Saturday, 30 July 2016

French ex-commissioner to lead EU Brexit talks, Britain cool on move


According to Reuters

“European Commission President Jean-Claude Juncker selected Gaullist Michel Barnier, a former European Union commissioner and center-right French foreign and agriculture minister to negotiate for the European Union in the expected Brexit negotiations.”

“Barnier, 65, was a commissioner from 2010 to 2014, in charge of internal market and services. He was involved in reforms of financial services and in the establishment of a European banking union with a single supervisor for euro zone banks.2

“Barnier presided over a frenzy of European financial rulemaking, not all welcomed by Britain.  More than 40 sets of rules were rushed onto the statute book, most based on global responses to the financial crisis.  [...] A hawkish European Parliament also insisted on caps for bankers’ bonuses, a reform Britain failed to stop.  [...] Barnier co-organized the 1992 Winter Olympics in his home region of Albertville and was a close ally of former Gaullist President Jacques Chirac, prided himself on working mostly in consensus with the City, London's financial center. He worked hard to improve his spoken English on the job.”

According to the Daily Telegraph


Barnier’s appointment is apparently “hardball”.  “As European Commissioner for internal markets in 2013 he attacked British eurosceptics for trying to negotiate a “pick and mix” approach to European financial services regulation while remaining in the EU.”

Bizarrely, the Telegraph writes:
“Diplomats have also suggested Mr Barnier he still resents Britain after losing his job after the French Government lost a referendum on the European Constitution.“

I’m not sure I understand the causal chain of events from French referendum to Barnier losing his job and somehow that being the fault of UKGov.  All the same, it’s too believable.

“He is a renowned defender of French protectionism and is hostile to the “Anglo-Saxon” free market model of capitalism.”

“He recently wrote a paper for Mr Juncker which called for an EU army.”

“He has insisted that Britain will have to accept freedom of movement - "without exception or nuance" if it wants to retain access to the single market.”

Opinion

If Barnier is a pragmatist, then he’s correct to suggest that European integration should be no hostage to Brexit.  If anything, he’ll be delighted that UK voted to leave, because the key obstruction to European integration has chosen to leave.  This means that Barnier is likely to show lots of “hardball” in the public arena, but likely to do quick, harmless, “no-brainer” deals when the media isn’t watching.

The “freedom of movement” argument is fast becoming a non-sequitur.  In July 2016, every new day carried another new headline about some mass killing going on somewhere in continental Europe.  I perceive “freedom of movement” argument being the straw man of the negotiations, picked most likely because it is the only pretend “red-line” that the Europeans are likely to agree on, only to be demolished at 23rd hour (or month, as Article 50 requires).

Remember the concept of “solidarity” in Europe?  Every member has a good incentive to break ranks and do a deal with its main export market - the UK - so they’ll only play ball with the European Union for as long as they can afford to do so.  They’ll stick to European law: they’ll lobby the Commission instead of negotiating their own deals with the UK (which, under EU law, they can’t do).  Far from making negotiations with Britain hard pour encourages les autres to toe the European line, hard negotiations could actually encourager les autres to realise that the European Union might be part of the problem.  In other words, the longer the European Union presents the straw man argument of “freedom of movement”, the risk of the European Union’s break-up increments.  At the point where member nations realise that the European Union prevents/obstructs sustainable trade, then the cessationist contagion that France and Germany most fear might become a reality.

Even worse for the European Union, its future depends almost the economic viability of the Eurozone.  Barnier is a fan of the Eurozone, suggesting a wrong-headed view that politics rules supreme over economics, and therefore not that pragmatist.  A single big shock to the Eurozone - say, the collapse of an Italian bank followed by the Italian government breaking the rules to permit a “bail-out” instead of first performing a “bail-in” - would be enough to render governance within the Eurozone zero.  Who would then want to be invested in Euros?

So how pragmatic really is Barnier?  His track record and political background suggests more of a typical Frankish dirigiste approach to government, the very style of government that maximises problems and the one typifies the current state of France: >50% GDP consumed within the public sector (paid for by whom?), high levels of unemployment, practical impossibility of hiring people (because how does one make jobs redundant in France?).

That Junckers appointed Barnier is also noteworthy.

Meanwhile, reported by Reuters, “EU leniency for Spain, Portugal signals softer economic path”, the European Commission appears already to have decided to use Brexit as a means to subvert its own rules.  So even if Barnier were a pragmatist, the European Commission appears to have sabotaged access to the most useful negotiating outcomes.

"The Stability Pact has died a second time," said Daniel Gros, director of the Brussels-based Centre for European Policy Studies, recalling that France and Germany had torn up the first version of the rules in 2003 to avoid sanctions on themselves.

Conservative German economics commentator Werner Mussler wrote in the Frankfurter Allgemeine Zeitung that the official justification made clear the rules were "empty talk" and would never lead to fines.

"Might these (eurosceptic) doubts not be due to the constant bending and breaching of the rules by the Commission?" he asked.

An appointment that looks like an attempt to punish the British for daring to leave the superior European Union, combined with a senseless avoidance of European rules, could well end up drive the Eurozone (and therefore also the European Union) to a point where few of its member nations can afford to be.

Has the European Union realised what a high-stakes game it has just started to play?

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