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May 14, 2018

Brexit Bulletin- May, 14, 2018. I Brexit Bulletin I The Telegraph

Brexit Bulletin
The best news and analysis from the Telegraph's unrivalled Brexit team in London, Brussels and beyond.
Ministers mull customs options as Damian Green talks up Max Fac
By Asa Bennett Brexit commissioning editor
Good afternoon.
Theresa May asked ministers to split up and examine her two customs proposals in greater detail. They are meant to have met in time for tomorrow’s cabinet meeting, so they can update their colleagues about how much more viable the customs partnership or “max fac” is looking.
Michael Gove, who is among the ministerial trio looking at the partnership proposal, told Andrew Marr on Sunday that he thought it “has flaws and that they need to be tested”. Meanwhile, Downing Street has been briefing every Tory backbencher on the available options, with Mrs May's chief of staff admitting that neither is workable in its current form.
Brexiteer suspicion of the customs partnership is well-known. So it may surprise some that Damian Green - an arch-Remainer - declared over the weekend that he thought max fac was the “most likely endpoint”.
As Mrs May's former deputy, he will be aware of much of the internal thinking about the available customs options. So is he trying to help the prime minister back away from her partnership plan in favour of something Brexiteers could accept? Quite possibly, although it cannot be forgotten that its acceptance depends on Brussels being prepared to go with it too.
Main story
TUC protesters dressed as Theresa May over the weekend
Hunt tells Boris to quieten down
Meanwhile, Jeremy Hunt told the Today programme that he felt it was “important” ministers discuss how to progress over Brexit “in private” rather than in public. He was “not very sympathetic” to those who have criticised Mrs May, all of which was clearly aimed at the likes of Boris Johnson - who last week blasted her customs partnership plan as a “crazy system”.
The irony has not been lost on Brexiteers that the Health Secretary may prefer cabinet dialogue to happen in private, but he chose nonetheless to make his rebuke in public.
 
Brexiteers believe they are in control. But their position is far weaker than they think
By Juliet Samuel Telegraph columnist
Each time it seems as if Theresa May is about to betray the Eurosceptics, she pulls back. But her conciliatory feints disguise the truth: the Brexiteers are in a weak position, and it’s getting weaker.
At the heart of this weakness is the agreement that Mrs May struck in December. Few Brexiteers except Mr Gove seem to realise it, but that was the moment when the Prime Minister gave up on everything they want. Her policy since then has been to drift until confronted, and then make a “strong statement” to convince the Eurosceptics that she’s still on board. Surprisingly, this seems to be working.
Mrs May surrendered on two major issues: the cash and the Irish border. Regarding the cash, she not only agreed to pay up (which hardly matters, since we would have paid up anyway if we had stayed in the EU); she also gave up on using the cash as leverage to secure a trade deal. Without any legal conditionality attached our EU payments, Britain’s biggest bargaining chip disappeared.
Then there’s Ireland. In her desperation for a “breakthrough”, the Prime Minister agreed to a form of wording that is wholly incompatible with her Brexit promises. The December document says that if Brussels doesn’t fancy our alternative suggestions for the Irish border, Britain will maintain “full alignment” with EU rules.
The “customs partnership” idea now preoccupying our government is, at best, irrelevant and, at worst, a smokescreen for effectively staying in the customs union, as Ireland wants. Simon Coveney, Ireland’s deputy Prime Minister, said as much on the BBC yesterday when he voiced support for an EU-UK “customs partnership”.


May is preparing to capitulate, and there is little Boris can do about it
Despite all of this, the Brexiteers act relaxed. When I asked Parliament’s chief Brexiteer, Jacob Rees-Mogg, why, he shrugged it off. The Irish backstop is a “meaningless” piece of paper, he said. Legally, perhaps. But diplomatically, that piece of paper is a set of shackles, and it’s one that the EU and Ireland fully intend to use.
The Brexiteers tend to repeat its comforting mantra: “Nothing is agreed until everything is agreed.” The problem is that Mrs May’s concessions have now made “everything” a very unpalatable option. And they cannot be sure that, given the choice, Mrs May will choose “nothing” over “everything”.
Unfortunately, without being willing to risk “nothing” – a “no deal” Brexit – we will not break the impasse over Ireland. The EU will stick to its guns, betting that our Prime Minister doesn’t have the stomach to walk out for real.
It is just about possible that it is wrong. Perhaps, in the autumn, Mrs May will undergo a personality transplant, jump up and shout: “Non!” God knows she will have left it horribly late to take her stand, but stranger things have happened.
The Brexiteers might huff and puff, but they have lost control of Brexit. With every day that passes, it gets harder to see how they can take it back.
 
The Italian catastrophe officials fear is coming to pass
By Peter Foster Telegraph Europe editor
Back in January a senior German diplomat covering EU affairs was in London for a conference on the future of Europe and the subject of a populist government taking power in Italy soon came up for discussion.
The German delegate, usually a mild-mannered fellow, made absolutely no attempt to gloss over the ramifications for Europe if Italy’s internet start-up 5Star Movement won the general election: “That,” he said, “would be a catastrophe.”
All the signs now are that that “catastrophe” is coming to pass. After a weekend of haggling, the leaders of 5Star and the hard-right League (formerly Northern League) indicated on Sunday they will make a deal to form a government. They could name their prime ministerial candidate as early as today.
For now, the markets are sanguine, but you do not have to peer too far into the future to understand why such an outcome so unnerves the stewards of Europe’s political project in Brussels, Berlin and Paris.
Until now, they have been able to reassure themselves that the populist ‘threat’ has been confined to the peripheries of political Europe.
In the east, Hungary and Poland have defied Brussels and Berlin over immigration and ‘rule of law’ issues, but are ultimately seen as small enough to be squashed back into line with budget squeezes and the threat of legal proceedings.
Meanwhile to the west, Britan’s vote for Brexit, while a much more economically significant and serious blow to EU credibility, could still be brushed off as the ‘final opt-out’ from a country that had never embraced the European dream anyway.
But if the Eurozone’s third-largest economy is indeed run by a 5Star-League coalition government, there will be no escaping the fact that - as the Italian president Sergio Mattarella warned last week - the “edifice of Europe is shaking”.
Such a government is highly unlikely to be stable, and given the inherent contradictions in the two parties’ interests and supporter-bases, it may not be that long-lived.
Take a look at Italy’s sharply divided electoral map, and it becomes clear that this government yokes together Italy’s poor and unproductive south (where 5Star dominated) with its and richer industrial north (core League territory) in an alliance that contains conflicting economic interests.
The two parties’ flagship economic policies - a flat-tax for The League and a guaranteed ‘citizens income’ for 5Star - appeal separately to those core constituencies at an estimated combined cost of some €90bn, or 6 per cent of Italian GDP.
Such extravagant campaign-trail promises - along with the repeal of a deeply unpopular pensions reform that increased retirement age at the cost of another €20bn a year - are fiscally impossible to deliver upon.
Not only would they smash the EU’s budget deficit rules, which the parties appear willing to observe in the short term, but as Mr Mattarella reminded the parties last week, the president has the power to strike down unfunded laws.
These realities leave Matteo Salvini and Luigi Di Maio - the respective leaders of 5Star and the League - with little option but to disappoint the voters with, at best, anaemic versions of what they originally promised.
Given such constraints, Mr Salvini and Mr Di Maio will - penny to a pound or, rather cent to a euro - have no political option but to direct their voters’ frustration at the austerity ayatollahs in Brussels and Berlin. And they will be pushing at an open door.
Italy is a deeply unhappy country. Eurobarometer opinion surveys show 80 per cent of Italians think their economy is bad and the number of Italians viewing Brussels favourably has halved to under 40 per cent in the last decade.
As well as austerity, Brussels will also be blamed for Italy’s immigration crisis, where Mr Salvini’s popular promises to “clean house” in Italy and deport thousands of migrants will, if enacted, shred any last semblance of an united EU migration policy.


Anger will now have a voice
Similarly, a 5Star-League government, when it takes its seat at the top-table of EU affairs, will not feel restrainted in voicing Italy’s long-standing opposition to Russian sanctions, further exposing Europe’s divisions when it comes to the big geopolitical issues. The Kremlin will be delighted.
These will be the obvious targets of a populist government will need to signal a break with the past. After a lost economic decade and with Italy is still only growing at 1.5% (the weakest in the Eurozone) those same opinion surveys show that some 78 per cent of Italians “don’t trust” their government.
It was that state of affairs that the League and 5Star were elected to rectify following a succession of bland, unelected technocratic governments beginning with the installation of Mario Monti during the 2012 eurozone crisis.
Indeed, it was to block Mr Mattarella from appointing yet another technical government that the two parties were galvanised to agree a deal.
Both leaders have put aside their personal prime ministerial ambitions to forge a chalk-and-cheese alliance, where the ‘who’ of Italy’s next prime minister is far less important than the ‘what’: as Mr Di Maio noted, what matters is that he or she, will be a “a politician, not a technocrat.”
And that is what will truly scare Brussels, Berlin and Paris, where Mr Macron’s hopes of rebooting Europe around a revivified Franco-German core now seem to be receding still further into the realms of fantasy.
For a decade since the financial crisis, the sullen fury Italian politics - a proxy in many minds for the failures of the Europe itself -  has been contained. A 5Star-League government, whatever its practical limitations, will now give that anger a voice.
 
In the news
 
CBI's warning shot: Theresa May will cause a "major setback" to British business if she does not urgently make a decision on Britain's future customs plans, the head of the UK's largest business lobby group is warning. Carolyn Fairbairn, the director general of the CBI, accused the government of pursuing "ideology over evidence" with its plan to leave the EU customs union after Brexit, risking thousands of jobs and business in the process. [Telegraph]
 
Gyimah's Brexit theory: Britain must return to its roots as a “science and technology superpower” if it is to make the the most of Brexit, the Universities and Science Minister has said. Sam Gyimah has called on Britain to rediscover its “spark of genius” and to turn bright ideas generated in universities and laboratories into commercial success.  [Telegraph]

The Telegraph
Evening, 14 May, 2018