Saturday, February 16, 2019

Thoughts from Galicia, Spain: 16.2.19

Spanish life is not always likeable but it is compellingly loveable.
            Christopher Howse: A Pilgrim in Spain
Save
  • Spain will go to the polls in April for its third general election in four years after its Socialist government failed to pass the national budget this week. What fun.
  • An ultimatum has been given to the (appalling) Franco family over the removal of his bones.
  • Reverting to the 2 items on perceptions of Spain  . . . I gave some thought to the other side of the Leadership coin and - rather to my own surprise - quickly came up with 14 'negative' points. Maybe I'll cite them here one day, though regular readers won't be too surprised at any them, I suspect. But, anyway, as with people, the most important question is whether the net balance is positive or negative. For me, as a retired Brit, it's always been very positive. But, if I were a young, unemployed Spanish graduate, I might well regard even the UK as a better place in which to live. And I've always admitted that, having quite a short fuse, I  would surely have found it hard to work in Spain, notwithstanding its numerous attractions/positives. Horses for courses, as they say.
  • Talking of life here . . . Years ago, I wrote a spoof guide to driving in Spain. I thought about this yesterday when concluding - probably not for the first time - that the only time you can confidently expect or believe a signal here is when someone overtakes you on an autovia and indicates they're going to pull in front of you. Ironically, no one does this in the UK. I don't recall what happens in other countries.
  • By the way, this year is the 300th Anniversary of a British capture of Vigo and Pontevedra. I don't think there are going to be any local celebrations. Except in my watering hole. As I recall, the biggest item removed by the Brits was the wine stores of both Vigo and Pontevedra. I like the final sentence of this Wiki item on the events of 2 weeks in October 1719: This caused some shock to the Spanish authorities, as they realised how vulnerable they were to Allied amphibious descents, with the potential to open up a new front away from the French frontier. I'll bet.
  • The Galician city of Lugo has also started to use archers to cull wild boars entering residential areas. 
Brexit and the UK
  • It's no secret that the far left of the Labour Party has been anti the EU since the 1970s, when - under Michael Foot - it fought against the UK's entry into the EEC, as it then was. The leading lights of today's Labour Party still see it as a capitalist club bent on exploiting the workers and this has naturally caused headaches for its 'old school' leader, Jeremy Corbyn. As Private Eye put it recently: Any young supporters who voted Labour in the belief that the party was pro-Europe should have watched as their leader took his Strategy and Communications Director, Seumas Milne, to an emergency Brexit meeting  with prime minister Theresa May last week. Milne has opposed the EU as intensely as Tory Brexiteers Jacob Rees-Mogg and Boris Johnson, only for much longer.  . . . Labour insiders bewail the influence of Milne and other ex-communists on Jeremy Corbyn. It's no coincidence that the Labour 'policy' on Brexit has been a case study in obfuscation and dissimulation. But time is running out. For everyone.
Brexit and the EU
  • Ambrose Evan Pritchard - below - continues to be optimistic that common sense will prevail, if only because the EU now has a lot more to lose that it had - or thought it had - months ago. Interesting to note confirmation of the hardening of his views re Brussels.
The USA
  • Anyone surprised at this
  • Religion in the benighted USA 1: Anti Trump Christians are as bad as Nazi enablers.
  • Religion in the benighted USA 2: More than half of Republicans believe in divine involvement in their elections. But only when it suits them, of course. Presumably it's the Devil at work when things go against them.
Spanish
English
  • Odd old word: Preferment: "You unmarried women were said to be on their preferment when they were waiting to be preferred by some young man". So, probation.
Finally . . .
  • The sales director of a sex toys company - Yes Yes.org - was sacked after he changed its domain name to .com without realising its founders had chosen it because of its closeness to orgasm. But I suspect there must have been other reasons as well.
THE ARTICLE

A no-deal Brexit starts to lose its terror as the EU draws up survival plans: Ambrose Evans-Pritchard

The leaks from Brussels have begun. Unnamed EU "diplomats and officials" have floated the subject of a temporary opt-out for Ireland in a no-deal Brexit.

Dublin will not have to erect customs infrastructure or police the outer limits of the single market immediately. There will be a transition.

Officials told Reuters that Ireland will ultimately face checks on its own exports to Europe or face being kicked out of the EU customs union if it refuses to put up a trade border against Northern Ireland in the event of a no-deal. “If there is no physical border, the customs checks would have to take place on all goods coming from Ireland,” said one.

But ultimately may be a long way off. There will be a strange hiatus. The derogation period circulating en coulisse in Brussels is about six months. In my experience such time-frames tend to be elastic.

So think this through. Later this year or at some point in 2020 the Irish government will come under pressure to erect a border, which both Dublin and the EU insist would be a violation of the Good Friday Agreement.

My supposition is that the interests of Ireland and the UK would that at stage become at least partially aligned. Both would be searching frantically for some sort of solution based on the latest digital and blockchain technology. Options now dismissed as “magical thinking” would look attractive. This includes the report written for the European Parliament by the former head of the World Customs Organisation, Lars Karlsson.

As months went by and various ways were found to manage cross-border trade in Ireland, it would become progressively harder for Brussels to push its maximalist position. It too would start to have a political interest in making it work.

The alternative would be ghastly. The EU would find itself sliding towards a diplomatic crisis with Ireland, whatever Leo Varadkar is now saying about the undying unity of the EU (which he knows to be humbug after the EU Troika manhandling of Ireland in 2010). The political fall-out of such a showdown could not easily be predicted.

Inventive officials in Brussels would start to float the "Canaries formula".  The Canary islands have their own tax and customs arrangements within the EU that is justified on grounds of distance from Spain and the rest of the EU. The European Commission said the geography of the islands “permits specific measures to be taken so as to take account of the particular characteristics and constraints of these regions.” “Local manufacturers have to contend with a number of handicaps, caused especially by their remoteness. This has justified the implementation of a specific measure to safeguard their competitiveness.

I do not wish to labour the point. The case of the Canaries is not an exact template. What it shows is that the EU comes up with flexible arrangements when it has to.

There would certainly be calls for "trusted trader" schemes to carry out rules of origin processing away from the border. There would be a growing acceptance that local cross-border trade (80pc of the total) could be given an exemption. Who is going to challenge this at the World Trade Organization if the UK, Ireland, and the EU all agree?

Ireland has been thrust into a very difficult position by Brexit through no fault of its own, and we in Britain should be cognisant of that. Many of us are partly Irish in any case.

My great great grandfather, Captain Hampden Evans, was sentenced to death by the British crown for his role in the United Irishmen revolt of 1798 (he died in exile in France).  My great grandmother was a Fenian activist. Countless readers will have their own family parallels.

The EU has exploited Irish sensitivities - with some encouragement from Mr Varadkar - to shut off Britain’s negotiating options and to shoehorn us into a customs union under EU legal and regulatory control. My own view of Brexit hardened drastically when it became clear this was the strategy. But I also think that this opportunism will come back to haunt if there is a no deal. What worked to the advantage of Brussels at one stage of this process will be a diplomatic quagmire in the next stage. That is why solutions will be found.

And what applies to the Irish issue will be apply to varying degrees to trade. A cliff-edge rupture will tip the eurozone itself into a recessionary downturn that it cannot easily withstand, given that it has no monetary and fiscal defences, and already has one foot in Japanese deflation.

So it will not allow the cliff-edge to occur. The open letter of the pan-EU lobby FoodDrinkEurope to Michel Barnier gives us a window into what is really happening. It warns that €58bn of annual UK-EU trade in food and drinks will blow up unless emergency measures are taken.

It calls on the Commission to prepare “unilateral contingency measures”. This includes forbearance on customs clearance for up to 24 months; mutual recognition of certifications; continued acceptance of licences for hauliers; and so forth. In other words, common sense should prevail.

To a great extent, we have already paid the price of a no-deal Brexit. Banks and City finance houses have had to activate their contingency plans already. Investment has already hit a wall.

With each passing week the economic return we get from giving up self-government and sovereignty is diminishing, even if that is not what Theresa May intends as she runs down the clock.

As we enter the final weeks, it is becoming clearer that the long-predicted doomsday scenario of March 30 will not happen even in a no deal rupture. At that moment Brussels will instantly lose the leverage of the Article 50 process. It will instead find itself having to explain to EU national capitals how it so misjudged the Brexit negotiations.

We will be in a new situation. Britain will be in a mess: Europe will be in a mess. Both will have a strong incentive to sort it out in a practical fashion. Ideology will no longer cut much ice.

Perhaps it is a wicked thought, but I cannot bring myself to share Sir Oliver Letwin’s alarm over the “terrifying” prospect of a no-deal. For me the terror peaked months ago. It has since been ebbing away. It is almost tempting to let events run their course.

Friday, February 15, 2019

Thoughts from Galicia, Spain: 15.2.19

Spanish life is not always likeable but it is compellingly loveable.
          Christopher Howse: A Pilgrim in Spain
Spain
  • The FT says that New elections loom as Spain is stuck in a cycle of instability. The article is behind a paywall, unfortunately. 
  • Here's how some Spaniards - possibly only the minority - see themselves, justifiably.
  • And here's how some foreigners see the Spanish. Equally justifiably.
  • Here's some Galician fears about Brexit.
  • There's a 1942 film I've been wanting to take a look at for some time. It's called Raza and it's said that Franco himself wrote the self-glorifying script. Most IMDB reviewers rate it 1/10(mostly non-Spanish), several rate it 10/10 (all Spanish) and 1 or 2 give it between 2 and 6. I suspect I'll be at the lowest end, as and when I get round to watching in. There are bits on on youtube here, plus a long documentary on it. Which probably isn't very laudatory.
Portugal
  • I went down to Valença yesterday. It's hard to get away from tree logs there, wood pulping being a major industry in North Portugal (and South Galicia). If it wasn't a long train of tree trunks passing through the station, it was trucks with trailers on the main road north-south. Where they are something of a scourge.
Brexit and the UK
  • Article 1 below is from what I regard as a sensible Brexiteer. Others would disagree, of course. Both with him and with me.
Brexit and Expats
  • Here's a useful guide for The Local on what Brits in the EU can expect in their country of residence in the event of a No Deal Brexit.
  • And here's what The Olive Press says every Brit needs to know. Also useful.
Brexit and the EU
  • The second article below is Ambrose Evan Pritchard's view of the real politik of the situation. He might well be wrong, of course. But, again, he seems to be spot on to me.
The USA
  • A Fox News poll found that 25% of Americans believe God wanted Donald Trump to become president,  That's more than 80m people, folks . . . 
Spanish
Finally . . .
  • Good got see that Alan Partridge will be back on the BBC on 26th February. Something to look forward to during the dark winter days. That said, our weather has been magnificent for the last few days, with lots of sun and temperatures as high as 18C.
ARTICLE 1

1. The eurozone’s coming recession will confirm Brexiteers’ warnings: Allister Heath

Remind me: what’s so great about the single market and the single currency again? The latest economic statistics from the eurozone are appalling, and point to a continent that is sleepwalking into a catastrophic recession. Our own establishment is too busy self-flagellating to have noticed, even though a eurozone meltdown would not only hurt British businesses and workers but could transform the Brexit negotiations.

Like the eurozone crisis which destroyed Greece and crippled Cyprus and Italy, this sudden economic storm could change everything. That earlier episode, a near-death experience for the euro, was a seminal moment in the rise of British Euroscepticism. It mattered almost as much as the migration crisis, a point that few Remainers understand because they cannot accept that Brexiteers care about economics, not just sovereignty. 

To Eurosceptics, the quasi-bankruptcy of the Club Med economies in the mid-2010s was the final confirmation that the EU was no longer a land of milk and honey, as it had appeared to be in the 1970s and early 1980s, but an economic basket case with terrifyingly authoritarian tendencies. The French Trentes Glorieuses, the Wirtschaftswunder in Germany and the Auf Wiedersehn, Pet phenomenon – when British workers moved to Europe for employment: all belong to a distant past. 

The issue isn’t so much British strength as European weakness: Brexit voters know that there is much that is wrong with the UK economy but they rightly no longer believe that the EU has any of the answers. Their critique is rational and forward-looking: it is the Remainers who are emotional and obsessed with past dreams, and who still see sunshine, prosperity and peace when they look over the Channel, rather than gilets jaunes and criminal levels of youth unemployment. 

Between 1999, when the euro was launched, and the start of 2017, the latest period for which IMF data is available from Bloomberg, the eurozone’s GDP grew by 26 per cent, against the UK’s 44 per cent and 42 per cent in the United States. Italy is up by just 6.7 per cent and Greece by 1.3 per cent; both have suffered two wasted decades.

If being part of the single market and customs union mattered so much more than any other policy, the eurozone would have boomed. Yet it didn’t, and the voters know they have been sold a pup. If you want to see proper growth, you need to turn to the emerging world, to China (which has multiplied the size of its economy in extraordinary fashion), to India, to Singapore, to Israel (up 98 per cent).

Of course, the UK has underperformed these past two years; and yes, Brexit uncertainty, compounded by the Government’s incompetence, was one important reason. Yet this brief period of EU overperformance is ending. Eurozone industrial production was down a calamitous 4.2 per cent, year‑on-year in December, led by a 6.7 per cent collapse in Spain, 5.5 per cent in Italy and 3.9 per cent in Germany. French industry’s crisis was less pronounced at minus 1.7 per cent; Britain did slightly better again, by shrinking only 1.2 per cent. 

How is any of this possible given that leaving the EU, we are told, is the only explanation for any and all bad economic news? I’m being facetious, of course: China’s downturn, dearer money in the eurozone and America, a general turning of the cycle after years of expansion, as well as some jitters about Brexit, all help explain the looming euro-recession.  Yet listening to Remain propaganda, the EU ought to have discovered the secret to perpetual growth by now.

The reality is, it is still the weakest link in the developed world, a precarious, unsustainable, stagnant construct, its cultural and geopolitical power drained by its inability to grow its economy. No wonder Brexiteers just don’t accept leaving will make us permanently worse off. The two big economic experiments that underpin European integration have failed spectacularly. 

The creation of the single market and its unified regulatory zone has delivered pathetically small results. A decade ago, the EU Commission calculated that it had only increased Europe’s economy by 2.1 per cent, a trivial number. It is likely that the UK will have gained even less: we don’t rely as much on EU markets, we specialise in services (where the single market is less complete), and we already had a more pro-competition environment.

The euro’s failure is even more disastrous. The huge boost to growth it was meant to generate by eliminating transaction costs and uncertainty never materialised. There was no free lunch, no spurt, no permanent upward shift in performance. The downsides have been cataclysmic – mad booms and busts in peripheral economies and the incompatibility between national social democracy and European fiscal policy exposed for all to see. 

One thing is certain: another eurozone crisis would strengthen the Brexiteers’ resolve, even if Britain is also affected. As a tangible EU failure, it would more than cancel out the warnings of Project Fear. It would make Eurosceptics even more sanguine about a no-deal departure.

The inevitable short-term costs of leaving the EU would be attributed – in some cases unfairly – to the eurozone crisis. If French and German factories are shutting, then why blame Brexit for what is happening to Nissan or Airbus?  All of this would also make it harder for the likes of Emmanuel Macron to play hardball: it is one thing to deliberately hurt one’s own economy in order to impose a punishment beating on Britain when that economy is growing; it’s another thing to do so when unemployment is beginning to rise.

Time is actually on our side, for once, assuming that the eurozone doesn’t suddenly bounce back.  If we had a competent government, these are the sorts of discussions it would be having. The Treasury would be trying to mitigate the contagion from a eurozone recession; and No 10 would be seeking to strengthen its hand. Instead, there is nothing: no plan, no strategy, no reaction. But at some point, and soon, the British public will notice what is happening to the eurozone, and it will remember why it voted Leave.

Woe betide the Tories if they betray Brexit under such circumstances.

THE CHECKLIST

The ultimate No-Deal Brexit checklist for Brits in Spain

Maybe a withdrawal agreement maintaining European citizens rights will be struck. Maybe Britain will crash out of the EU and chaos will ensure. Maybe, Brexit will be cancelled all together. We can't predict the future but we can help you be best prepared for whatever comes next.

Here's our 12-point check list:

1.  Make sure that you’re legally resident in your host country.

This is the ONE thing that all Brits living in Spain should make sure they do and has been repeated incessantly by British Embassy and consular staff in the run up to Brexit.

This will provide evidence the date of your arrival in your host country and provides proof that you were legally resident on March 29th 2019, when Britain exits the EU.

This will streamline the process when it comes to applying for whatever residency arrangement is decided after Brexit, whether there is a Withdrawal Agreement or dreaded No Deal.

READ MORE: This is the ONE thing Brits in Spain need to do ahead of Brexit

If you don't have either the A4 green piece of paper or the credit card sized certificate then you may not be officially registered.

2. Register with the Hacienda

Make sure that you’ve submitted income and other tax returns if you’ve been there long enough to do so (even if all your income comes from the UK).

3. Check your healthcare

Make sure that you are registered with Spanish social security and that you have a health card. Your rights may change if there is a no-deal Brexit and the Spanish and UK authorities have vowed to strike a reciprocal agreement so will easier to prove that you were entitled to it if you are already in the system.

If you have health insurance, keep it updated and see if you can guarantee your current rate will be maintained for at least the next year. Premiums might well go up for Brits after Brexit.

READ ALSO: British Embassy ‘reassures’ Brits in Spain over healthcare post-Brexit

4. Exchange your British driving licence for a Spanish one

If you’re still using a UK driving licence, apply to change it for a Spanish one as soon as possible because on 30 March 2019 the EU rules under which UK licences are recognised in the EU27 will lapse if there is no deal. 

In the worst case scenario, you could be required to sit a Spanish driving test.

READ MORE Exchanging your British driving licence for a Spanish one: What you need to know

5. Check your passport

You’ll need to comply with different rules to enter and travel around the Schengen area post Brexit although we don’t yet know what they might be.

There are two important issues that may affect your right to travel or to live here legally after exit, so it’s really important to start thinking about this now.

Firstly, Schengen Border Code rules mean that existing passports which were renewed early and therefore have over 10 years validity will no longer be valid until the expiry date written on the passport, but will be limited to the 10 years immediately after their issue date. For example, if your passport was renewed (under the old rules) 6 months before its expiry date, it would show a valid period of 10 years and 6 months. After 29 March 2019, you will effectively ‘lose’ the last 6 months validity, as third country nationals’ passports must have been issued within the last 10 years. Note: this may affect you even if you don’t travel – in order to remain a legal resident in your host country you need to make sure that the issue date on your passport is later than 29 March 2009.

Secondly, your passport must have at least 6 months’ validity on arrival, after discounting the period above. More details HERE

We don’t yet know what rights, if any, we will have to cross the border to or from any EU27 country if there is No Deal, but dealing with these two issues now is a sensible precaution.

6. Get the paperwork ready

Make a dossier as if you’re applying for a proof of residence or permanent residence document.

Collate all your income, property and other tax returns and notifications since your arrival. You may need them to prove the length of your residence.

Put together a file of utility bills for at least 10 years if you can. This will prove your continued residence.

If your name is not on the income and property tax bills for your household or on any utility bills, get it added now. For anyone who has changed their name through marriage or otherwise: make sure that the name on bills, bank statements, pension statements, payslips etc. matches the name on your passport if possible.

Put together a file of bank statements, wage slips (if employed) or income and other tax declarations (if self-employed), proof of health cover and pension payments and/or pension statements for the last 5 years if you’ve lived in your host country that long. Longer is even better – 10 years is best. You may need these to prove the stability, sufficiency and regularity of your resources.

7. Prepare financially

The following is particularly relevant to those who derive their income or have savings in the UK in sterling, says the British in Europe Group, which campaigns for EU citizens rights post Brexit. 

If you have bank accounts, savings or investments in the UK, consider moving them to your host country now. Sterling may drop suddenly in the case of a no-deal exit; there may also be temporary problems moving money in and out of the EU. If most of your savings and income are in the UK, try and make sure you have access to enough cash in euros to see you through two or three months, especially if your income is transferred monthly.

If you have a personal pension in the UK (this doesn’t apply to state or public service/occupational pensions) and have not yet retired, think about getting advice about how to deal with this and cashing it in if you’re old enough, or moving it. There may be issues with the rights of UK insurers/financial services providers to operate in the EU without having a formal presence there after Brexit and these could cause problems e.g. with insurers making payments to those living outside the UK.  Write to your insurer/private pension company in the UK to ask them what plans they have put in place for post-Brexit scenarios. 

8. Put in place contingency plans to secure your income and minimise your expenses.

This applies particularly if the bulk of your income is in sterling, which may take a serious hit after a no-deal exit. Create a personal financial contingency plan. Look at ways you can cut your spending temporarily, and how you could create additional income, particularly in euros. Get any potentially expensive dental, optical and hearing work done now, in case you have to reduce the cover on your private health insurance (if you have one)!

If you have a business that relies on attracting people from the UK, think about changing your client base. If there is a no-deal Brexit, people may not want to travel to the EU next year and you’ll need to find new clients in the EU 27 if you’re to survive financially. Make sure you have a website in the language of your host country, if you haven’t already, and that you begin to advertise NOW to attract EU27 customers.

If you have a business that relies solely or partly on UK customers/clients, put contingency plans in place now to deal with potential issues with VAT, excise, billing, professional insurance cover, etc.

9. Prepare for applying for long-term residence and think about citizenship.

If you have lived here for more than five years you can apply for permanent residency and if you have been a resident for ten years, you are eligible for citizenship, although you have to pass a language and citizenship test.

READ MORE: Everything you need to know about getting Spanish citizenship 

10. Top up your medication before 29 March 2019.

If you currently rely on an S1 form for access to the local health service and you need regular medication, think about making sure you have a good supply of it on 29 March 2019 – if the worst happens and the reciprocal health care system stops on that date it might take several weeks to get an alternative system up and running and there may be short term chaos. Making sure that you have the permitted 3 months of long-term medication would mean that you’d avoid having to pay full whack for your meds while the situation was resolved.

11. Get your professional qualifications recognised now.

The European Commission has said that, whatever the outcome of the negotiations, Brexit does not affect decisions made pre-Brexit by EU27 countries recognising UK qualifications under the general EU directive on the recognition of professional qualifications (Directive 2005/36/EC).  For details of which qualifications are covered see HERE

So if you have a UK qualification covered by that Directive and you need to be able to use it, apply to get it recognised before 30 March 2019.

12. Make sure that you’re in your host country on 29 and 30 March 2019.

This is probably not the best time to make a family visit to the UK! Transport could be chaotic, with no agreements on air or other travel between the UK and EU.

Ideally it would be best to be in your host country on those dates but if not possible, try to be somewhere in the Schengen zone: 

13. Keep informed

Make regular check-ins to The Local Spain for updates about how Brexit might affect UK nationals. Become a member and sign up to our newsletter for updates straight to your inbox.

FCO website Living in Spain HERE and their Facebook page HERE

Spanish government dedicated Brexit information page HERE

READ ALSO: Brexit questions? Ask the British Ambassador in Madrid

ARTICLE 2. 

Europe will have to offer May a Brexit concession or risk a diplomatic and economic disaster: Ambrose Evans Pritchard.

At a chance encounter in Davos, Ireland’s Leo Varadkar asked Nick Clegg whether it was really conceivable that Britain’s Prime Minister would dare to go “over the cliff” and into a no-deal Brexit. “I’m afraid to say that she really might,” was the reply.

Days later the shaken Taoiseach felt the imperial fist of the European Parliament’s six-man steering group on Brexit. MEPs Elmar Brok and Philippe Lamberts declared Ireland will be forced to erect a hard border in the North in the event of a no-deal.

If the Irish state refused to police the frontiers of the EU single market with proper vigour, it would be ejected from the European trading system. “We would have to set up customs barriers against Ireland, otherwise we’d soon have American chlorinated chicken inside the EU,” said Mr Brok, a German Christian Democrat.

Mr Lamberts, a Belgian Green, was just as blunt. “If Ireland refuses to protect the Northern Irish border after a hard Brexit, we will have to erect a customs frontier on the Continent,” he said. The country could not expect Europe to uphold the Good Friday Agreement “at any cost”.

So after months of dramatising the threat to Irish peace, the issue is suddenly secondary. It confirms what we suspected, that EU negotiators have exploited the neuralgic issue of Ireland in order to pressure the UK into a customs union and therefore into the EU’s legal and regulatory orbit.

Yet threatening Ireland in this fashion is untenable statecraft. It is just eight years since the European Central Bank ordered Dublin to swallow the debts of Anglo-Irish Bank, at a cost of 30pc of GDP to Irish taxpayers. This was done to defend the European banking system from contagion at a moment when the eurozone – due to its own negligence – had no lender of last resort. The ECB threatened to cut off emergency liquidity unless Dublin complied. The anger in Ireland has subsided but the mistrust lingers.

I do not wish to rehearse the arguments for how one could manage intra-Irish trade with no visible border. If one takes a maximalist stance, all technological solutions can be dismissed as “magical thinking”.

The European Parliament itself issued a report “Smart Border 2.0” by Lars Karlsson, former head of the World Customs Organisation, suggesting how it could be done.

Suffice to say, one can exempt small traders and farmers (80pc of commerce) from rules of origin, tariffs and clearance procedures. The other 20pc can be cleared electronically through a trusted trader scheme away from the border.

If Brussels were to follow the Brok-Lamberts line and force Ireland to violate its treaty obligations under the 1998 Belfast Agreement, it would lose the moral high ground and face an explosive intra-EU crisis on the cusp of the European elections.

It is one reason why Brussels urgently needs to find some formula to extract itself from a Brexit impasse of its own making. There are many others.

Sigmar Gabriel, until recently Germany’s foreign minister, has advised the EU to rewrite the botched Withdrawal Agreement or risk consigning Europe to geostrategic oblivion. “Brexit will damage Europe’s role in the world in a way that we Europeans currently seem unable to grasp,” he wrote for Project Syndicate.

The EU is becoming a spectator struggling to hold its footing in a “G-2 world” run by the US and China. It must not resort to the fratricidal punishment of a nuclear-armed, military ally such Britain, with the world’s financial hub. The EU must seek to keep cordial ties with Britain.

“It may be factually correct to point out with a shrug of our shoulders that the UK put itself into this position, owing to the feckless behaviour of its political elite. But this stance helps no one. Europe as a whole will suffer the consequences of Brexit.

Sigmar Gabriel, until recently Germany’s foreign minister, has advised the EU to rewrite the botched Withdrawal Agreement or risk consigning Europe to geostrategic oblivion

“Europeans must ask themselves whether we can agree on a better treaty. Perhaps there are other ways to reassure Britain that there will be a follow-up treaty acceptable to both sides, under which no one is held hostage permanently. And perhaps there is room for manoeuvre on freedom of movement,” he wrote.

This is the voice of the national capitals, asserting rank over the commission priesthood with its own Jesuit agenda. “As Brexit moves towards its endgame, signals from leaders in Germany, France, Ireland and the Netherlands will provide a more accurate indication of where the EU27 are than the views of political figures in Brussels,” said Mujtaba Rahman from Eurasia Group.

I let others judge whether the nightcap ramblings of negotiator Olly Robbinstells us anything about Theresa May’s tactics, or if she is preparing an 11th-hour capitulation to Brussels on the backstop.

To the extent that EU leaders think she may indeed go to the wire, they are in an awkward position. The eurozone is suddenly in an industrial recession. One more shock will push the region into a deflation crisis at a time when it has no monetary or fiscal defences.

This is a radically different set of circumstances from Europe’s hubris in December 2017 when it set the trap of the Irish backstop. A no-deal Brexit has become more dangerous. This alters the negotiating equation.

At the end of the day, the UK at least has the sovereign policy instruments to fight a fresh slump. The Treasury can launch a fiscal blitz of 2pc of GDP or more if need be. The Bank of England can resort to “helicopter money” and outright financing of state spending in extremis. Europe’s dysfunctional currency union is prohibited by law from doing any such thing.

Germany’s IFO Institute says the EU has reason to be alarmed by Liam Fox’s suggestion that the UK might opt to tear down its tariff barriers and go for unilateral free trade in a no-deal scenario. This would bring the guillotine down on the EU’s £340bn exports to the UK. Clusters of goods would be rendered uncompetitive at a stroke. The EU might never regain markets lost to China.

My assumption is that the EU will be forced by diplomatic, political and economic pressure to come up with something plausible on the backstop to defuse the Brexit crisis, whatever the current rhetoric from Brussels today.

It will probably be some form of codicil that gives greater legal weight to the Political Declaration. This is double-edged since it locks supremacy of the European Court, the continuation of the acquis, and such details as fishing quotas, deeper into the relationship.

What is indisputable is that the poker stakes of a no-deal Brexit have risen to exorbitant levels for the EU itself.





Thursday, February 14, 2019

Thoughts from Galicia, Spain: 14.2.19

Spanish life is not always likeable but it is compellingly loveable.
            Christopher Howse: A Pilgrim in Spain
Spain
  • Here in Spain - as we know from recent high-profile trials - the crime of rape doesn't yet embody the concept of consent. There needs to be violence and injury. In these circumstances, you might think it would be, at the very least, ironic for a member of the Spanish government to compare Catalan independence referendum activities to rape. "Because they didn't seek permission in advance". Whatever Spaniards think, this isn't going to go down well outside Spain. Given the PR challenge the government faces, this is the equivalent of kicking the ball into your own goal straight from the kick-off and then taking half your team off the field.
  • Needless to say, this was the lead item on Sky's International News early this morning and I expect the rest of the media to take up the issue pretty soon. And then there's social media. Get ready for a twitter storm, mostly in Catalan perhaps.
  • Since we've started with sex - sort of - let's continue on the subject. The Spaniards who most 'maintain/sustain' sex are to be found in Cantabria, it says here. Where they probably spend more time indoors than their compatriots in sunnier regions.
  • Galicia normally comes near the bottom of the numerous lists which adorn the Spanish press but, in this case, our region comes in at a respectable 5th.
  • Just in case you need it this Valentine's Day, here's The Local on speaking the Spanish language of love. For those with other pursuits on their minds:-
  • Camino News 1: I saw my first 2 camino pilgrims of the year in Pontevedra a couple of days ago. They were crossing the Burgo bridge going south. I refrained from telling them that Santiago was northwards, as they were possibly heading for their accommodation.
  • Camino News 2: Yesterday I helped 2 German women - why is it always German women? - who were attempting something almost impossible in Spain - buy a bottle of wine with a screw top. I can't say they seemed to appreciate my assistance. Maybe in these times I shouldn't offer it to females. Their loss, of course.
  • Camino News 3: Such is the increase in the afluencia of 'pilgrims', Pontevedra's public albergue is going to add a floor and double its capacity. Provided the Xunta agrees with their proposal. 
  • Camino News 4: An albergue owner in O Pedrouzo has been fined for merely dumping sheets and blankets on the beds and not making them up. He took the chance to moan about unfair (desloyal) competition from 'tourist flats' and illegal albergues. And who can blame him?
  • For Brits in Spain, reproduced below is a useful checklist from The Local of what you should be doing ahead of Brexit. I've included all the links but I'm not sure you'll be able to access them all, if you've reached their monthly limit for free access. For Mac users, just click on Reader View to solve any problem arising
The EU 
  • George Soros - who I think is in favour of the EU - is, nonetheless, somewhat pessimistic about its current management. See the article below.
The UK and Brexit 
  • It's been stressed that Mrs May needs to keep a No Deal Brexit on the table to scare the EU.   One columnist has astutely noted that, in fact, she's also keeping it there to frighten the Commons into accepting the (much despised) deal she negotiated. Avoiding a hard Brexit is the only thing which gets majority support in the parliament. Meanwhile, the Prime Minister is blatantly running down the clock until the last parliamentary vote just before the March 29 deadline. As someone has said, given the stakes, the word 'brinkmanship' doesn't do justice to her strategy. Not a popular woman.
The UK
  • The proportion of young people  in their 20s who are living at home has is now said to be a staggering 49%. Hardly abnormal for Spain but very new for the UK.
  • A French view: The 'Great' will soon be gone from Britain . . . In a few years she will fall to the second or third rank of European powers without hope of ever rising again. This is a comment in a Foreign Ministry report of 1779. Déjà vu?
The USA
  • As I know too well, it's easily done . . . In Alabama, the law requires a Christian clergyman be there to deliver the last nights when someone is executed by the state.
  • I recently admitted failing to recall the technical name for the syndrome of being so stupid that you don't realise just how stupid you are. Well, it's the Dunning Kruger effect and you can hear more about it here.
Spanish
English
  • Odd old word: Rose-cold: A variety of hay-fever (allergic rhinitis) which occurs in spring or early summer and attributed to rose pollen.
Finally . . .
  • Yesterday I read, firstly, a report in a UK paper about a young couple who died when they crashed their car while being pursued by the police, and then a report in a local paper about mayhem in a restaurant when 2 families celebrating different events came to blows. In each case, I'd be prepared to bet from the information supplied that all parties involved in these events were gypsies/'travellers'. Interestingly, in neither country was this spelt out. Or even much hinted at. But one can always read between the lines, rightly or wrongly.
THE CHECKLIST

The ultimate No-Deal Brexit checklist for Brits in Spain

Maybe a withdrawal agreement maintaining European citizens rights will be struck. Maybe Britain will crash out of the EU and chaos will ensure. Maybe Brexit will be cancelled all together. We can't predict the future but we can help you be best prepared for whatever comes next.

Here's our 12-point check list:-

1.  Make sure that you’re legally resident in your host country.

This is the ONE thing that all Brits living in Spain should make sure they do and has been repeated incessantly by British Embassy and consular staff in the run up to Brexit.

This will provide evidence the date of your arrival in your host country and provides proof that you were legally resident on March 29th 2019, when Britain exits the EU.

This will streamline the process when it comes to applying for whatever residency arrangement is decided after Brexit, whether there is a Withdrawal Agreement or dreaded No Deal.

READ MORE: This is the ONE thing Brits in Spain need to do ahead of Brexit

If you don't have either the A4 green piece of paper or the credit card sized certificate then you may not be officially registered.

2. Register with Hacienda

Make sure that you’ve submitted income and other tax returns if you’ve been there long enough to do so (even if all your income comes from the UK).

3. Check your healthcare

Make sure that you are registered with Spanish social security and that you have a health card. Your rights may change if there is a no-deal Brexit and the Spanish and UK authorities have vowed to strike a reciprocal agreement so will easier to prove that you were entitled to it if you are already in the system.

If you have health insurance, keep it updated and see if you can guarantee your current rate will be maintained for at least the next year. Premiums might well go up for Brits after Brexit.


4. Exchange your British driving licence for a Spanish one

If you’re still using a UK driving licence, apply to change it for a Spanish one as soon as possible because on 30 March 2019 the EU rules under which UK licences are recognised in the EU27 will lapse if there is no deal. 

In the worst case scenario, you could be required to sit a Spanish driving test.


5. Check your passport

You’ll need to comply with different rules to enter and travel around the Schengen area post Brexit although we don’t yet know what they might be.

There are two important issues that may affect your right to travel or to live here legally after exit, so it’s really important to start thinking about this now.

Firstly, Schengen Border Code rules mean that existing passports which were renewed early and therefore have over 10 years validity will no longer be valid until the expiry date written on the passport, but will be limited to the 10 years immediately after their issue date. For example, if your passport was renewed (under the old rules) 6 months before its expiry date, it would show a valid period of 10 years and 6 months. After 29 March 2019, you will effectively ‘lose’ the last 6 months validity, as third country nationals’ passports must have been issued within the last 10 years. Note: this may affect you even if you don’t travel – in order to remain a legal resident in your host country you need to make sure that the issue date on your passport is later than 29 March 2009.

Secondly, your passport must have at least 6 months’ validity on arrival, after discounting the period above. More details HERE

We don’t yet know what rights, if any, we will have to cross the border to or from any EU27 country if there is No Deal, but dealing with these two issues now is a sensible precaution.

6. Get the paperwork ready

Make a dossier as if you’re applying for a proof of residence or permanent residence document.

Collate all your income, property and other tax returns and notifications since your arrival. You may need them to prove the length of your residence.

Put together a file of utility bills for at least 10 years if you can. This will prove your continued residence.

If your name is not on the income and property tax bills for your household or on any utility bills, get it added now. For anyone who has changed their name through marriage or otherwise: make sure that the name on bills, bank statements, pension statements, payslips etc. matches the name on your passport if possible.

Put together a file of bank statements, wage slips (if employed) or income and other tax declarations (if self-employed), proof of health cover and pension payments and/or pension statements for the last 5 years if you’ve lived in your host country that long. Longer is even better – 10 years is best. You may need these to prove the stability, sufficiency and regularity of your resources.

7. Prepare financially

The following is particularly relevant to those who derive their income or have savings in the UK in sterling, says the British in Europe Group, which campaigns for EU citizens rights post Brexit. 

If you have bank accounts, savings or investments in the UK, consider moving them to your host country now. Sterling may drop suddenly in the case of a no-deal exit; there may also be temporary problems moving money in and out of the EU. If most of your savings and income are in the UK, try and make sure you have access to enough cash in euros to see you through two or three months, especially if your income is transferred monthly.

If you have a personal pension in the UK (this doesn’t apply to state or public service/occupational pensions) and have not yet retired, think about getting advice about how to deal with this and cashing it in if you’re old enough, or moving it. There may be issues with the rights of UK insurers/financial services providers to operate in the EU without having a formal presence there after Brexit and these could cause problems e.g. with insurers making payments to those living outside the UK.  Write to your insurer/private pension company in the UK to ask them what plans they have put in place for post-Brexit scenarios. 

8. Put in place contingency plans to secure your income and minimise your expenses.

This applies particularly if the bulk of your income is in sterling, which may take a serious hit after a no-deal exit. Create a personal financial contingency plan. Look at ways you can cut your spending temporarily, and how you could create additional income, particularly in euros. Get any potentially expensive dental, optical and hearing work done now, in case you have to reduce the cover on your private health insurance (if you have one)!

If you have a business that relies on attracting people from the UK, think about changing your client base. If there is a no-deal Brexit, people may not want to travel to the EU next year and you’ll need to find new clients in the EU 27 if you’re to survive financially. Make sure you have a website in the language of your host country, if you haven’t already, and that you begin to advertise NOW to attract EU27 customers.

If you have a business that relies solely or partly on UK customers/clients, put contingency plans in place now to deal with potential issues with VAT, excise, billing, professional insurance cover, etc.

9. Prepare for applying for long-term residence and think about citizenship.

If you have lived here for more than five years you can apply for permanent residency and if you have been a resident for ten years, you are eligible for citizenship, although you have to pass a language and citizenship test.


10. Top up your medication before 29 March 2019.

If you currently rely on an S1 form for access to the local health service and you need regular medication, think about making sure you have a good supply of it on 29 March 2019 – if the worst happens and the reciprocal health care system stops on that date it might take several weeks to get an alternative system up and running and there may be short term chaos. Making sure that you have the permitted 3 months of long-term medication would mean that you’d avoid having to pay full whack for your meds while the situation was resolved.

11. Get your professional qualifications recognised now.

The European Commission has said that, whatever the outcome of the negotiations, Brexit does not affect decisions made pre-Brexit by EU27 countries recognising UK qualifications under the general EU directive on the recognition of professional qualifications (Directive 2005/36/EC).  For details of which qualifications are covered see HERE

So if you have a UK qualification covered by that Directive and you need to be able to use it, apply to get it recognised before 30 March 2019.

12. Make sure that you’re in your host country on 29 and 30 March 2019.

This is probably not the best time to make a family visit to the UK! Transport could be chaotic, with no agreements on air or other travel between the UK and EU.

Ideally it would be best to be in your host country on those dates but if not possible, try to be somewhere in the Schengen zone.

13. Keep informed

Make regular check-ins to The Local Spain for updates about how Brexit might affect UK nationals. Become a member and sign up to our newsletter for updates straight to your inbox.

FCO website Living in Spain HERE and their Facebook page HERE

Spanish government dedicated Brexit information page HERE


THE ARTICLE


EU could collapse like Soviet Union, warns George Soros

The billionaire investor George Soros has warned that the European Union is “sleepwalking into oblivion” and risks collapsing like the Soviet Union.

Citing the spasms of upheaval in Italy, Britain and Germany, he said that Europe had drastically underestimated the threat from its “internal enemies” and was on the cusp of tipping into “the nightmare of the 21st century”.

Mr Soros, 88, who is Jewish, survived the Nazi occupation of his native Hungary in 1944 and the Soviet siege of Budapest in the following year before fleeing to England in 1947.

In an article for Project Syndicate, a Prague-based website, he said the rise of anti-EU populism before the European elections in May could once again throw the continent into violent chaos. Nationalist parties are expected to win substantial numbers of seats in countries such as France, Italy, Sweden, Germany and Poland, and may emerge as one of the most powerful forces in the next European parliament.

“Neither our leaders nor ordinary citizens seem to understand that we are experiencing a revolutionary moment,” Mr Soros wrote. “Most of us assume that the future will more or less resemble the present, but this is not necessarily so. In a long and eventful life, I have witnessed many periods of what I call radical disequilibrium. We are living in such a period today.”

Mr Soros’s championship of liberal causes has made him a scapegoat for radical right-wing parties in many countries, and particularly in his homeland, where Viktor Orban, the prime minister, has cast him as an object of hatred. The climate in Hungary has become so hostile that several organisations linked to Mr Soros, including the Central European University and the Open Society Foundations, have elected to leave the country over the past year.

Yet the philanthropist reserved his most bilious criticism for supporters of the EU, who he said had failed to realise that it was in existential danger from Mr Orban and his allies. He argued that the “antiquated” party systems in many states, including the UK, had left pro-Europeans with little or no political representation.

He also condemned the ruling conservative bloc in the European parliament for tolerating Mr Orban’s presence in its ranks “in order to preserve its majority and control the allocation of top jobs”.

He wrote: “Anti-European forces may look good in comparison: at least they have some principles, even if they are odious. One can still make a case for preserving the EU in order radically to reinvent it. But that would require a change of heart in the EU. The current leadership is reminiscent of the politburo when the Soviet Union collapsed – continuing to issue ukazes as if they were still relevant.”

In 2017 MEPs voted for the first time to launch disciplinary proceedings against Poland, whose right-wing government had forced several judges out of the country’s constitutional court. In September the same clause was triggered against Hungary for alleged breaches of the EU’s “core values” such as academic freedom and equal rights.

While both countries could ultimately have their right to vote suspended, critics argue that the sanctions available are too weak and could easily be hindered by a group of nations acting in concert.


Mr Soros said there was “a lack of legal tools for disciplining member states that violate the principles on which the European Union was founded”.

Wednesday, February 13, 2019

Thoughts from Galicia, Spain: 13.2.19

Spanish life is not always likeable but it is compellingly loveable.
            Christopher Howse: A Pilgrim in Spain
Spain
  • The latest development in the Franco Corpse Saga.
  • Here, here, here, here and here - Are All you need to know about the Catalan separatists' trial. I believe the last 2 are from a Catalan perspective, which might not be shared by all readers . . .
  • A surprising report on domestic travel. Perhaps we don't really need that ever-elusive AVE high speed train from Madrid. Oh, hang on. Vigo has just lost some flights.
The EU 
  • In the couple of days which have passed since I suggested that Brussels possibly underestimated the depth of British affection for their 'ancient freedoms', the phrase has come up twice. Firstly, it was used in an article from a British cabinet minister. And then I read that, during his time in the London, Voltaire had told his French friends back home of 'this strange people . . . fond of their liberty, learned, witty, despising life and death, a nation of philosophers'. Plus ça change . . .
  • There's an echo of this fondness for liberty in the Daily Telegraph leader posted below.
The UK and Brexit 
  • Economist Robert Peston: Most MPs tell me they believe a no-deal Brexit is a remote prospect. They are wrong. I would argue it is the most likely outcome – unless evasive action is taken much sooner than anyone expects. Reasons for this view here.
  • Richard North today: There can rarely have been a time when the MP collective has been regarded with such profound contempt by the public at large. . . If contempt solved anything, we would be well on our way to a rapid solution for Brexit. Sadly, that is not enough.
The UK
  • Political journalist Adam Boulton: The party system provides the foundation for parliamentary democracy; now it's broken, our unstable hung parliament in Westminster is wobbling more and more. Whatever route MPs choose over the next few weeks - no deal, Theresa May's deal, a softer Brexit or delay - all roads will probably lead to an early election.
The World
  • You'll recall that the Oxford researchers had concluded that the 7 shared rules of societies around them world are.- 1. Help your family; 2. Help your group; 3. Return favours; 4. Be brave; 5. Defer to superiors; 6. Divide resources fairly; and 7. Respect the authority of others. Re-reading the article, it struck me that there was/is no need for a religion to bind society  together, even if some faith systems include some or all of these precepts. Truth to say, religions have undoubtedly more often served to divide rather than unify societies. 
Spanish
Finally . . .
  • An amusing tale of a wayward nun, evdencing the the truth old adage that: There are nun so horny as those . . . 
THE ARTICLE

It's no wonder Europeans hold the EU in contempt when it flagrantly ignores its own rules.

The EU is often called a rules-based organisation, which is ironic given the alacrity with which it breaks them. A recent example of this cavalier attitude to the regulations it imposes upon others was the appointment of Martin Selmayr as Secretary-General of the European Commission, one of the most powerful positions in the bloc. Mr Selmayr had previously been chief of staff to Jean Claude-Juncker, the Commission president, and is reputedly determined to see the UK suffer for having the temerity to vote for Brexit.

The German’s elevation to such a key post last year was a surprise, not least because no one else appeared to have been considered for the role. An investigation by the EU ombudsman has now found that the appointment “did not follow EU law, in letter or spirit, and did not follow the Commission’s own rules”. Yet it seems there are to be no consequences for this blatant piece of favouritism, other than to request the Commission to look again at their appointments procedures.

It is hardly surprising that disdain for the EU as an institution and for its practitioners is growing across the continent. This will be evident in the elections to the EU parliament in May when populist parties are expected to gain significant ground, though doubtless even that shock will be ignored by the powers-that-be in Brussels.

Brexit is the most powerful manifestation of the public’s contempt for the undemocratic nature of the EU. In the Commons yesterday, Theresa May asked MPs to give her more time to negotiate the terms of the UK’s departure, gambling on the institution’s propensity to refuse to do something until the very last minute, at which point concessions are made. Hers is a high-risk strategy that may yet be undone by the EU’s intransigence or its willingness to damage itself in order to make a point. But as the Selmayr case demonstrates, the idea that they have a set of inviolable rules from which they cannot depart is for the birds.

The test of the EU’s ability to adapt will come after Brexit. As Mark Carney, the Bank of England governor said, Britain’s departure was a “leading indicator” of the fundamental pressure to reorder globalisation and ensure democratic accountability. “It is possible that new rules of the road will be developed for a more inclusive and resilient global economy,” the governor said. If they are, then the EU must learn to stick to them.

I wouldn't hold your breath . . .

Tuesday, February 12, 2019

Thoughts from Galicia, Spain: 12.2.19

Spanish life is not always likeable but it is compellingly loveable.
                                                         Christopher Howse: A Pilgrim in Spain
Spain

  • The minority PSOE government is still having problems getting its 2019 budget passed. So an early election is being considered, it says here.
  • Spanish (tribal) politics at their most intense, here.
  • More on our geriatric vandal here.
  • Such is the ambient noise level in Spain - something which rather contrasts with nearby Portugal -  it’s sometimes hard to tell - when I’m taking a tiffin on a terrace - that there’s a demonstration or protest taking place on the other side of the square.
  • Says Wiki: Galicia has a concentrated farm population living on intensely fragmented plots. These are called minifundios and a local paper has recently reported that Galicia's system of minifundismo genético - tiny plots - is unique in the world. It doesn't help the economy, of course. But nothing will/can be done about it. As with the 3 uneconomic airports.
The EU 
  • Ireland: I saw an interesting article suggesting that the EU - having protected Ireland from the depredations of the nasty Brexit British - will soon be going after the Irish because they are gorrones fiscales - or fiscal spongers/freeloaders. This is because the corporation tax there is only 12.5%, against an EU average of 24%
  • Italy 1: This is an interesting article on the spat with France, from an Italian political analyst. Looking backwards, he says the 2 countries are effectively washing the EU's dirty linen in public, something usually 'forbidden'. Looking ahead, he argues that this is a harbinger of how politics will be transacted within the empire. Which, he avers, will benefit from it.
  • Italy 2: See the Ambrose Evan Pritchard article below, in which he claims that some folk there are exploring a bilateral deal with the UK, to mitigate the impact of the Brexit on an economy which is already in the intensive care unit.
The UK and Brexit 
  • Richard North today: There is possibly only one person in the world who knows what Mrs May intends to do – and that's Mrs May. But it is just as possible that she herself doesn't know what she's doing – or has simply run out options. . . . That said, if I was forced to put money on the outcome, it would be the no-deal scenario – occasioned simply because Mrs May had failed to get the Withdrawal Agreement ratified, and parliament didn't have the wit to call a halt to the madness into which we're descending.  . . . Meanwhile we get endless prattle from the media about parliament introducing a motion to "block" a no-deal, a move which – if pursued – will indicate that parliament has failed to understand the limits of its own power, alongside the media's inability to appreciate the finer points of our constitution. As it stands, no-deal remains the default under Article 50, leaving open only three possibilities if it is to be prevented from taking effect automatically on 29 March. But  there is only one certain way to avoid a hard deal, and that is for parliament to ratify the Withdrawal Agreement when (of if) it is again submitted to a vote.
The UK
  • Apparently, the utterly hapless Jeremy Corbyn, having finally come out of the long grass on Brexit, has managed to seriously annoy all the constituent elements of the barely-held-together Labour Party:-
  1. The Far Left - Momentum et al.
  2. Labour Brexiteers
  3. Labour Remainers
  4. Moderate, 'centre-left' MPs, and
  5. Those party members and voters who want a second referendum.
And then there's his long-standing, unchanged views on Venezuela and its dictators. Is it any wonder that, in the polls, Labour still lags far behind the most incompetent British Conservative government in living memory? Mrs May surely can't believe her luck at having JC as leader of the Opposition. Of course, several of us predicted that he'd be a disastrous leader. In truth, this wasn't exactly difficult. Or clever.

The USA
Spanish
Finally . . .
  • I see that Bill Davis, journalist and ex-editor of Punch - has passed away. I met him once, in Tehran airport, after Iranair had given each of us the other's boarding pass. Nice guy, though he did accuse me of taking my Iranian secretary - actually my English wife - to the UK for a dirty weekend. Despite having a first class seat, he spent most of the flight in Economy, standing in the aisle and sharing the slightly hysterical laughter of those of us who were a bit stir-crazy, after waiting in the terminal for many hours because of a snow storm. As I recall, he was a tad worried about his caviar going off and very sceptical when I told him you could freeze the stuff. Probably quite rightly, for I later asked someone at Harrods and they were horrified at the very thought. I see that he wanted his epitaph to be: “He was fun.” Very commendable. Something else we've shared. But still a memento mori.
THE ARTICLE

Italy explores its own bilateral Brexit deal with Britain as its economic crisis nears danger level:  Ambrose Evans-Pritchard

Italy is drawing up emergency plans to safeguard financial stability and keep trade with the UK flowing even if there is a no-deal Brexit, if necessary through a bilateral deal between Rome and London.

The country’s insurgent Lega-Five Star coalition is increasingly worried that a mishandling of the EU’s Brexit crisis could push Italy's fragile economy into a dangerous downward slide and risk a funding crisis for its sovereign debt at a treacherous moment.

Premier Giuseppe Conte has told his Brexit Task Force to focus urgently on ports, airports, customs, and the handling of food trade, as well as the status of Italians living in the UK.

Palazzo Chigi, the prime minister’s inner machine, is exploring what Italy can do under its own authority to defuse the stand-off with Britain.  While this is relatively straightforward for issues such as citizens’ rights, it is unclear how it would work in trade and finance where the EU sets the rules.    

Both the Lega and Five Star movement have Eurosceptic roots and are irked by the Brexit strategy of the European Commission, seen as rigid, ideological, and potentially explosive.

“We want the closest possible bilateral ties with the UK and certainly don’t agree with any idea of punishment. You are our customer,” said Claudio Borghi, the Lega’s economics spokesman and chairman of the budget committee in parliament.

“Unfortunately we are not in charge of Europe, at least not yet,” he said.

It is a perilous time for Italy. The economy is in a protracted recession. Risk spreads on its 10-year bonds are again nearing the threshold of 300 basis points, the level where trouble has begun in the past.

The country’s financial system depends on the City of London for global funding of its bond markets. “Great Britain is in a sense Europe’s investment banker,” said Confindustria, Italy’s business federation.

While direct trade exposure to the UK is modest, this is highly misleading. The Milan-Turin industrial hub in North Italy is intimately intertwined with car plants and engineering companies in Germany that do feed the British market.

Ettore Prandini, the head of Italy’s agro-industrial federation Coldiretti, said there were fears that a hard Brexit could devastate Italy’s long-established food exports to Britain. The UK is the country’s third biggest market for food products after Germany and the US.

“It is absolutely vital that we get a good accord. We have made big investments in the distribution network in the UK,” he said.

Italy’s food and drinks sector is already in crisis. Sales of fruit and vegetables have dropped 12% over the last year due to cut-throat global competition.

“What worries us about Brexit is that exporters in the rest of the world will come in and undercut us. This is what happened after the Russia sanctions in 2014. The Turks grabbed our market share,” he said.

Coldiretti is concerned that suppliers in places such as South Africa, Kenya, or parts of Latin America will suddenly gain an edge in UK supermarkets.

If the UK were to opt for unilateral free trade to keep ports open in a no-deal scenario - as has been floated by Trade Secretary Liam Fox, at least as a temporary measure - it might lead to an irreversible loss of UK market share for Europe’s high-cost producers.

A confidential study by the pan-EU lobby FoodDrinkEurope estimates that Italy could see a 33% drop in wine sales in Britain in a hard Brexit.

The body said annual EU exports of food and drinks to the UK are €41bn, against €17bn flowing in the opposite direction. “The exit of the UK from the EU without a deal will constitute a lose-lose situation for the entire agri-food chain. The impact will be immediate and harsh,” it said.

It called on the Commission to prepare “unilateral contingency measures”, with light-touch customs clearance for up to 24 months, mutual recognition of certifications, and continued acceptance of licences for hauliers until the mess is sorted out.

Mr Prandini said he had been to see the president of the European Parliament, Antonio Tajani, to plead for a resolution of the Brexit deadlock.

“Tajani promised to do his best but the matter was beyond his control. He told me ‘it’s Juncker who is in charge of everything’,” he said, referring to commission chief Jean-Claude Juncker.

Italy’s total exports to the UK are €23bn annually. This is heavily tilted in favour of Italian producers. The bilateral surplus is over €10bn.

Confindustria said Italy could have trouble placing its debt if financial ties with London are damaged. “The risk is that financing costs will go up. Banks in the City have up to now been responsible for the rump of European debt sales,” it said.

The City is the principle conduit for global funds willing to buy riskier peripheral EMU debt. This is a comprehensive package not always understood by European politicians.

The City’s ecosystem offers investors derivative instruments for hedging the currency risk, interest rate risk, and insolvency risk, (through credit default swaps, etc) when buying Italian debt. These hedges are a sine qua non for Asian institutions, insurers, and wealth funds calculating fine margins on huge sums of capital.

If these services suddenly become less accessible at the end of March, Italy faces the higher likelihood of a ‘roll over squeeze’ and rising borrowing costs. The country has to fund €400bn of debt this year, mostly in the form of medium or long-term bonds.

The European Central Bank has been soaking up the entire net issuance of the Italian treasury for most of the last three years through quantitative easing. This programme was shut down in December. Italy is suddenly nakedly exposed to market forces.

The London Stock Exchange is moving 20% of its MTS Cash trading business to Milan in preparation for Brexit. This goes only so far in securing inflows of global capital.

Italy is disturbingly close to a fresh crisis. The prospect of recession lasting deep into 2019 has blown apart the budget deficit targets agreed with Brussels in November.  The country’s knife-edge debt dynamics are coming into sharper focus.

The social policies of the Lega-Five Star alliance - a universal basic income and a roll-back of pension reforms - will in any case cause a structural deterioration in the fiscal profile into the 2020s.

Rating agencies have yet to issue verdicts. Fitch Ratings will rule on February 22 and Standard & Poor’s on April 26. Both have negative watch positions and are likely to follow Moody’s in downgrading Italy to one notch above junk. That is a thin safety margin in recessionary conditions.

Investors may start to anticipate higher haircuts on collateral for banks. Italian lenders hold roughly €360bn of Italian sovereign debt. The International Monetary Fund said that every 100 rise in Italy’s 10-year bond yield erodes the banks’ core capital ratios by 40 points. This becomes a vicious circle, the doom-loop in EU parlance.

“With the deficit and the spreads so high, all it takes is a spark from the outside, however modest, and a crisis becomes all too probable,” said Carlo Cottarelli, the 7head of Italy’s independent spending review.

Italian industrial data released on Friday showed that output collapsed by 5.5% in December from a year earlier. This is the worst drop since the EMU banking crisis.

Every sector contracted: printing fell 13%; clothes, leather, and accessories fell 11.1%; plastics fell 7.9%; electrical equipment fell 6.4%; manufacturing, transport equipment, and metals fell 5.5%

Unemployment is inevitably creeping up again with a lag. The youth jobless rate has risen to 31.9% (Sicily 58%) or 15.7% for prime aged workers aged 25-34 (Sicily 50%).

A developed economy with full sovereign policy instruments in such a downturn would typically launch a fiscal stimulus of ‘shovel-ready’ infrastructure and investment projects worth 1% to 2% of GDP. It would restart quantitative easing. It would engineer a sharp slide in the currency. All three together would right the ship.

Italy can do none of these things within the constraints of the euro. It is essentially defenceless.

Monday, February 11, 2019

Thoughts from Galicia, Spain: 11.2.19

Spanish life is not always likeable but it is compellingly loveable.
            Christopher Howse: A Pilgrim in Spain
Spain
  • There's been a major hike in the national minmum wage here and it's fair to say that opinion is divided on what the consequences will be, with forecasts of job losses ranging from 40,000 to 125,000. See here.
  • Would you believe . . . . Spain 's right wing parties - the PP and Ciudadanos -  say the Prime Minister's plan to appoint an intermediary for talks with Catalan separatists amounts to 'treason'. Well, they are losing votes to the far-right Vox Party. So are desperate.
  • Here's a very right-wing - and contentious - US take on the current state of Spanish politics, interesting for its equivalence between the fascists of Vox and the Trumpists.
  • So, Ryanair and the Vigo council have fallen out and the airline has picked up its bat and left the field  - to the detriment of travellers who used the city's airport for its national and (few) international flights. Including those to Dublin and London. Oporto, of course, will be a major beneficiary of this failure. Can there be a single politician in Galicia who doesn't know that having 3 small, uncompetitive 'international' airports is stupid? And is there one local politician who'll have the courage to come out and say they need to be amalgamated, in Santiago most obviously? The answer must be No in both cases.
  • Here in Pontevedra, the camino is marked in parts of the city by brass scallop shells embedded in the pavement. Hard to believe but the council has had to replace some of these after they’d been stolen. Surely not as souvenirs by 'pilgrims'.
  • I read this morning that 10% of the UK's high street shops stand empty. Well, in the little Pontevedra street I walk up to my regular bar the number is 25%. I'm not sure this is generally true of the entire retail scene but I can say that the only outlets here which seem to stay in business - indeed increase in number - are the jewellery stores. As I've said, we seem to have a disproportionate number of these and my suspicion is that some/many of them are fronts for laundering the proceeds of our huge drug smuggling business.
  • Which reminds me . . . One shop I passed in the centre on Saturday is now in at least its 3rd manifestation. Last time I passed it, it was a glossy place for laser depilation and fat reduction. Now it's another phone company store.
  • I've mentioned the encroachment of wild boars into Spanish cities. Up in Álava, the council has licensed archers to cull their local pests. Sitting in trees to do so. The archers, not the council . .  
  • My old sparring partner -Alfie Mittington - must have dusted down an old map - I'm sure he's not aware of the existence of Apple or Google Maps - and has realised that Caminha is on one side of the estuary of the Miño/Minho and La Guarda on the other. How, he asks, do the camiño/caminho pilgrims get between the 2, if they can't walk on water. Well, I'm not totally sure but I suspect they might just get the ferry that ploughs between them very regularly.
The EU
  • The best comeback to Tusk's “special place in hell" comment was from Yanis Varoufakis, the former Greek minister: It probably looks very similar to that reserved for those who designed a monetary union without a proper banking union and, once the banking crisis hit, cynically transferred the bankers’ gigantic losses onto the shoulders of the weakest taxpayers.
  • The economy: It's really beginning to look like the eurozone is on the brink of another crisis, as growth stalls for the 3rd time in 10 years. Last week, the Commission warned growth will slow to 1.3% this year, down from 1.9% in 2018. This is a very abrupt downgrade – and there could be more to come. . . . The other worrying feature about the eurozone economy is the extraordinarily uneven spread of growth across the region. From the 60s onward, living standards within nations that went on to establish the single currency were broadly converging. Yet, since the euro was formed in 1999, a gap has re-emerged.  Average per capita incomes among “southern” eurozone members are now just 75% of their “northern” counterparts, down from almost 90% in the early 2000s – reflecting how the uniform exchange rate has boosted competitive nations, while hammering others. That’s why youth unemployment is over 30% in Spain and Italy and almost 40% in Greece but just 5% in Germany. . . . There is one fundamental truth - The eurozone is an unsustainable construct – just one bad election, one geopolitical event, one sovereign downgrade, one eurozone bond crisis away from a “hell” of its own. 
  • Italy and France: Here's a very positive take on the latest - severe - spat between these founding members - The real winner of this dispute is Europe. Hmm.
The UK
Spanish
  • There was a report in a local paper about a couple making love in a public place. Interestingly, in Spanish, they weren't just making love but 'sustaining/maintaining' it.
English
  • Odd Old Word: Fleshquake. A tremor of the body. Shame we lost this one.
Finally . . .
  • There used to be something in England called The Ugly Club. Imagine being turned down for membership of that . . .
  • I managed to solve my Apple-updates problem by deleting the 2 relevant apps - both from Apple and pre-installed on my new laptop - and then re-installing them. All because I had to change my Apple ID, it seems. And what a calvario that was!