1989 Generation Initiative

Welcome back to the weekly brief of the 1989 Generation Initative! This week we will discuss Merkel’s attempts to forge a coalition, the EU’s moves against Poland and other recent developments.

On the 15th and 16th of February we will launch our next policy cycle “A New Contract: Reconnecting the EU and its Citizens” at the London School of Economics. Experts such as Philippe Legrain, Alberto Alemanno, and former Vice President of the European Commission, Joaquin Almunia, have already confirmed their presence. Are you coming as well?

New Year, Same Goals: ‘Groko’, Poland and Brexit

The start of 2018 can best be characterised as an attempt to tie up the loose ends and get rid of the leftovers of the previous year: Germany is still struggling to form a government, although a major breakthrough has been achieved; the stand-off between Poland and the Commission has not seen any signs of improvement; and while Theresa May and her colleagues in Whitehall still ponder about their collective position in the Brexit negotiations, Nigel Farage unexpectedly argued in favour of a second referendum.

The ‘Groko’ coalition: When Merkel did not manage to form a coalition with the Greens and the Liberal Party, she had no other option than to turn to Social Democrats of Mr. Schulz. Although he had repeatedly stated that there would not be yet another grand coalition (‘Groko’) between Germany’s biggest two parties, talks started after his own party gave him the green light. The talks are a true balancing act for both parties. The Social Democrats fear being in a government with the Christen Democrats again, will cost them even more support. Meanwhile, Merkel is under fire from the conservative wing within her own party, who blame her for the rise of the extreme-right AfD party. In other words, both Merkel and Schulz have a lot to lose. The compromise that was reached yesterday is a sign of hope nevertheless, as it shows an unwavering support for the European Union. Among other things, it signals a willingness to contribute more to the EU budget and it stresses the need for more Franco-German cooperation, while emphasising that “Europe has to take its fate into its own hand.”

Article 7 procedure: This week Bulgaria took over the rotating presidency of the European Council. The country’s Prime Minister, Boyko Borisov, used the occasion to argue his country should join the Eurozone and the Schengen area, as well as to promote further EU expansion on the Balkans. Indeed, his priorities do not seem to match those of the rest of the Eurozone, let alone the Union. Aside from these aspirations, however, Borisov also announced that a vote in the European Council on the sanctions against Poland will be pushed back to the end of 2018. He argued that a vote would give the EU “sleepless nights” and should be avoided. After it triggering the article 7 procedure last month, the commission has argued that the Polish government needs to step back before the end of March. If not, a unanimous vote of the European Council could strip Poland of its voting rights. Hungary already announced that it would veto such a decision, so it appears Borisov is trying to prevent the occurrence of a political stalemate during his presidency.

Exit Brexit? Although Nigel Farage suggested he would be in favour of a second referendum, as to ‘kill of the issue for a generation’, his intervention was seized on by the Remainers believing it would be a way to prevent the UK from leaving the EU. Government polls found a small majority of the British population (53%) would favour a second referendum, but it seems unlikely the government would go along at this point in time. After the first round of negotiations was concluded last December, talks about the future relationship between the EU and the UK are bound to start. On both sides of the Channel, there seems to be a realisation that a compromise needs to be found. The Spanish and Dutch finance minister together discussed the need for a Soft Brexit, as both Spain and the Netherlands have close ties with the UK. Meanwhile, treasurer Stephan Hammond told the EU that it “takes two to tango”, arguing that a trade deal that does not include (financial) services would be disastrous for both sides.

Europe’s Week in Links

  • New president of the Eurogroup: Mário Centeno from Portugal has succeeded Jeroen Dijsselbloem as head of the Eurogroup. On his way out, Dijsselbloem argued for reforms of the Eurozone. Or watch this LSE podcast.
  • EU Budget Boost: Juncker has called on the member states to increase their contribution to the EU budget, in order to make up for the UK’s departure.
  • M7 focus on migration: Ahead of the Council summit in March, the Southern EU countries – including France – deliberated in Rome about the challenges awaiting the EU. Prominent topics included immigration and budget reform.
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