Archive for the 'EU matters' Category


Picking up the pieces. Disintegrating Europe

Sunday, October 8th, 2017

For 160 million years, overlapping substantially with the age of the dinosaurs, the entire landmass of the world was gathered together into a supercontinent called Pangaea.  And for much of the last 30 years, many devotees of the EU have imagined a single supercontinental system of government, as first western Europe and then much of eastern Europe has gloopily coalesced under a twelve-starred flag.  Laggards were expected to be absorbed over time with improvements in governance or, in the very long term, with an increased recognition of its virtues.

It hasn’t worked out that way.  Britain has voted to leave the EU, destroying the aura of inevitability around ever-closer union.  At a subnational level, the stresses have been seen in other areas too.  Scotland came close to voting for independence in 2014 and a large minority are as enthusiastic for that cause as ever.  Catalonian nationalists are wrestling with the Spanish government to secure independence at the moment, the Spanish government having decided to take a far more confrontational approach to assertive nationalists pushing their luck than the British coalition government ever did.

Spain seems intent on a course that will provide it with either with a province that will at best be bitterly resentful and at worst ungovernable or with a new neighbour with a grudge against it that will last for decades.  Through mismanagement, a difficult but salvageable relationship now looks unsalvageable.

Three looks like a trend.  It’s a trend that might not have ended yet either.  After an informal independence referendum in 2014, Veneto is holding a formal referendum at the end of this month on a proposal for further autonomy.  So is Lombardy.  Opinion polls suggest that support for independence in Sardinia is at a level comparable with that in Scotland and Catalonia.  Flemish nationalism remains strong.  Pan-Europa is fissuring.

Why?  No doubt whole books will be written on the subject.  1066 And All That joked that the Treaty of Versailles was the cause of increased geography.  Certainly it was the spur for a bout of nationalist country-making. Numbers of states then stayed relatively stable while the pressures of outside forces (Russia and Germany before 1945, Russia and the USA afterwards) made co-operation between national groups essential.  With the collapse of the USSR, the defensive need for nation size lessened sharply, and as a result much smaller countries emerged in the early 1990s, feeling comfortable sheltering under transnational groupings like NATO and the EU.

After a 20 year pause, the process of fragmentation has restarted.  Perhaps it’s no coincidence that it has restarted in the west of the continent, far from a militarily resurgent Russia that is eagerly egging this fragmentation on.  It seems to reflect in part a lack of interest in wider international responsibilities that western European countries might be perceived to have.

Mere cultural difference isn’t enough – Welsh nationalism and Scania separatism, to take two examples, have not yet really taken flight.  I note that in every case where separatist sentiment is surging (bar Sardinia), the secessionist part is at least as rich as its host.

The strident nativism that has been seen at a national level in France, the Netherlands and Germany (to name three) seems to have been driven by the poor, the old and the uneducated.  Brexit seems to belong with this nativist trend.  Likewise, Lombard and Venetian demands for greater autonomy are led by the Lega Nord, kindred spirits to UKIP. On the other hand, Catalan nationalism, like Scottish nationalism, has dressed to the left.  There is more than one component to the centrifugal forces.

Paradoxically, it is potentially easier for unhappy regions within the EU to break away from their existing national boundaries.  The EU provides an outer framework or safety net to break the fall.  Scottish nationalists never found a good answer to the question of what currency they would use after independence, while the question simply doesn’t arise if everyone around you is using the Euro. 

But that is only true if the seceding state is allowed into the EU.  Again, Scottish nationalists struggled (ironically with hindsight) to answer the question of how it would deal with the disruption to its EU membership.  Would Spain veto Catalonia’s membership of the EU, and if so for how long?  Would other member states tolerate it doing so?

The EU has a tightrope to walk, therefore, between not interfering in member states’ own affairs and not irrevocably alienating potential future member states.  It has not yet found the right institutional tone in relation to Catalonia, failing to comment on Spain’s disproportionate use of force against citizens, though as events unfold it no doubt has further opportunities to tack according to the prevailing winds.  Meanwhile, Europe – including Britain – continues its descent into introverted identity struggles.

Alastair Meeks



If the PVV do it tonight in the Dutch election it will be another polling miss where the right was understated

Wednesday, March 15th, 2017


British punters stayed with the PVV until yesterday

The big political betting event today is the Dutch General Election where the betting prices have been out of line with the polling.

British punters appear to have been taking a view that the PVV will do better than the surveys suggest. At one stage Betfair had the PVV at a 71% chance – at 1pm that was down to 34%

I took Alistair Meeks’ post yesterday seriously and have a small wager that the PVV won’t do it.

Mike Smithson


Your guide to betting on tomorrow’s Dutch election

Tuesday, March 14th, 2017

The first of the big 3 elections in EU countries this year

After the last Ice Age, Britain and the Netherlands were joined by land. The Thames and the Rhine were part of a single river system.  Following an inundation caused by a megatsunami, the two were separated, ironically, under a torrent of water.

In 2016, European politics was hit by the megatsunami of Brexit, separating Britain from the rest of Europe.  Are there previously joined political currents that have now been separated by this?

Pundits have not been shy to suggest exactly this.  Marine Le Pen’s strong showing in the French presidential election, the new highs of the AfD in Germany and the long periods during which Geert Wilders’ PVV have led the Dutch polls have all been cited as examples of part of a wider nativist anti-immigration movement sweeping world politics.

The referendum vote to leave the EU and Donald Trump’s election victory were both unexpected by the betting markets.  Determined not to be caught out again, punters are putting their money behind the outsiders this time.  In France, despite every poll for many months showing that Marine Le Pen would be very soundly beaten in the second round by whoever she is remotely likely to be up against, she is shorter than 3/1 on Betfair at present to become next president.  In Germany, Angela Merkel is only just shorter than evens on Betfair to remain as Chancellor after the election in October.  And in the Netherlands, PVV are odds-on favourites to get most seats.

I don’t propose in this piece to look at the betting markets in France or Germany (though for what it’s worth I’m very happily betting against Marine Le Pen and for Angela Merkel).  Instead, I’m going to turn to the Netherlands.  Is the dyke holding out the PVV going to burst?

Very probably not.  The Netherlands operates a highly proportional system.  The PVV are getting nothing like 50% of the vote.  Their list of allies grows thin.  Even if they take the most seats in Parliament, they are going to struggle to put together a government.

The Dutch electorate, always quite fragmented, has atomised.  On current polling, the largest party, whichever that may be, will get less than 20%.  Meanwhile, six parties are regularly polling above 10%.  Up to 14 parties may get Parliamentary representation.

The polls have recently turned against the PVV.  For the last week, the VVD (the current Prime Minister’s party) has been consistently in the lead.  The PVV appear to be fading.

The election campaign has been galvanised in the last few days by a spat with the Turkish government.  It appears that bettors think that this will help Geert Wilders – the PVV have shortened markedly on Betfair in that time.

But this seems illogical.  The Turkish government’s ire was provoked by the Dutch government’s actions.  Floating voters unconvinced to date by the government’s readiness to deal with immigration will presumably have been heartened by this, which I would have thought would help government parties and hinder the PVV.

This is not to say that the VVD is home and hosed, far from it.  It’s anything up to a six horse race who is going to cross the finishing line first.  It’s certainly possible that the PVV will do it in the end.

But should the PVV be odds-on favourites? In my view clearly they shouldn’t.  The polls might be wrong or there might be a last minute swing but there is no reason why either of those considerations should necessarily benefit the PVV rather than another party.

From all this it follows that the Betfair markets look wrong.  The VVD, who are after all in the lead in all the recent polls should be favourites and probably shorter than the 2.66 which at the time of writing they were last matched at.  The PVV should definitely be longer than the 1.81 which at the time of writing they were last matched at.  In fact, those odds look roughly the wrong way round.  Bet accordingly.

Alastair Meeks


The consequences of what has already happened and the consequences of what is yet to come

Sunday, January 8th, 2017


Britain is Brexiting, Trump is triumphant in the USA, France is flirting with the Front National and in countries as diverse as Sweden, Austria and the Netherlands, the far right is doing more than alright.  Yes, yes, but what does it mean?

Much energy has been expended analysing why populism and the alt right are doing so well right now.  Rather less has been spent on considering the practical implications not just for individual countries but for the world as a whole.

The single most obvious consequence, from which many other consequences will flow, is that there will be less co-operation between Western governments in both the short and medium term.  Britain by definition is seeking to co-operate less with other EU countries by Brexiting.  The prospects for harmonious working relationships with other EU countries during the transition and for a while thereafter look bleak.  Meanwhile, Donald Trump’s agenda looks to set a radical discontinuity from that the USA has previously followed, with all the indications that he is going to take an aggressive “America first” approach that will set the USA at odds with its historical allies on many subjects.  Other hard right politicians and populists trade on putting their own country first at the expense of other countries that are perceived to be free-loading in some way, so if they are electorally successful they will be looking to reduce co-operation too.

So we are entering a period in the short and medium term where Western countries will no longer aspire to co-operate with each other to anything like the same degree as previously.  This reduced co-operation will lead to more competition between different Western states, some continuing to operate as a bloc and some now acting individually.  This will inevitably reduce the collective effectiveness of all of the Western countries.  So Western governments will weaken relative to other countries, over and above the weakening that is taking place as the rest of the world closes the gap economically on the West.

This is not a new trend.  With the EU having been internally divided for some time, the formalisation of one aspect of those internal divisions through Britain leaving the EU is merely a continuation of this decline.

This weakening will be felt most strongly among the more weakly performing Western countries under the most stress.  Both France and Britain have pretensions to global importance that are not backed up by their economic performance.  Their pretensions are likely to become steadily less sustainable.

So, other governments are by default going to become more influential.  We have had lots of commentary about how Russia is projecting its power, but it is merely the most visible (and probably not the greatest) beneficiary of this trend.  China will benefit most as the non-Western country with the largest economy and the greatest global reach.  India also will see enhanced standing.  Other countries will more effectively be able to play off Western powers that compete against each other.  Soft power just got a lot softer. 

All the time, Europe will seem less and less relevant as power shifts south and east.  This may be the moment that confirms when Europe falls off the pace of the very top tier of world civilisation.  If so, it may well prove to be the most important inflexion point of the century.

Just as Western governments will weaken relative to other countries, they will weaken relative to non-government actors. Large corporations will be more influential with individual governments, since those governments will co-operate less on developing a common front.  Tax avoidance and arbitrage is likely to rise as governments compete more overtly with each other to secure the tax revenues of large multi-nationals.  Similarly, the very wealthiest individuals who are mobile will be able to secure still more favourable treatment from states looking for taxes.  All other things being equal, collective tax takes of Western countries are likely to decline.

This in turn will make it still harder for European governments in particular to sustain their high tax high spend model of government.   This is unlikely to benefit the poorest in society, who rely on public spending.  Government is likely to prove an exercise in reducing public expectations of what government can afford.

Other non-government actors are also likely to benefit.  With declining inter-governmental co-operation, international criminals of all stripes are likely to find life easier.  Terrorists’ plans will be harder to track.  New criminal practices will be more difficult to spot.

All of these consequences arise before we get to consider the impact of increased informal trade barriers.  But that’s for another day.  I wouldn’t want to be accused of being too negative all in one go.

Alastair Meeks


Saved by der Bellen but what will the Italian referendum bring for the EU?

Sunday, December 4th, 2016

Another polling failure? A bit harsh when polls are banned for the final fortnight

Latest Italian referendum betting




What if Trump does prefer Putin over Juncker?

Saturday, November 19th, 2016


And where would that leave the Brexit process?

A weary-sounding Jean-Claude Juncker told students in his home state of Luxembourg last week that “we will need to teach the president-elect [i.e. Donald Trump] what Europe is and how it works”. In doing so, he erred badly, not for the first time. You can hear the derision dripping from the words, as, no doubt can the chief occupant of Trump Tower; not someone known for brushing off condescension. If Juncker is looking to build a relationship, it’s an odd way of going about it. Perhaps he’s miffed that Trump’s favourite European is the one who’s done more to break up the EU than anyone since Greece was let into the Euro.

But the belittling language is not the worst of it. Juncker has made at least two more serious errors of thought. Firstly, that Trump is interested in learning what ‘Europe’ is, and secondly, that he will like what he finds. The signs are that he’s not and he doesn’t, which should lead every European leader to ask searching questions of themselves and of their colleagues.

Trump was clear on the campaign trail about where he sees the main threat to the United States and the global order more generally, from radical Islam. He was also clear that as regards Syria, he was more interested in taking the fight to Daesh than in refereeing the war and awarding penalties against those acting badly.

On both counts, he has an ally in the Kremlin. Trump might well ask why the US is conducting sanctions against Russia over a secondary issue when the Eagle could be usefully working with the Bear on the primary one.

That ties into the question of the future of NATO. It was always designed as an anti-Soviet/Russian alliance and quite clearly still is. But is Russia still the geostrategic enemy for the US that it was in the Cold War? Leaving the short-term issue of Syria aside, isn’t the future challenge more likely to come from China – and isn’t that a potential threat to Russia too?

The question of contributions to NATO is an irritant but not a decisive determinant. It is the fortune of small states that their great power sponsors will back them almost irrespective of their own contributions because they’re needed as allies; it is their fate that their sponsors might turn their backs as their own interests change. Trump has clearly thought rather more coldly about America’s interests than any other president in decades and has determined, not unreasonably, that the world has changed since the 1940s. The likes of Juncker have yet to wake up to the fact that it is not business as normal.

Which has implications for the EU, where Brexit means that it’s also very much not life as normal. The eastern EU states and particularly the Baltic ones will feel vulnerable enough with the potential loss of US support and the prospect of US-Russian cooperation. The loss of one of the EU’s two big military powers combined with several years of internal wrangling are likely to heighten that sense of vulnerability further, in a way that proposals for a paper EU army won’t assuage (not that the UK’s forces are what they were).

But still, therein lies a new opportunity for the UK in the Brexit negotiations. Reaffirming a commitment to NATO and to continental security is not something that need come within the EU ambit at all. The two are, however, likely to go hand in hand: we are talking about almost exactly the same countries, after all. If the mood music can be kept peaceful, with those in the east in particular working to keep all sides talking, Britain ought to be able to get a decent deal. On the other hand, if the process stalls in acrimony and then falls off a cliff as the clock runs out, there’ll undoubtedly be questions about whether Britain shouldn’t follow the US out of any meaningful NATO commitment – and in such circumstances, rightly so.

David Herdson


The Brexiteers, Juncker’s fifth columnists?

Tuesday, October 18th, 2016


How the Leavers may have ultimately signed the United Kingdom up for the single currency, the Schengen agreement, an EU Army, and a United States of Europe.

Despite all the hype and bluster, the court case, and Parliamentary scrutiny, the United Kingdom will be leaving the European Union within the next few few years, and both will rapidly change because of Brexit.

Without the United Kingdom inside the EU stopping and vetoing more federalist ideas nor without our influence advocating pro business policies such as one of Margaret Thatcher’s finest acts as Prime Minister, the single market, the EU will become a very different beast to what it is now, especially amongst the Eurozone countries.

Whilst I’m not a supporter of the single currency, it always seemed flawed to me to have economic and monetary union without a full political union, and with the problems with Greece, I fully expect to see more integration in the EU, especially within the Eurozone.

But the EU doing very well won’t convince people in the U.K. to rejoin the EU, the other condition will be for the reality of Brexit to be seen as a mistake by the voters, or to put it bluntly, such as the fears of Brexit that Boris wrote about before he came out for Brexit actually happen.

Laissez les bon temps rouler might as well be the Leavers’ motto for a post Brexit U.K. but if the good times don’t roll then what? If Brexit turns out to be an economic mistake for the U.K., which translates to things like mass jobs losses, high inflation, and an economic slump then there may well be pressure to rejoin the EU. As an aside, it is far too early to conclude, one way or the other if Brexit has been an economic disaster or success, for every Sterling slide or a spike inflation, there’s some good news such elsewhere such as ING moving jobs to London. We will only have an idea once the final Brexit deal has been agreed if Brexit is good or bad for the economy.

We have some polling which already shows more Leavers regretting their vote than Remainers and with it looking like the poorest will be hit the hardest most by Brexit then that figure may very well rise.

In an ever evolving world some ideas that the U.K. public oppose today, they may very support in the future, for example with the possibility of Donald Trump in The White House, given Trump’s pronouncement that as President he wouldn’t automatically defend NATO allies under attack, supporting or joining a EU Army makes sense in those circumstances.

In any future deal for the U.K. to join the European Union, the U.K. will be the supplicant, so we won’t be able to dictate any favourable terms, and new members of the EU will have to sign up to things like the Euro, The EU Army, and the Schengen agreement, possibly all of them, and with the U.K. having already left the EU once, there maybe no future Article 50 option a second time. There would be a great irony if the Leavers end up helping the U.K. become a full member of a federal Europe, Jacques Delors, Valéry Giscard d’Estaing, Jean Claude Juncker, and Sir Edward Heath may end up thanking Leavers for their help in realising their dream.


P.S. – It won’t necessarily mean a future referendum on taking us back into the EU, all it needs a Pro/Rejoin the EU party to win a majority at a general election, 48% might not be enough to win a binary choice referendum but in the right circumstances, 48% can win a landslide under first past the post. Perhaps Leavers should start supporting electoral reform such as the alternative vote to stop this scenario unfolding.


Why I’m betting that it’ll be next July at the earliest before Article 50 is invoked

Friday, July 15th, 2016

Several bookies, including Betfair, have got markets up on when, if ever, Article 50 will be invoked. This is, of course, the formal process that would see the exit of the UK from the EU.

There’ve been two articles this afternoon that cause me to suggest that this will be later rather than sooner. Ian Dunt has an excellent explanation here while the ITV news piece in the Tweet above features the PM’s views.

She makes it very clear that there will be no invocation until there is UK-wide agreement and that, importantly, includes Scotland.

Even if that happens it is hard to see this being finalised before the end of June next year which is the mid time segment on the Betfair market. I’ve gone for from July 1st 2017 if at all.

The Dunt article, linked to above suggests that things could drag on until the next general election.

One of the smart features of the May’s cabinet choices is that it is prominent leavers who are handling this. My view is that this will make it easier to assuage the outers if things go on longer than expected. David Davis was talking about a much earlier exit before he got appointed but squaring the Nicola Sturgeon problem is going to be very tricky.

Mike Smithson