in the coherence and power of the Single Market.

Meanwhile, the UK would say in response that such an arrangement suits the EU just fine, since it runs a trade surplus with us, and is offering nothing on services.  And that the EU seems set on using its economic muscle to pressure us into becoming an imperial outpost rather than Global Britain.

This, by the way, suggests a point that runs in the opposite direction to Barnard’s.  If the UK is confident in its own trading future, why not simply take the hit from any EU reprisal measures, and use our new freedoms as we think fit?

Our answer is that the Government should not, repeat not, settle for accepting a proposal that is manifestly unfair – in other words, one that would give the EU the right first to change its social laws and then, were we not to follow suit, to decide for itself both the width, speed and depth of retaliatory measures.

Such would be the classic bad deal – and, as Theresa May’s original formulation rightly has it, No Deal is better than a bad deal. But we don’t suggest for a moment that the consequences would be an easy ride.

In the long-term, what shapes a country’s economic future is its tax system, its spending control, its regulatory framework, the quality of its workforce, its education system, its capacity for innovation, its openness to investment, its relationship between labour and capital – and so on.  Not tariff and non-tariff barriers.

In the short-term, we are not so sanguine about the consequences of disentangling the UK, in the event of No Deal, from an EU with which it has been merged for the best part of 50 years.

In other words, No Deal would present the likelihood of short-term pain (the interplay with Covid; shortages; lower investment; scraps over fishing; damaged co-operation on crime and terrorism) against that of long-term gain, if we get our economic framework right.

Nonetheless, No Deal also has the potential to cut both ways, as John Redwood suggests on this site this morning.  For example, a fall in the pound could more than make up for the effect of tariffs.

Much will depend, if it happens, on how agile Rishi Sunak and Alok Sharma are response.  Meanwhile, No Deal would hit our EU neighbours hard, too.  In particular, it would be a political and diplomatic defeat for Ireland, in the wake of its win in the Withdrawal Agreement over the land border.

In the first few days after No Deal, the Cabinet would rally round the Prime Minister; so would Conservative MPs; so, beyond a doubt, would ConHome’s panel of Party members.

The EU and, in particular, France would be blamed by the Tory press and many voters.  The effects wouldn’t simply spill over into fishing and the North Sea.  Potentially, they would menace the security co-operation of the only two substantial military powers in western Europe.

We are less sure of what would happen in week eleven than week one.  We would put money on the response of Tory members hardening, together with that of some Conservative MPs.

However, we wouldn’t slap down a bet on all the Cabinet behaving in the same way.  The institutional interests of the Treasury and BEIS are against No Deal.  Michael Gove will be exposed if it happens, as the Cabinet Minister responsible for the UK’s response.

Our sense it that there would soon be stories of splits between Cabinet “hawks” and “doves”.  And Tory MPs, many of unfamiliar with normal Parliamentary proceedings and unprepared for unpopular decisions – how would they respond?

That would ultimately depend on their constituents, the British people – and the clash between what David Goodhart has called the Anywheres, gainers from globalisation who identify with similar gainers abroad, and the Somewheres, who are less mobile, more rooted and have a stronger sense of national identity.

One point is certain. We have decided to quit the EU twice over.  First in the 2016 referendum.  Then in the election of almost a year ago.

So in the event of No Deal, there will be no going back.  No political party or movement of any significance is suggesting rejoining the EU (which would now take place on less favourable terms than before.)  Which means that the best way of dealing with No Deal, if it has to happen, is to treat it less as a problem than as an opportunity.

The Government is up against the clock to justify its next set of restrictions – as the Covid Recovery Group grows

17 Nov

Will they or won’t they? Is the question being asked of MPs in regards to whether they will extend the current lockdown restrictions in England. Although these measures are due to expire on December 2, at yesterday’s press conference, Matt Hancock told the nation that it was “too early to know” if they had worked.

The Government’s post-lockdown plan is to return to the tiered system of lockdown. But even that could shift. At the same press conference as Hancock, Susan Hopkins of Public Health England, threw a spanner in the works when she said there had been “little effect from Tier 1”, and that the Government might have to “think about strengthening” tiers “to get us through the winter months until the vaccine is available for everyone.”

Despite some encouraging statistics about the nation’s battle with Covid – intensive care admissions have fallen, and hospitals are running at “normal capacity”, according to Carl Heneghan, a professor director of evidence-based medicine at Oxford University – there are signs the Government will play it safe when it comes to imposing more restrictions.

There was the fact that Rishi Sunak recently expanded the furlough scheme so that it will last until March. More recently, a newspaper printed emails from George Pascoe-Watson, Chairman of Portland Communications, who had been advising Dido Harding and James Bethell on strategy and communications, revealing he had been “been privately advised that tier 2 restrictions will be imposed on London until at least the spring of next year.” 

In short, it wouldn’t be unreasonable to make the following prediction (contingent on hospitalisations being at a manageable level): the Government will phase out the lockdown (thereby keeping its promise and avoiding the difficulties of an extension being approved) but then move parts of the country into Tier 2, 3 or 4 (as has just been imposed on 11 local authorities in Scotland) – with the measures in place until spring. Therefore, many will be left feeling that they are in de facto lockdown. 

One reason the Government might feel emboldened to keep restrictions going is the news of two vaccines, as well as the knowledge that mass testing is being rapidly developed. It’s far easier to ask people to “sit tight” if they know an exit strategy is on its way.

But one group that is going to present a big headache for the Government is the anti-lockdown Covid Recovery Group (CRG), whose members will vote on the next set of restrictions. The CRG has been steadily growing in numbers, now standing at around 70 members, according to reports. Depending on how much bigger this figure gets, and what restrictions the Government next wants to impose, it may have to increasingly call on Labour to get the voting numbers.

And it’s not only the idea of a national lockdown that the CRG is opposed to. Its members are also sceptical of softer restrictions; or, at least, they want them to be justified. Mark Harper, CRG chairman, has called some of the previous Covid-19 measures “arbitrary”, and the group is unlikely to ease off the pressure because of a vaccine. Steve Baker, its deputy chairman, has said that “we must find a more sustainable way of leading our lives until a vaccine is rolled out”. As far as the CRG is concerned, days, weeks and months are too long in terms of waiting for Pfizer to come to the rescue.

The group’s main demand is that the Government is more transparent with information on the cost of lockdown. It wants a full-cost benefit analysis of restrictions on a regional basis, and for the Government to publish the models that inform policies – so that members of the public can make up their own mind. In short, the CRG is trying to place the burden of proof onto the Government to explain why it’s imposing any restrictions – as opposed to MPs having to argue for them to come off.

As Harper tells me: “When the Government brings forward its proposals for what follows the lockdown, it’s incumbent on it to show that for every restriction it wants to put in place, the good done by the restriction outweighs the harm, both from a health perspective and an economic perspective.”

Given that December 2 is approaching the Christmas period, the pressure will be all the greater for the Government to explain the rationale for each set of restrictions, as even more closures for shops could signal their end. MPs will also be after more information for how the Government’s mass testing programmes are coming along – one of the main ways it can reopen the economy until the vaccine arrives.

Interestingly, the Government could be about to run into difficulties not so disimilar from the ones Angela Merkel has experienced in Germany. Merkel had wanted to tighten Germany’s restrictions, but failed to win the support of the country’s state leaders. Thus she has had to postpone decision making in this regard. In essence, just as the public support for lockdown might be tiring, so is MPs’.

Either way, the next couple of weeks will be interesting to say the least.

Elsewhere:

Stephen Booth: The Brexit trade talks, the romance and realities of fishing, and its crucial importance for Scotland

29 Oct

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

UK and EU negotiators are now targeting a mid-November deadline to reach a trade agreement. This would give the European Parliament enough time to consider the treaty and hold a vote on it in the last session of the year, due in the week of December 14 – only two weeks before the Brexit transition period ends.

A fortnight ago, a public row erupted due to the apparent suggestion from EU leaders that further compromises all had to come from the UK side and that this was a precondition for “intensified” negotiations. After Downing Street declared the talks “over”, some on the EU side, including Angela Merkel, the German Chancellor, and Mark Rutte, Dutch Prime Minister, sought to immediately defuse the situation, saying the bloc was also willing to make concessions. Ultimately, it took Michel Barnier’s speech to the European Parliament, in which he said it was his intention to “seek the necessary compromises on both sides”, to get the UK to confirm that talks were back on track.

After these theatrics, the EU does appear to have dropped its insistence that the most difficult areas must be settled before progress can be made on lower hanging fruit. The Financial Times reports that much of the talks this week have been engaged with the technical process of agreeing common legal text in areas where there is already considerable agreement, including many of the rules for trade in goods and services, with a mixture of EU and UK drafts being used to reach a consolidated text.

The fact that very little has leaked out of this week’s round of talks is a positive sign that these negotiations are now serious and, indeed, “intensive”. Simon Coveney, the Irish Foreign Minister, this week stated optimistically that: “We’re likely to get a deal, but it won’t be easy.” Charles Michel, the EU Council President, was more equivocal, noting that the two sides have yet to overcome their differences on “level playing field” guarantees, fishing, and the deal’s enforcement.

As I noted in my previous column, the differences over subsidies seem to be narrowing and fishing is increasingly emerging as the major sticking point.

Fishing’s political symbolism is outsized compared to its economic importance to either side. The industry is not significant across the UK – it makes up only around 0.1 per cent of gross value added. The economic contribution is similar in Spain, Denmark and France, which together account for over half the total EU catch.

On the UK side, we know that the Common Fisheries Policy was long viewed as one of the major inequities of British membership and fishing communities were among the most vocal supporters of Leave in the EU referendum. In 2017, around 35 per cent of fish landed by EU vessels from the north Atlantic came from UK waters. By contrast, only 13 per cent of fish landed by UK vessels came from EU waters.

There is a certain romance that an island nation attaches to the sea-faring industry. But cold, hard political realities also explain the significance of fishing in this negotiation. Although not a major national employer, the industry is of course very important to particular communities – often remote, such as along the west coast of Scotland, in Wales and Northern Ireland, with limited other employment opportunities – and, ultimately, the negotiation is a zero-sum game for both sides. More fishing quota for the UK means less for the EU.

For a Conservative Government with increasing reason to be concerned about the state of the Union, there is obvious political benefit to ensuring a better settlement. According to the Government’s statistics, the UK’s largest and most valuable fish landings are in the north-east of Scotland, where larger trawlers tend to operate. 40 per cent of fishers working on UK boats are on Scottish boats. Should the UK gain extra quota, this region is likely to benefit the most. A Brexit dividend for Scotland would be an important win.

The EU knows that the UK has leverage when it comes to fishing access. A failure to reach a deal would mean the UK was under no obligation to provide access to foreign boats at all. Brussels had therefore wanted a deal on fishing rights settled in July, well before the final horse-trading of end-game negotiations.

Nevertheless, a wider trade deal – if it includes a better quota share – is also in the interests of the UK fishing industry. The UK imports most of the fish British consumers want to eat but exports most of the fish UK vessels catch. The EU is by far the biggest market for UK exports. It should also be noted that the wider fish processing industry is a larger, although less vocal, employer than the catch sector. Failure to reach a trade deal would increase costs for UK exports and the processing industry via new trade barriers.

Brussels’ starting position – described as “maximalist” by Barnier – was essentially that its fishing rights in UK waters should not change after the transition period. The EU has so far turned down the UK’s request to move to a new regime of annual quota negotiations – a model the UK recently agreed with Norway.

A possible compromise is likely to rest on establishing a process under which EU fleets’ catch would be phased down over a number of years. The UK would regain a much greater share of future catch opportunities but EU fishing communities would be assured of their rights over the medium-term. How the 100 or so stocks that are up for discussion might be apportioned could also present opportunities to ensure certain political constituencies are prioritised.

So far, Emmanuel Macron, the French President, has been steadfast in his belief that the EU should stand firm on fishing access, vowing to scupper any Brexit deal that “sacrifices” French fishermen. He is aware of a potential political backlash in coastal and rural areas.

However, despite the rhetoric, reports suggest that in private, at least, the French government is preparing the industry for a compromise. It should be noted that Macron is also effectively negotiating with the rest of the EU about how much of the residual quota France will get in the future.

Given the wider economic and political issues at stake, it still seems unlikely that fishing will be the deal-breaker. Macron is likely to come under increasing pressure from member states most exposed to no deal – Ireland, Belgium, the Netherlands and Germany – to moderate his position. However, it is clear that the political choreography of reaching a deal on this issue is vitally important on both sides of the table.

Germany enters a critical stage – as Europe increasingly converges in its Covid-19 response

15 Oct

With much of the UK media focussing its energies on the Government’s latest Tier 2 and 3 restrictions, it’s easy to think that the country is alone in having to go through such harsh measures. But European countries are, in fact, converging in many ways, from facing the same challenges – to how leaders are reacting to them.

One country whose current situation is not too dissimilar to the UK’s is Germany. It has been better at controlling the virus in a number of respects, thanks to its high quality healthcare, localised response to outbreaks and ability to introduce testing early on in the crisis. Even so, it is not immune to the same problem that this country, France and others have experienced. That is, rising cases with the emergence of colder weather.

In fact, today Germany has seen a record daily increase in cases – reporting 6,638 new infections, according to data from the Robert Koch Institute (the national agency responsible for disease control and prevention). It’s previous record daily increase was 6,294 on March 28. While it should be said that improvements in testing regimes will inevitably lead to more cases being detected (paradoxically making a country’s situation look worse), it’s the rapid uptick that has concerned its government.

What is the answer to this? As with UK politicians, German leaders have issued some strong words to the public, urging them to be sensible. “It is up to us to stop the infections”, Helge Braun, Merkel’s chief of staff, told one broadcaster, adding that the situation “depends on the population”.

Angela Merkel, the chancellor, has warned that there could be over 19,000 new infections per day if the trends continue, and taken strong action to prevent this, meeting with the leaders of Germany’s 16 federal states – who will soon reveal tougher restrictions to slow down the virus.

One of these will be compulsory mask-wearing in crowded spaces when an area reaches 35 per 100,000 cases in people in seven days. There have also been new curfews for bars and restaurants in hotspots for Covid-19, in addition to restrictions on how many people can gather in public and private settings. In Berlin, alcohol can no longer be sold between 11pm and 6am – a similar policy to the one enacted by Nicola Sturgeon recently, who has imposed a two week alcohol ban for pubs and restaurants.

Merkel especially focussed on young people, asking them to stop holding parties together – “in order to have a good life tomorrow or the day after.” In one of the most radical warnings, Markus Söder, the Bavarian state premier, even suggested that Germany could be close to another lockdown.

In better news, Jens Spahn, the health minister, has said that a vaccination drive for Germany was just months away; a far more optimistic assessment than Boris Johnson’s recent admission to Steve Baker, when quizzed in parliament, that “there is a good chance of a vaccine, but it cannot be taken for granted.” The plan in Germany so far is for it to be voluntary, and given to high-risk groups to start with. 

Until then, it looks as though Germany will indefinitely face similar restrictions to the UK, and that of France (where Emmanuel Macron implemented 9pm curfews). As I wrote yesterday for ConservativeHome, there is a tendency to believe that countries are taking radically different approaches, particularly with Sweden – which has become more cautious in recent times. In fact, the evidence is that countries are increasingly unified in their strategies to deal with the pandemic.

Stephen Booth: As the Brexit deadline nears, the UK is strong on fishing rights – but Frost indicates movement on state aid.

15 Oct