Lessons from BREXIT


March 10, 2019

Lessons from BREXIT

European citizens need to learn from the Brexit impasse and apply those lessons ahead of and after the European Parliament election in May. That means embracing reforms that advance the three goals that lie at the heart of the European project.

 

PARIS – Never, since World War II, has Europe been as essential. Yet never has Europe been in so much danger. Brexit stands as the symbol of that. It symbolises the crisis of Europe, which has failed to respond to its peoples’ needs for protection from the major shocks of the modern world. It also symbolises the European trap. That trap is not one of being part of the European Union. The trap is in the lie and the irresponsibility that can destroy it.

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Who told the British people the truth about their post-Brexit future? Who spoke to them about losing access to the European market? Who mentioned the risks to peace in Ireland of restoring the former border? Nationalist retrenchment offers nothing; it is rejection without an alternative. And this trap threatens the whole of Europe: the anger mongers, backed by fake news, promise anything and everything.

We have to stand firm, proud and lucid, in the face of this manipulation and say first of all what today’s united Europe is. It is a historic success: the reconciliation of a devastated continent in an unprecedented project of peace, prosperity and freedom. We should never forget that. And this project continues to protect us today. What country can act on its own in the face of aggressive strategies by the major powers? Who can claim to be sovereign, on their own, in the face of the digital giants?

How would we resist the crises of financial capitalism without the euro, which is a force for the entire European Union? Europe is also those thousands of projects daily that have changed the face of our regions: the school refurbished, the road built, and the long-awaited arrival of high-speed Internet access. This struggle is a daily commitment, because Europe, like peace, can never be taken for granted. I tirelessly pursue it in the name of France to take Europe forward and defend its model. We have shown that what we were told was unattainable, the creation of a European defence capability and the protection of social rights, was in fact possible.

Yet we need to do more and sooner, because there is the other trap: the trap of the status quo and resignation. Faced with the major crises in the world, citizens so often ask us, “Where is Europe? What is Europe doing?” It has become a soulless market in their eyes.

Yet Europe is not just a market. It is a project. A market is useful, but it should not detract from the need for borders that protect and values that unite. The nationalists are misguided when they claim to defend our identity by withdrawing from Europe, because it is the European civilisation that unites, frees and protects us. But those who would change nothing are also misguided, because they deny the fears felt by our peoples, the doubts that undermine our democracies. We are at a pivotal moment for our continent, a moment when together we need to politically and culturally reinvent the shape of our civilisation in a changing world. It is the moment for European renewal. Hence, resisting the temptation of isolation and divisions, I propose we build this renewal together around three ambitions: freedom, protection and progress.

Defend Our Freedom

The European model is based on the freedom of man and the diversity of opinions and creation. Our first freedom is democratic freedom: the freedom to choose our leaders as foreign powers seek to influence our vote at each election. I propose creating a European Agency for the Protection of Democracies, which will provide each member state with European experts to protect their election processes against cyber-attacks and manipulation. In this same spirit of independence, we should also ban the funding of European political parties by foreign powers. We should have European rules banish all incitements to hate and violence from the Internet, since respect for the individual is the bedrock of our civilisation of dignity.

Protect Our Continent

Founded on internal reconciliation, the EU has forgotten to look at the realities of the world. Yet no community can create a sense of belonging if it does not have bounds that it protects. The boundary is freedom in security. We therefore need to rethink the Schengen area: all those who want to be part of it should comply with obligations of responsibility (stringent border controls) and solidarity (one asylum policy with the same acceptance and refusal rules). We will need a common border force and a European asylum office, strict control obligations and European solidarity to which each country will contribute under the authority of a European Council for Internal Security. On the issue of migration, I believe in a Europe that protects both its values and its borders.

The same standards should apply to defence. Substantial progress has been made in the last two years, but we need to set a clear course: a treaty on defence and security should define our fundamental obligations in association with NATO and our European allies: increased defence spending, a truly operational mutual defence clause, and the European Security Council with the United Kingdom on board to prepare our collective decisions.

Our borders also need to guarantee fair competition. What power in the world would accept continued trade with those who respect none of their rules? We cannot suffer in silence. We need to reform our competition policy and reshape our trade policy with penalties or a ban in Europe on businesses that compromise our strategic interests and fundamental values such as environmental standards, data protection and fair payment of taxes; and the adoption of European preference in strategic industries and our public procurement, as our American and Chinese competitors do.

Recover the Spirit of Progress

Europe is not a second-rank power. Europe in its entirety is a vanguard: it has always defined the standards of progress. In this, it needs to drive forward a project of convergence rather than competition: Europe, where social security was created, needs to introduce a social shield for all workers, east to west and north to south, guaranteeing the same pay in the same workplace, and a minimum European wage appropriate to each country and discussed collectively every year.

Getting back on track with progress also concerns spearheading the ecological cause. Will we be able to look our children in the eye if we do not also clear our climate debt? The EU needs to set its target – zero carbon by 2050 and pesticides halved by 2025 – and adapt its policies accordingly with such measures as a European Climate Bank to finance the ecological transition, a European food safety force to improve our food controls and, to counter the lobby threat, independent scientific assessment of substances hazardous to the environment and health. This imperative needs to guide all our action: from the European Central Bank to the European Commission, from the European budget to the Investment Plan for Europe.  All our institutions need to have the climate as their mandate.

Progress and freedom are about being able to live from your work: Europe needs to look ahead to create jobs. This is why it needs not only to regulate the global digital giants by putting in place European supervision of the major platforms (prompt penalties for unfair competition, transparent algorithms, etc.), but also to finance innovation by giving the new European Innovation Council a budget on a par with the United States in order to spearhead new technological breakthroughs such as artificial intelligence.

A world-oriented Europe needs to look towards Africa

A world-oriented Europe needs to look towards Africa, with which we should enter into a covenant for the future, taking the same road and ambitiously and non-defensively supporting African development with such measures as investment, academic partnerships and education for girls.

Freedom, protection and progress. We need to build European renewal on these pillars. We cannot let nationalists without solutions exploit the people’s anger. We cannot sleepwalk through a diminished Europe. We cannot become ensconced in business as usual and wishful thinking. European humanism demands action. And everywhere, the people are standing up to be part of that change.

So, by the end of the year, let’s set up, with the representatives of the European institutions and the member states, a Conference for Europe in order to propose all the changes our political project needs, with an open mind, even to amending the treaties. This conference will need to engage with citizens’ panels and hear academics, business and labour representatives, and religious and spiritual leaders. It will define a roadmap for the EU that translates these key priorities into concrete actions. There will be disagreement, but is it better to have a static Europe or a Europe that advances, sometimes at different paces, and that is open to all?

In this Europe, the peoples will really take back control of their future. In this Europe, the United Kingdom, I am sure, will find its true place.

The Brexit impasse is a lesson for us all. We need to escape this trap and make the upcoming European Parliament elections and our project meaningful. It is for Europe’s citizens to decide whether Europe and the values of progress that it embodies are to be more than just a passing episode in history. This is the choice I propose: to chart together the road to European renewal.

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Emmanuel Macron is President of France.

Brexit Is Hell


March 7,2019

Brexit Is Hell

Over time, public conceptions of hell have migrated from the realm of religious belief to that of literature and political aphorism. And nowhere is the idea of eternal damnation as punishment for one’s own choices more appropriate than in the case of the United Kingdom as it hurdles toward the Brexit abyss.

 

PRINCETON – European Council President Donald Tusk recently sparked controversy by saying there is a “special place in hell” for those who advocated Brexit “without a plan.” To angry Brexiteers, the statement epitomizes the unfeeling, moralistic attitude of the European Union technocracy in Brussels. British Prime Minister Theresa May duly issued a statement rebuking Tusk for his remark.

But May’s response scarcely matters. She has already extended her deadline for holding a “meaningful vote” on an EU-exit deal, effectively confirming that she will remain bereft of a plan until the final moments. At this rate, the delays and extensions of Brexit deadlines might well continue indefinitely.

Tusk’s great offense was to offer a banal and universal truth. Whether you are in London, Washington, DC, or anywhere else, it is never advisable to enter into a negotiation without clear objectives and a sense of how the other side will respond. Hence, throughout history, statesmen such as Otto von Bismarck have regarded diplomacy as a chess game. As Bismarck well knew, it is not enough just to move pieces around; one must also anticipate what will come next.

As for the theological language in Tusk’s indictment, one could argue that it is perfectly appropriate for politicians in a largely secularized Europe to speak of hell. After all, even many Christian clergy have moved beyond belief in an afterlife of perpetual damnation. And the Anglican Church abandoned the idea of purgatory back in the sixteenth century, with the .

In Christopher Marlowe’s classic play Doctor Faustus (1592), the title character asks Mephistopheles what a demon is doing in his study instead of in hell. “Why, this is hell,” replies Mephistopheles, “nor am I out of it.” Equally all-encompassing was the atheist Jean-Paul Sartre’s own conception: “Hell is other people.”

What hell implies in a modern political context is open to debate, at least until we have a twenty-first-century Dante to offer a comprehensive eschatology and a new map to the Inferno. In view of former US Secretary of State Madeleine Albright’ defense of Hillary Clinton’s flawed 2016 presidential bid, for example, hell is the final destination for “women who don’t help each other.” Presumably, Albright did not mean that the 42% of women voters who backed Trump have a fiery future in store for them.

Meanwhile, some Italian journalists have alleged, erroneously, that even Pope Francis has dispensed with the notion of hell. In reality, he has put hell at the center of his vision of humanity. Francis reminds us that hell originally derived from a rebellious angel’s arrogance, or superbia. A vice deeply embedded in the human psyche, arrogance is the act of telling God, “You take care of yourself because I’ll take care of myself,” Francis explained in 2015. Accordingly, “They don’t send you to hell, you go there because you choose to be there.”

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Brexit represents precisely this course. If hell is thinking that you do not need others, and that you need only look out for yourself, then the Brexiteers are already there. Those who believe only in themselves see no need to negotiate, because they assume the other side will simply bend to their will.

But in international relations, the assumption that one can regulate everything by oneself creates a hell that others have to live in, too. Hell, in this sense, is what happens when people succumb to the lure of self-determination and “sovereignty,” creating a self-perpetuating cycle of strained relationships and mutually destructive unilateralism. This version of hell tends to last quite a long time indeed, because each side has its own selective memory and wants to punish the other.

While the assertion of sovereignty seems to conjure endless new possibilities, as it clearly has for the Brexiteers, it actually constrains one’s choices. Those who renounce treaties, for example, invite others to do the same, whereupon it becomes all the more difficult to forge any kind of agreement at all. And those who have convinced themselves that they can choose freely among endless unrealized opportunities tend to live in constant regret of what might have been. This is the trap laid by hubris.

Thus, like Tantalus forever grasping at the fruit that is just beyond his reach, the United Kingdom wants to pursue trade deals that its membership in the EU otherwise precludes. Left unsaid is what that would mean in practice. The UK could aim to maximize prosperity by pushing deregulation as far as possible. Yet to trade profitably with other countries or the EU, it would still have to meet their regulatory standards regarding safety, quality, and so forth. Moreover, outside the EU’s regulatory framework, Britain’s newfound freedom would also imply new responsibilities to introduce regulations protecting UK residents.

The real question, then, is whether escape is even possible. If May wanted to be bold, she could issue the following statement: “Brexit is a terrible mistake. The decision was reached after a campaign of lies and malign foreign influence, and it is obvious that its costs will far exceed its benefits. As such, my government has decided not to pursue it any further. Instead, we will commit to working with the EU to address British concerns and prepare for an unpredictable future.”

Such a statement is of course impossible, because May has already paid the ferryman through her previous choices. What awaits her and the UK is more punishment. First, the dismal reality on the ground will be exposed, and it will stand in shocking contrast to what might have been. Then, someone will have to be held responsible. But assigning blame is a punishment in itself. In Dante’s telling, the adulteress Francesca da Rimini spends the rest of eternity incessantly pinning the blame for her actions on everyone and everything but herself.

Brexit augurs a similar national fate. The debates in Westminster and Whitehall show no sign of ever ending, and it is becoming increasingly obvious why: Brexit is eternal damnation.

 

 

Can a “No-Deal” Brexit Be Avoided?


February 4, 2019brexit people's voice

Can a “No-Deal” Brexit Be Avoided?

British Prime Minister Theresa May’s party is divided, her cabinet is split, and perhaps half its members are jostling to succeed her. To ensure an orderly withdrawal from the European Union, her government has only one option.

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EDINBURGH – It is a near-tragedy that the United States and the United Kingdom – the two countries most identified with long-established stable constitutional frameworks – are now ranked among the world’s most dysfunctional democracies.

In the past, when Britain’s Parliament faced crises and appeared deadlocked, it proved capable of breaking the stalemate. Over two centuries, battles over electoral reform, the Corn Laws, free trade, the House of Lords, and the Irish question were eventually resolved by reform and compromise.

But now an all-consuming two-and-a-half-year debate over the UK’s relationship with Europe has overwhelmed Westminster and consumed Whitehall’s time, energy, and patience. And as the March 29 Brexit deadline approaches, neither the government nor Parliament seems capable of ending the impasse they have created.

The latest government initiatives – to be discussed in Parliament on Tuesday – simply show that Prime Minister Theresa May’s government has learned nothing and forgotten nothing. A week of “consultation” has been at best a farcical exercise in hearing but not listening, by a prime minister painted into a corner behind her own red lines. Her party is divided, her cabinet is split, with perhaps half its members now jostling to succeed her. May’s withdrawal agreement was rejected by a record-breaking 230-vote majority, and Tuesday’s proceedings are likely to reveal that there is still no majority in Parliament for any policy option other than avoiding a “no-deal” Brexit.

At this point, it is virtually impossible to legislate the seven complex Acts and hundreds of Statutory Instruments required by the withdrawal agreement in the 32 parliamentary workdays scheduled before March 29. But, most worryingly of all, the UK not only has a government that is unable to lead, but also a public that now seems unwilling to be led.

At no point in this grim process have any of May’s proposals enjoyed the support of more than one-quarter of the public. According to a poll commissioned by Hope Not Hate and Best for Britain, more people than ever – 68%, and probably still rising – now feel that no political party speaks for them. The disconnect is now so great, the mistrust so deeply felt, that accusations of “betrayal” and “treason” have become everyday language. Remain supporters claim that the 2016 referendum was won by lies, misuse of stolen data, and criminal breaches of electoral law. Leave supporters believe the promise of a clean break with Europe has been broken.

If, as may happen, a messy last-minute compromise deal is conjured behind closed doors, the public will feel shut out from a decision with far-reaching effects on their lives, and people’s trust in politicians may never recover.

So, it is clear that Britain cannot end the deadlock, repair the shattered trust, or heal a divided country without re-engaging the public in the solution. The dialogue Britain now needs is one not just between Parliament and government, but between our political elites and the British people. Respondents to the same recent Hope Not Hate poll agreed by almost two-to-one with the proposition that, “It would be better to … pause the process and seek a consensus by gathering ordinary people together to discuss the options.”

It is now high time for politicians to do what should have been done at the outset: bring the British people into their confidence and be honest with them that the search for a quick fix is over. “In or out” sounds simple. But even the hardest of hard-line Brexiteers who want “out” remain keen to buy and sell to EU countries and to travel freely to and from Europe. And that requires the complex supply chains serving industries like aviation and car manufacturing; landing rights and road traffic regulations; and environmental and animal health standards. Even supplies of life-saving medications as basic as insulin would be imperiled by a no-deal Brexit.

Replacing one set of complex treaty arrangements with another is a vast undertaking. And simplistic comparisons, such as with a divorce – after which partners may never communicate again – or with leaving a golf club (while insisting on changing its rules), simply do not apply.

For more than a half-century, since then-Prime Minister Harold Macmillan prepared for the UK’s first membership application in 1961, Europe has been the subject of unending debate. Yet there have been only two in-depth examinations of what being part of Europe means to Britain: the reports MacMillan commissioned and the Labour government’s 2003 studies – 23 volumes of them – on the case for and against abandoning the pound and joining the euro.

Fact-based studies like these are needed now more than ever. So, on Tuesday, Parliament should vote not only to extend the Brexit deadline, but also to consider ushering in a series of Citizens’ Assemblies. With public hearings in each region of the UK, supported by Parliament’s Select Committees, a representative sample of electors should consider the facts, not least the issues that dominated the referendum debate: who controls the UK’s borders and laws.

Such consultations should be followed by a reconsideration in Parliament of our European options. Then, if it is agreed that the situation has changed, Parliament will have the option of a renegotiation with the EU, followed by a referendum to give the entire electorate the final say.

Such public hearings have been conducted successfully from California to Scandinavia to Australia, and most recently – and to great acclaim – in advance of the abortion referendum in Ireland. There, an issue that could have been hijacked by extremists on both sides became the subject of a civilized debate in which people of devout faith and resolute feminists stood their ground, listened, and came to respect each other’s positions. In the end, those who lost the vote did not dispute the referendum’s verdict.

Britain can learn from this, and I sense that – freed for the time being from the binary yes/no choices of the past – the British people could unite around the proposition that the situation has changed since 2016, and find common ground. Such a breakthrough is needed for another, more urgent, reason: the alternative, a no-deal Brexit, would lead to lost jobs, reduced trade, panic and stockpiling, and highways transformed into truck parking lots as ports along the English Channel seize up.

Political deadlock in the US and the UK has been causing widespread chaos. But the two countries’ egregious failures of statecraft may have very different consequences. Presidencies come and go, and the resilience of America’s carefully crafted constitution will prevail. But if the UK crashes out of the EU with no deal, its marginalization, diminution, and decline could be felt for decades to come.

The two issues that undermined the E.U.


January 21, 2019

The two issues that undermined the E.U.

by Dr. Fareed Zakaria

https://fareedzakaria.com/columns/2019/1/17/the-two-issues-that-undermined-the-eu

As we watch Britain go through the paroxysms of Brexit, it is easy to view its decision to leave the European Union as an act of foolishness, a self-inflicted wound that will impoverish Britons for years. Europe is Britain’s largest market, taking in almost half of the country’s exports. Losing special access to it is a high price to pay for some symbolic gains in sovereignty.

But the Brexit debacle also shines a light on Europe itself, and what one sees is a continent and a political project that have stopped working — at least for many of the people at its Western European core. I say this as an ardent supporter of the European Union. The United States and the E.U. have been the two main engines behind a world based on open markets, democratic politics, liberty and law, human rights, and global welfare. These values will probably be eroded worldwide if the strength and purpose of either of these centers wane further.

For the past three decades, the European project has been wandering off course. What began as a community of nations cooperating to create larger markets, greater efficiency and political stability has become obsessed with two massive issues that have undermined its central achievements.

The first was — after the Soviet Union’s collapse — the rapid integration of many new countries that were far less economically and socially developed than the E.U.’s original members. Since 1995, it has expanded from 12 countries to 28. Originally focused on opening up markets, streamlining regulations and creating new growth opportunities, the E.U. soon became a “transfer union,” a vast scheme to redistribute funds from prosperous countries to emerging markets. Even in today’s strong economic environment, spending by the E.U. accounts for more than 3 percent of Hungary’s economy and almost 4 percent of Lithuania’s.

his gap between a rich and a poor Europe with open borders inevitably produced a migration crisis. As Matthias Matthijs pointed out in Foreign Affairs, from 2004 to 2014, about 2 million Poles migrated to Britain and Germany and about 2 million Romanians moved to Italy and Spain. These movements put massive strains on the safety nets of destination countries and stoked nationalism and nativism. The influx into Europe of more than 1 million refugees in 2015, mostly from the Middle East, must be placed in the context of these already sky-high migrant numbers. And as can be seen almost everywhere, from the United States to Austria, fears of immigration are the rocket fuel for right-wing nationalists, who discredit the political establishment that they deem responsible for unchecked flows.

The second challenge consuming the European Union has been its currency, the euro. Launched more with politics than economics in mind, the euro has embodied a deep structural flaw: It forces a unified monetary system on 19 countries that continue to have vastly different fiscal systems. So when a recession hits, countries do not have the ability to lower the value of their currency, nor do they get substantial additional resources from Brussels (as U.S. states do from Washington when they go into recession). The results, as could be seen for years after 2008, were economic stagnation and political revolt.

Brexit should force Britons to think hard about their place in the world and make the adjustments that will allow them to prosper in it. But it should also cause Europeans overall to take stock of their project, a great idea that has gone awry. The European Union needs more than tinkering; it needs to return to first principles, rediscover its central purpose and question which aspects of its current system are no longer working, affordable or manageable. As former British prime minister Tony Blair told me in an interview this week for CNN, it’s crucial that “Britain thinks again but Europe also thinks again.”

Europe is foundering. Although some Americans seem to delight in this prospect, it is bad for our country.

“By the middle of the century, you’re going to live in a multipolar world,” Blair said. “In those circumstances, the West should stay united and Europe should stand alongside America, because in the end . . . we’re countries that believe in democracy and freedom and the rule of law. . . . Otherwise, we’re going to find that as this century progresses and my children and grandchildren work out where they stand in the world, the West is going to be weaker. And that’s bad for them and bad for all of us.”

c) 2019, Washington Post Writers Group

Theresa May’s Government Lives on—and So Does the Brexit Chaos


January 18,2019

Theresa May’s Government Lives on—and So Does the Brexit Chaos

If insanity is doing the same thing over and over again and expecting a different result, the British Prime Minister, Theresa May, and the other members of the government should be confined to a psychiatric hospital. Having narrowly survived a no-confidence vote in the House of Commons on Wednesday, in which a loss would almost certainly have led to a general election, May and her colleagues are now looking to resurrect her Brexit plan, or a slightly refined version of it, which was subjected to an overwhelming defeat in the Commons on Tuesday evening.

With just ten weeks until March 29th, when Britain is supposed to leave the European Union, May is hoping that the prospect of the country crashing out without any withdrawal agreement—an outcome that could cause shortages of essential medicines and industrial parts, as well as bedlam at the Channel ports—will persuade a majority of parliamentarians to back her plan as the least bad option available. Of course, this is precisely the same logic that the Prime Minister was relying on when she delayed a vote on the Brexit plan until Monday, after the New Year, and she ended up suffering what was widely described as the biggest loss ever inflicted on a sitting British Prime Minister. But, after what she has been through in the past couple of years, May can perhaps be forgiven for getting a little addled. The entire country is a little addled. More than a little.

In making the closing argument for the motion of no confidence during Wednesday’s debate, Tom Watson, the deputy leader of the Labour Party, was careful to acknowledge the efforts that May had already made to solve the political equivalent of Goldbach’s conjecture. “I think the country recognizes that effort,” Watson told the packed chamber. “In fact, the country feels genuinely sorry for the Prime Minister. I feel sorry for the Prime Minister. But she cannot confuse pity for political legitimacy, sympathy for sustainable support.” May’s strategy had failed utterly, Watson said, and “the cruellest truth of all is that she doesn’t possess the necessary political skills, empathy, ability, and most crucially the policy, to lead this country any longer.” The question facing the House, Watson said, was whether it is “worth giving this failed Prime Minister another chance to go back pleading to Brussels, another opportunity to humiliate the United Kingdom, another chance to waste a few weeks. The answer must be a resounding no.”

Making the closing argument for the government, Michael Gove, the minister for the environment, sought to divert attention from the humiliating setback that May had suffered, and the fact that more than a hundred Conservative M.P.s had rejected her plan. He turned his invective to Watson’s boss, Jeremy Corbyn, the leftist leader of the Labour Party, whom the Tories still view as their trump card. After noting that Watson hadn’t mentioned Corbyn during his speech, Gove, who is known at Westminster as a clever and slippery fellow, gleefully caricatured many of the Labour leader’s positions, claiming that Corbyn rejects Britain’s role in NATO and wants to get rid of the country’s nuclear deterrent. (A longtime antiwar activist, Corbyn has held these positions in the past, but official Labour policy, which Corbyn now supports, rejects them.) “No way can this country ever allow that man to be our Prime Minister,” Gove said, to loud cheers from the Conservative benches.

Since ten M.P.s from Northern Ireland’s Democratic Unionist Party, which holds the balance of power in a narrowly divided Commons, had agreed to support the government, Gove knew that he and the Conservative government were on safe ground. But although the subsequent vote—of three hundred and twenty-five votes to three hundred and six—assured May’s survival, it merely confirmed the Brexit stalemate. A bit later in the evening, the Prime Minister emerged from 10 Downing Street to say that she had invited M.P.s from all parties to meet with her in an effort to find a way forward. Corbyn quickly rejected the offer, saying that the Labour Party wouldn’t join the talks unless May explicitly ruled out a no-deal Brexit—an option favored by some right-wing Conservative M.P.s.

So the show goes on, a very dark comedy. The hardline Conservative Brexiteers, led by the faux aristocrat Jacob Rees-Mogg, are encouraged because they have defeated May’s plan, and they know the default position is that Britain will crash out on March 29th.

Like a First World War general, May is soldiering ahead. Corbyn, relieved for now of the alarming prospect of having to step into May’s shoes, still says that he wants to honor the result of the referendum—in which many working-class, Labour-supporting areas voted Leave—but also to negotiate a better exit deal. (How he’d manage this, he hasn’t said.) But many Labour Party members—a large majority of them, according to recent polls—want to stay in the E.U., and seventy-one Labour M.P.s have now expressed support for the People’s Vote campaign, which is advocating a second referendum. In the coming days, Corbyn will face strong pressure to clarify his position and commit to another referendum.

 

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How and when will it all end? On Thursday, the government announced that Parliament would debate and vote on May’s “Plan B” on Tuesday, January 29th. M.P.s who spoke with the Prime Minister said that she still thinks she can tweak her deal and win, but few people outside of Downing Street believe it. The E.U. has ruled out making any more significant concessions. Both major parties are horribly split. And when the pollsters present the British public with the three options on offer—a no-deal Brexit, a Brexit on May’sterms, or a decision to Remain—there is no clear majority for any of them.

“I cannot recall Britain falling so low,” Philip Stephens, a veteran political commentator for the Financial Times, wrote in Thursday’s paper. “The Suez debacle in 1956? As supplicant at the door of the IMF 20 years later? These were moments of national shame. They were moments also that passed. The impact of Brexit has been cumulative. Each chapter in the story heaps on more humiliation. However it ends, the damage will not be quickly undone.”

And who, ultimately, is to blame? Before the vote on Wednesday, a BBC News crew approached David Cameron, the former Conservative Prime Minister who decided to hold the 2016 Brexit referendum, near his home in West London. He said that he didn’t regret that decision, even though the result went against his wishes. (He was a Remainer.) Then he set off on his morning jog.

A previous version of this post misstated the day that the vote on Theresa May’s Brexit plan took place.

https://www.newyorker.com/news

The Euro turns 20


January 13, 2019

The Euro turns 20

The euro’s first 20 years played out very differently than many expected, highlighting the importance of recognizing that the future is likely to be different from the past. Given this, only a commitment to flexibility and a willingness to rise to new challenges will ensure the common currency’s continued success.

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https://www.project-syndicate.org/commentary/four-lessons-from-euro-s-first-20-years-by-daniel-gros-2019-01

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BRUSSELS – Twenty years ago this month, the euro was born. For ordinary citizens, little changed until cash euros were introduced in 2002. But in January 1999, the “third stage” of Economic and Monetary Union officially started, with the exchange rates among the original 11 eurozone member states “irrevocably” fixed, and authority over their monetary policy transferred to the new European Central Bank. What has unfolded since then holds important lessons for the future.

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In 1999, conventional wisdom held that Germany would incur the biggest losses from the euro’s introduction. Beyond the risk that the ECB would not be as tough on inflation as the Bundesbank had been, the Deutsche Mark was overvalued, with Germany running a current-account deficit. Fixing the exchange rate at that level, it was believed, would pose a severe challenge to the competitiveness of German industry.

Yet, 20 years on, inflation is even lower than it was when the Bundesbank was in charge, and Germany maintains persistently large current-account surpluses, which are viewed as evidence that German industry is too competitive. This brings us to the first lesson of the last 20 years: the performance of individual eurozone countries is not preordained.

The experiences of other countries, such as Spain and Ireland, reinforce that lesson, demonstrating that the ability to adapt to changing circumstances and a willingness to make painful choices matter more than the economy’s starting position. This applies to the future as well: Germany’s current predominance, for example, is in no way guaranteed to continue for the next 20 years.

Yet the establishment of the eurozone was backward-looking. The main concern during the 1970s and 1980s had been high and variable inflation, often driven by double-digit wage growth. Financial crises were almost always linked to bouts of inflation, but had previously been limited in scope, because financial markets were smaller and not deeply interconnected.

With the creation of the eurozone, everything changed. Wage pressures abated throughout the developed world. But financial-market activity, especially across borders within the euro area, grew exponentially, after having been repressed for decades. For example, eurozone member countries’ cross-border assets, mostly in the form of bank and other credit, grew from about 100% of GDP in the late 1990s to 400% by 2008.

Then the global financial crisis erupted a decade ago, catching Europe off guard. The first deflationary crisis since the 1930s was made especially virulent in Europe by the mountain of debt that had been accumulated in the previous ten years, when countries had their eyes on the rear-view mirror.

Of course, the eurozone was not alone in being taken by surprise by the financial crisis, which had started in the United States with supposedly safe securities based on subprime mortgages. But the US, with its unified financial (and political) system, was able to overcome the crisis relatively quickly, whereas in the eurozone, a slow-motion cascade of crises befell many member states.

Fortunately, the ECB proved robust. Its leadership recognized the need to shift focus from fighting inflation – the objective the ECB was designed to achieve – to curbing deflation. Ultimately, the euro survived, because, when push came to shove, leaders of the eurozone’s member states expended political capital to implement needed reforms – even after blaming the euro for their countries’ problems.

This pattern of demonizing the euro before recognizing the need to protect it continues to unfold today – and it should serve as a second lesson of the last 20 years. Italy’s populist coalition government used to speak bravely about flouting the euro’s rules, with some advocating an exit from the eurozone altogether. But when financial-market risk premia increased, and Italian savers did not buy their own government’s bonds, the coalition quickly changed its tune.

In fact, the eurozone’s economic performance has not been as bad as the seemingly endless stream of bleak headlines implies. Per capita GDP growth has slowed over the last 20 years, but not more so than in the US or other developed economies.

Moreover, continental European labor markets have undergone an under-reported structural improvement, with the labor-force participation rate increasing every year, even during the crisis. Today, a higher proportion of the adult population is economically active in the eurozone than in the US. Employment has reached record highs, and unemployment, though still high in some southern countries, is continuously declining.

These economic realities imply that, even if the euro is not particularly well loved, it is widely recognized as an integral element of European integration. According to the latest Eurobarometer poll, support for the euro is at an all-time high of 74%, while less than 20% of the eurozone’s population opposes it. Even Italy boasts a strong pro-euro majority (68% versus 18%). Herein lies a third key lesson from the euro’s first two decades: despite its many imperfections, the common currency has delivered jobs, and there is little support for abandoning it.

But probably the most important lesson lies elsewhere. The euro’s first 20 years played out very differently than many expected, highlighting the importance of recognizing that the future is likely to be different from the past. Given this, only a commitment to flexibility and a willingness to rise to new challenges will ensure the common currency’s continued success.

 

Daniel Gros

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Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.