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Thursday, February 06, 2014

All hail Angela Merkel – No 10 goes all out for the Chancellor

Painting in the Royal Gallery - the Duke of Wellington with Field Marshal Blucher at the Battle of Waterloo - harking back to an earlier age of Anglo-German cooperation.
Angela Merkel will visit London on 27th February, in what will be, no doubt, a much hyped affair. Though the details are yet to be confirmed, in addition to meeting David Cameron and the Queen, Merkel could also “be given the rare privilege” – as the Telegraph’s Chris Hope put it – of addressing both Houses of Parliament at the Royal Gallery, perhaps in an attempt to rekindle the spirit of the early 19th Century when Anglo-German cooperation was the norm (see painting).


The last head of government to address the Royal Gallery was apparently Nicolas Sarkozy – then French President – in 2008. We suspect that for Merkel this is more a case of “business as usual” rather than “privilege” but in any case, it’s significant.

There’s no doubt that the Tory leadership hopes for encouraging signs from the Chancellor, following Francois Hollande’s predictable comments last week that EU treaty change “is not a priority” (which nonetheless generated headlines). Far worse for Cameron et al was that the German Foreign Minister Frank-Walter Steinmeier proved such hard work when he was here on Monday – holding a rather awkward press conference alongside William Hague, which included some tempered language on Treaty change (which even came close to contradicting the German Coalition agreement).

As we’ve noted before, the German Grand Coalition isn’t a deal-breaker for Cameron’s plans but it does mean a lot more work. In contrast to the Steinmeier visit, which was barely publicised (most lobby journalists - the parliamentary correspondents who often set the agenda in UK press - were unaware of the meeting instead basing their write-ups on the news wires, which arguably triggered even worse headlines for Hague / Cameron), the Government will go all out for Merkel.

As we’ve argued since the start, Merkel holds the key to a new settlement in Europe, so No 10 is right to step it up. However, at the same time, it must be wary of not being seen as desperate – Merkel is by far the most important leader in Europe, and the big Europe questions are decided by the Kanzleramt and even the Finanzministerium, not the Auswärtiges Amt. Nevertheless, the strategy cannot entirely rest on Merkel, also keeping in mind that this is her last term, with her potentially getting weaker closer to the end.

Merkel’s visit will mark the start of a fresh attempt by No 10 to court EU leaders (read: explain to Europe what in the world Britain actually wants to achieve apart from creating emergency headlines to appease backbenchers). It won’t be a day too early. 


Anonymous said...

OE - "Merkel holds the key to a new settlement in Europe"

No, she doesn't!!

We need our politicians (MPs and Lords alike) to start respecting our democracy.

We also need one of them to start acting like a Statesman and playing the EU at its own game.

The UK's best 'settlement' is to just leave. No more BS.

Free trade = YES.
Sovereignty = No.


Anonymous said...

OE - you have not made any mention of the article in the Telegraph this morning entitled "Dutch would be 'better off' if they left the euro".

We are in the same boat as the Netherlands.


Open Europe blog team said...

@ SC - we did mention it in our press summary today http://www.openeurope.org.uk/Article/Page/en/LIVE?id=19584&page=PressSummary and are currently analysing it. We may post a blog post on it later, once we've been through the study.

Freedom Lover said...

If Cameron is trying to appease his backbenchers in his negotiations with Angela Merkel, he's likely to fail. This is because they people who he should be appeasing currently are the Somerset farmers & villagers who are the victims of the latest bit of wrong-headed EU interference in British affairs - with the UK's Environment Agency (EA) acting this time as Brussels' agent. And getting Merkel's help in over-ruling Brussels on behalf of his fellow countrymen in Somerset should be one of his negotiations' aims.

The British EA have been seeking to meet the requirements of the EU's Habitats Directive, and the targets set under the EU's Natura 2000 programme, as well as the requirements of the EU's Floods Directive, which required the "restoration of floodplains". In effect, allowing the Somerset Levels to flood was one of the quickest and cheapest (for the UK's Environment Agency) ways of creating new "habitat" to satisfy EU demands. The flooding is the result of deliberate policy, mandated by EU law. These are "designer floods", made effectively to EU order.

Not least of the Cameron's problems - & Merkel's too if he, as he clearly should, get her assistance to punish Brussels (preferably massively financially) for their contribution to this flooding disaster - is the disposal of the spoil dredged up from the rivers that have been deliberately left by the EA to silt up. Under EU rules, the spoil can be placed on the bank side but if it is double-handled – i.e., moved again – it becomes controlled waste and must be removed to a landfill site at a cost of around £140 per cubic metre.

So, if Cameron wants to genuinely do something for his British fellow countrymen in general, & Somerset farmers & villagers in particular, he will get stuck in good & proper to the EU & its ridiculous Habitats & Floods Directives, & also its Natura 2000 programme. If he can persuade Mrs Merkel to join him in this vital operation, all may work out well & good. But if he can't, then he should - like a true Briton (which I hope he is, but fear he isn't) - be prepared to go it alone against the bureaucrats of Brussels! If that doesn't work, well then why not try Article 50?

Rik said...

You are in a different boat than the Netherlands.
The UK is one of the biggies and as such an exit would sign the outside world that the thing might fall apart.
Holland is much smaller but has on the other side some added advantages. It is an Euro member which makes the EU at this achillesheel very vulnerable.
And its relation with Germany is different. Germany can for its own domestic economic reasons not allow Holland to be outside the Customsunion as most of Germany's export and import goes via (mainly Rotterdam). And there is no realistic alternative for that it will take decades to set up sufficient capacity at other harbours and to create the proper infrastructure would even take much longer in densely populated Western Europe. The UK has as said other strong points (mainly by its size) but Germany is simply as much dependent on Holland as the other way around Only the size of the countries are different so the percentages would be different but absolute amounts will be huge and equal.

The report you are referring to is made for Wilders. Probably rather decent but anyway will be heavily attacked simply because of the Wilders link.
A lot will depend if he is able to defend it properly. Shouldnot be too difficult on most of the main points (keep mass 3rd word immigration out and avoid trnsfer payemtns to keep the EZ intact (I came at higher percentages 2 years or so ago to keep the thing properly functioning. Totally unrealistic percentages would basically give away all Dutch growth. So a compromise would take place, likely meaning still an awful lot of money and also meaning that things are still not properly stabilised.

I calculate it as follows btw: market rate for the South (unsupported etc. by ECB stuff) minus sustanable interest rate, divided over the FFANGs pro rata minus structural lower interest because of the size of theEZ compared to the much smaller size of most countries.
Huge amounts 1 1/2-2% of GDP.

The main thing: it is likely to create a lot of noise just before the EP election. And the noise is simply in whatever form it will take place almost certain pro-EUsceptic. Simply it refers to one of the weak points of the EU which they are trying to give an as low as possible profile. And that is pretty difficult if Wilders is on the other side also internationally. He gets by far the most press overthere.
And as said it is nearly certain always Eurosceptic. If the press agrees they finally will have seen the light according to the Wilders voters and confirm that Wilders always has been right.
Press doesnot agree it is a confirmation that they are in bed with the dodgy Euro elite.
And they have not found a method to tackle this Catch22. The EU will simply always look in degrees of crap either way.
Standard press stuff only works towards the EUphile population and they were already that and voting that way.
While at Wilders side it makes people vote that before didnot vote and people that before were borderline Wilders material. In other words there it makes a difference.

Anonymous said...

Angela Merkel, as German Chancellor, is not a Head of State. She is the Head of Government. The Head of State is German President Joachim Gauck.

Rik said...

This being Merkel's last tem makes things not so much more difficult but more more volatile imho.
The cabinet could fall apart, anyway it will likely get more unstable the closer it gets to next elections (and more than previously with the FDP).
Successor is still a big unknown.
Pressure from AfD (or possibly FDP when they find their marbles), how will this play out.
Like electoral pressure on the CDU (Blair effect, structural trend for Christian parties).
Almost certain there will be a few new chapters in the Euro drama, but when.
Anyway it is hard to see her party not being under a lot of pressure 2017/2018.

I would say it is rather possitive than negative for a reneg. Pressure means in the current EUrelated climate in Germany (as we see know) more critical noises and likely by that time some critical policies.

christhai said...

Let us love everyone, but let us love our own countrymen more.

Let us leave the EU.

Open Europe blog team said...

Thanks Anonymous, well spotted, have changed to "government"

Patrick Barron said...

Merkel still believes that Germany can have more influence inside the EU than outside. She is wrong. The EU is eating away at Germany's capital base, just as it does with all other members. Merkel still suffers from German guilt, equating the rational decision to quit the EU and the EMU will being anti-Europe. Again she is wrong. Germany needs to save itself and in doing so will save Europe. Most likely many other countries would not reinstate their own national currencies but would adopt the reinstated DM. The DM might replace the euro in most of Europe. This action would be one of cooperation and not coercion, which the modus operandi of everything EU.

Germany should join the UK and leave the EU.

Anonymous said...

Rik Holland is one of the original there nations Benelux that joined Germany France and Italy to form the common market, if they leave it won't be the size of nation or its economy that matters but the political fallout which would be seismic.

Anonymous said...


The UK and the Netherlands are very much in the same boat (although we do not share the same currency).

The people of the Netherlands can see the lack of democratic validation and accountability, they contribute to the EU (they are not a net recipient) and they can see that the EU and the Euro are just not going to work.

The Wilders report has been produced by a respected economics research house that does NOT receive any monies from the EU so has no vested interest as such.

As for trade wrt Germany it is in nobody's interest to damage anyone else as it will, no doubt, lower growth and will increase the political and economic instability within the EU and the Euro.

EU nations are getting more and more uncompetitive and do not have the flexibility to move quickly in the right direction. The EU is just a straight-jacket that prevents innovation and a quick time to market. It also adds layers of complexity due to issues such as self-interest and the underlying costly social model (a model which we all can see is unsustainable unless they put up import/trade controls to protect it).

A good example is the single market in services, such as legal services. This is at the bottom of the queue but should have been deregulated years ago. the benefit to Europe (and especially the UK) is immense - yet we have no progress.

"Live and let live", I say. Let us all see if the EU can do this without causing the next European war. This is the very war that they claim to have personally help avoid.

I have no confidence in the EU and reject its authority and vision. In fact, I fear for our children unless we can rid ourselves of it.


Rik said...

Fully agree on that.
If Holland leaves with some disturbing noises the Euro is imho a goner and the EU needs major restructuring. Re the Euro it looks like after a German or a French exit the worst that can happen to them. Italy leaving looks a lot less of a risk. At the end of the day it plugging the financial holes caused by that for which the market sees the present guarantees being 'good for their money'.
Holland leaving robs the EZ of its de facto second biggest guarantor. Hard to see the Finns not following on top of that.
And without guarantees it is Feuerfrei on the South and likley France as well for as long as it would still be in the EZ. With only the subsequently impotent ECB to keep things quiet.
In that respect a Nexit might even be more catastrophic than a Brexit.

That is why I say that Holland is the by far best ally for the UK re reforms. That is for the fall back position when things donot go in a normal way. Always a risk with these burocrats.
And the Hols are simply being moved by electoral pressure into that position as it looks now. And a lot of that pressure come via Wilders. That is why this report and how the rest of Swampykraut politics deals with it is highly relevant.
And it is moving into the right direction I havenot seen one proper technical objection against the findings of the report. Most are not technical and think that the mere association with Wilders will do the job. Which is doubtful imho.
And the other ones (a minority) are simply not proper (not intellectually consistent or BS in general terms).

I expect to be honest that Wilders will do a fine electoral job on this one. Last report he messed a bit up and he simply never makes the same mistake twice. Unlike nearly all traditional politicians who are strictly following Einstein's definition of madness (repeating things that donot work and expect a different outcome).
And as said that repeat button is frequently used by the traditionals. While painting Wilders as whatever is wrong isnot realy working seen the fact that he is now the largest party in Dutch polls and by a decent margin on top of that.
One should however keep in mind that Wilders usually has his eyes clear on the ball. And that is his ball (not the UK reneg one):
-getting a good EP election;
-gain extra in the general election polls;
-put pressure on the traditional parties.

Also a bad idea to make him an official ally. He is still especially abroad unacceptable.
However with almost half the electorate in Holland going for funny parties and pressuring politics into more and more an EU critical behaviour he will be an important guy to watch.
If he pushes the VVD (Rutte) will move. The CDA will have to move as Wilders got most of his voters from them. And even the left populist Socialist (second party in the polls btw) will become more EU critical (as there is substantial traffic between them and Wilders) and subsequently Dutch Labour will move as well as we have seen recently.

Holland will not move out of the Euro because of this but defending that lost war will become increasingly more difficult and very likely cause another dip in Euro-support.

The achillesheels of the EU. A set up that is meant to accomodate integration but at the same time as no proper rules are made make the reverse movement highly dangerous. Holland say 5% of the population, leaving would bring it in an existential crisis.
There is no electoral/public platform for all that stuff
Any real referendum is a high risk event.
And the Euro mess is put a) on top of the electoral agenda and b) for several electoral cycles. So the public can have their say.

Overall a huge strategic problem.
They will be vulnerable at at least one flank and very likely more than one. And back to Wilders he knows and is exploiting that.

Rik said...

Just reading a short summary of the report.
Looks like it is adressing all the painareas of current main stream EU politics.
-Immigration a huge votechanger and with as its posterchild the Balkans at the moment. And the first negative noises coming out as well.
Apparently Rums/Bulgs while being equally unemployed when the arived in Germany now have double that rate in a very short period.
-Centrally planned fiscal policies. A wellknown disaster for economies that different.
-Also puts the issue that at the end of the day the only thing that brings in the bacon is the Common market/Freetradezone. The rest is probably counterproductive.
-Transfer payments and getting guarantees on budgets another weak point. All of this is effectively hidden via creative bookkeeping (who do they think they are banks?).
hard to see any traditional politician would like to have a public discussion over that.

With with all that new crap the eyes are taken of the ball (things that bring home the bacon) which is making that market as strong as possible (like with services), however the EUs priorities seem to be somewhere completely else. In other words all the later added stuff effectively causes the EU to become less sufficient there where it has added value.