Thoughts from Galicia: 16.6.17

Spanish life is not always likeable but it is compellingly loveable.

- Christopher Howse: A Pilgrim in Spain. 

Here's my weekly HT to Lenox of Business Over Tapas for some of today's items . . . 

Life in Spain:-

• The death of Banco Popular - absorbed by Banco Santander - promises a tsunami of claims by shareholders who lost out via what they will claim were fraudulent public offerings. Any disgruntled ex-shareholder reading this can get help at this site.
• Here's Giles Trimlett on a couple of new books on the fate of Spain's Muslims/Moors.
• It's reported that a 'heatwave currently gripping the whole of Spain" forced courts and offices to close in Madrid on Wednesday. Well, this version of Spain appears to exclude Galicia, where it's been warm-to-hot this week but nothing like that. Today, though, is forecast to reach 33. So perhaps it's just late coming up from the South.
• The governing PP party survived a vote of censure in Parliament this week. Given that this was a foregone conclusion, the fotos of PP MPs cheering President Rajoy to the rafters looked a tad bizarre. The motion was put forward by the 'far left' Podemos party, which was censuring the government for its infamous levels of corruption. Strangely, the latter was helped to bat this off by the support of the centrist Ciudadanos party, which is supposed to be 100% against corruption. But, as they say, politics makes for strange bedfellows. For its own reasons, the centre-left PSOE party abstained. Doubtless experts on Spanish politics could explain all this.
• Should you want a list of all the 60+ PP corruption cases being investigated/processed right now, click on this article from El Diario.
• Here's one comment on Rajoy's 'success', from the Voz de Galicia:-

• Talking of Podemos . . . There are always severe tensions in parties of the Left over which faction is the purest. This party is no exception to this rule and there's been an ongoing battle for a while between 2 of its founders/leaders. And now the furthest-left section of this far-left party has come out in favour of a Catalan referendum on independence, set for October 1. Which won't do the party much good in future elections. At least not those outside Cataluña.
• As regards Catalan secession, here's Don Quijones on the potential consequences of Catalan secession on the rest of Spain.
• From Lenox: One of Spain’s best comedy ‘news’ sites is 'El Mundo Today'. One of Spain’s most alt-right news sites is 'OKDiario'. With this in mind, we read that ‘El Mundo Today' has announced it's giving up printing false news, as it says it can’t compete with 'OKDiario’.

Roger Bootle takes a look at Germany's role in the EU here and says he's increasingly of the view that the whole integrationist project of the EU is a form of fantasy, dreamed up by the European elites. Huge steps, such as monetary union, are taken without thought for the consequences.  . . Fiscal union is the shoal on which the EU will founder. Long-term readers will know this has always been my view. Which is not to say I support Brexit the way the British government has gone about it. For a longer - very informed view on Germany and her attitude to both the EU and Brexit - see the article at the end of this post.

Talking of the EU . . . Brussels says it'll be sanctioning Hungary, Poland and the Czech Republic for their anti-immigrant policies. I wonder if the penalties - if any - will be as toothless as those previously applied to Germany, France and Spain for their various 'serious' fiscal offences.

Thin-skinned bully Donald Trump is naturally averse to being the butt of humour and so routinely blocks from his twitter feed 'sad losers' who indulge in this. See here for the identity and crimes of some of the latter.

Here in Galicia, our fishermen are complaining about the latest example of 'unfair competition' from our Portuguese neighbour. An accord is being negotiated between the 2 countries and our fishermen want their Portuguese counterparts to be prevented from working at the weekend.

What to to make of this? A Vigo investigation/trial of 7 drug traffickers which has taken 13 years has ended with the prosecution withdrawing severe prison demands, in preference for a €339,000 fine and sentences which mean only 1 of the accused will spend just a few weeks in clink. Relatedly, 1,200 kilos of cocaine en route to our coves was intercepted off the Canary Islands last week.

Finally . . . Some readers will have noticed that, in the Lion cartoon yesterday, Christians and Catholics were listed as separate entities. This left me wondering whether the cartoonist was a Jehovah's Witness, as they believe everyone else claiming to be a Christian is actually part of the antichrist community. But there might well be other Protestant sects who share the view that only they are Christian. Who can possibly keep track of all of them and their odd views of themselves and each other? I regularly wonder whether this - and worse - confusion is part of a cosmic joke being played by one or more deities.

Today's cartoon:-

ARTICLE

Prospect Magaizine: June 2017

How the German elections could change the course of Brexit

Whoever wins in Britain, Berlin will seal our deal. Regime change there will spell trouble

by Paul Lever, ex British ambassador to Germany

Early in the morning after his dinner with Theresa May on 26th April, an account of which was subsequently leaked to a Germannewspaper by his chief of staff, Jean-Claude Juncker made a telephone call to complain that the British Prime Minister was living on another galaxy. The call was not to Donald Tusk, the President of the EU Council responsible for directing the Brexit negotiations. It was to the German Chancellor Angela Merkel.

This illustrates where power in the EU lies. In the past, the so-called Franco-German motor provided Europe’s political impetus. Now Germany alone is at the wheel. That is not because it has set out to lead or considers itself entitled to do so—phrases like “manifest destiny” or “the indispensable nation,” which so easily trip off American tongues when discussing their country’s role in the world, would be anathema to any German politician. It is because the rest of the EU has chosen to follow. 

Germany’s economic strength, the attractiveness of its social model and the quality of its senior politicians have given it an unprecedented dominance in EU affairs. In the challenges of the sovereign debt and banking crises, Greece and the euro and Mediterranean immigration, Germany has provided the response.

Germany set the terms for David Cameron’s abortive re-negotiation of Britain’s membership of the EU and it is Germanythat will determine the conduct and outcome of the Brexit negotiations. Any analysis of their prospects must start from an understanding of Germany’s own EU aims and how Brexit fits into them.

Germany has traditionally favoured something called a political union. But no German politician has ever spelled out what this union would look like. What German governments have consistently made clear is that it will not be a “transfer union”: there will be no big central budget, no common policies which require major expenditure and no pooling of member states’ debts. Germany’s energies are focused on dealing with the problems of the day. The only policies that Germany has proposed in recent times have been for tighter control by the European Commission of member states’ budgets, and more tax harmonisation. Both would suit its national interests, neither are exactly an integrationist clarion call.

Germany’s national interests are, of course, what German governments pursue in the EU. In this respect they are no different to other members: they are simply reluctant to admit it. For in German public discourse the EU is projected as something nobler than a transmission mechanism for Germany’s economic success. This is what motivates Germany in shaping the EU’s policies.

The current two priorities for Germany in the EU are sustaining the euro as a sound money currency and managing the problems associated with migration across the Mediterranean. Even before we decided to leave the EU, Britain was irrelevant to these interests: one reason no doubt why Germany was unwilling to pay too much of a price to keep us in. Brexit is, by comparison, if not a sideshow then at least a second-order issue.

This does not mean that Germany will pay little heed to the negotiations or is indifferent to their outcome. Order is a much valued quality in Germany and a disorderly British withdrawal from the EU—with no understanding on the terms of the divorce or the nature of the subsequent relationship—would, from a German perspective, be unwelcome. It would damage the EU’s international reputation, would spook the markets and would create a climate of uncertainty and instability. So Germany will be looking for an agreement and will use its political muscle to get one. But it will have its own interests to protect. These are the maintenance of unity among the 27 member states, the preservation of the integrity of the single market and ensuring that it does not have to pay any extra as a result of Britain’s withdrawal (hence the hard-line approach over the size of the divorce bill).

Maintaining unity among the 27 means that the EU will only deal with Britain through its appointed negotiators. Merkel will not engage in any bilateral diplomacy with May. When they meet, which in future will be rarely, she will listen to anything that the PM has to say about Brexit, but will not commit to any response. The tactic that Cameron employed in his re-negotiation of trying to sell ideas in advance to her and only advancing them if confident of her support will not work this time round.

As regards the single market, Germany will continue to insist that the four freedoms of movement—goods, people, services and capital—are indissoluble. May is right that Britain cannot stay in the single market without accepting full free movement. Germanintransigence on this point was a surprise to Cameron, who had hoped that Germany, which has its own public concerns about social benefits for Polish workers, would be more sympathetic here. But the issue was not so much one of principle, as precedent. If an exception had been created whereby a member state facing a high level of EU immigration could impose provisional restrictions on it, then other countries with balance of payments difficulties could demand their own restrictions, such as import surcharges,  on the free movement of goods—a red line for Germany.

Tariff-free access for exports to the UK is also a German interest, but not a central one. German manufactures sell on quality rather than price and most could absorb a WTO tariff regime without difficulty. Similarly, as regards customs arrangements, German car makers are less reliant on border-straddling supply chains, and could easily switch the sourcing of parts they currently import from Britain. BMW could manufacture its Minis in the Netherlands where it has spare capacity. So though the concerns of the German business community will be heard, as they always are, they will not be decisive. In any case, the German equivalent of the CBI has said the single market is its main Brexit priority.

In sum, Merkel will not show any particular sympathy for Britain during the negotiations. But she will not be vindictive and her decisions will be rational and predictable. However she may not always be Chancellor. She currently dominates both German and European politics and is, according to Forbes, the most powerful woman in the world. But she faces an election in September; and after 12 years in power she is not certain of victory.

Her opponent, Martin Schulz of the Social Democrats, was a surprise choice. He has no track record in German politics. His only national elected office was as a municipal councillor and mayor of a small town near Aachen. Since 1994 he has made his career in the European Parliament—where he led the Socialist group-—and served as its President from 2012 to 2017.

During his time in Strasbourg, Schulz displayed considerable political cunning, but was mainly interested in advancing the power of the Parliament itself. Since returning to Germany, he has presented himself as a man of the people and initially generated a bounce in the SPD’s poll ratings. Having hovered in the low 20s, they surged briefly to over 30 per cent. But the novelty soon wore off and Merkel’s CDU has re-established a six to eight-point lead.

In theory this should guarantee her the Chancellorship next time round. But German politics has become complicated. There are four parties in the present Bundestag: Christian Democrats, Social Democrats, Greens and Die Linke, a far-left party which has inherited the support of the former communist party of the German Democratic Republic. But there could be two more after September’s election: both the long-established Free Democrats (social and economic liberals) and the newer Alternative für Deutschland, an anti-euro and anti-immigrant party, are currently polling above the 5 per cent mark, which is threshold for representation in the Bundestag. Schulz had already hinted that, unlike all his SPD predecessors, he might be willing to go into a coalition with the ex-communists. He has already pulled his own party to the left, by indicating a readiness to repeal the labour market reforms introduced by Gerhard Schröder, the SPD Chancellor from 1998-2005.

Schulz is a euro-fundamentalist, a close associate of Juncker and would certainly want to punish the UK, for which, like many other Brussels apparatchiks, he has an undisguised contempt. If Merkel and Michel Barnier remain the key Brexit figures on the EU side, a deal, though not guaranteed, is possible. If, contrary to what the opinion polls currently suggest, Schulz becomes Chancellor it is much less likely.