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MICHAEL WHITE: Europe prepares for its showdown summit

Michael White suspects the summit at the Europa Building at the end of the month could be a stalemate Photo: PA - Credit: PA Archive/PA Images

MICHAEL WHITE is on the hunt for solutions as Europe prepares for its showdown summit.

Looking at all the problems crowding in on Brussels, Ed Conway, savvy economics pundit for Sky News and the Times, suggested that what the EU really needs now is its own Donald Trump, a disruptive force strong enough to dislodge stale thinking and save the eurozone from its own rigidities. And that was before Labour’s Keir Starmer talked Jeremy Corbyn into a new soft Brexit amendment so subtle it baffled everyone.

Steady on there, Ed! Conway is a shrewd analyst and he makes a good point about stodgy thinking among Europe’s embattled political and bureaucratic class as we head towards a likely stalemate summit at the grandiose Europa Building on June 28-29. Don’t forget, a feeble outcome wouldn’t just stall over Brexit – a sidebar distraction for the 27 – but those other problems over budgets, immigration, austerity and populism, all EU vultures flapping home to roost.

‘The EU is in existential crisis, everything that could go wrong has gone wrong.’ Who said that? Not Jake Rees-Mogg, the workers’ friend, or Liam Fox, champion of quick and easy trade deals with Trump’s America until Monday when he had to play Mr Macho over those self-harming steel tariffs the scattergun US is imposing against allies, the EU, Mexico and Canada, as well as China.

No, the existential warning came from George Soros, billionaire second referendum ‘plotter’ (© Daily Mail) and Hungarian ‘traitor’ (© Viktor Orban), no one’s idea of a Brexiteer. Now is the ideal time to reform the EU, so that the Brits would want to stay, Soros said in Paris, a warm-up speech for the launch of pro-Remain’s Best for Britain campaign.

But does the situation cry out for a disruptive ‘EU Trump’? Don’t we have a queue of mini-Trumps heading for the summit already, a queue longer today than when Ed Conway penned his column for the Times last week? We do. On Sunday a ‘Slovenia First’ populist party more-or-less won power, headed by Janez Jansa, a Twitter-activist and ex-PM who was jailed for bribery in 2014, a man who campaigned on immigration in the manner of Hungary’s Orban.

That adds Slovenia to the growing list of uncomfortable dinner guests at the Brussels summit. Poland, Hungary, Austria – whose populist regime takes over the rotating EU presidency this month – Britain (which only stays for the soup) and of course the new regime in Italy, eager for a fight. No wonder that I recently heard a senior Whitehall official – trying hard to be positive about Brexit – say that France and Germany may soon realise they share more values with us.

The only positive development for Team Europe since the Conway Disruption Doctrine is that Pedro Sanchez’s post-Rajoy regime in Madrid is pro-EU and (like all Spanish governments since the return of democracy) keen not to be bracketed with those unhappy-go-lucky Italians. If Brussels plays it smart and discreetly helps steer Sanchez back into dialogue with his stroppy Catalan separatists more good may come of it. It’s a big ‘if’ on the evidence of recent exchanges with Rome, and Sanchez too must tread a delicate path or risk alienating his pro-Spain majority.

Meanwhile there is Emmanuel Macron, currently doing better in his chosen fight with his domestic opponents in the rail unions than I predicted, certainly better than Chris ‘Failing’ Grayling has been doing closer to home. Ed Conway singles the French president out as the nearest thing the EU has to a ‘disrupter-in-chief’ but his plans for deeper integration of the eurozone – the logic of its present plight – have met with a limp response from Berlin since last September’s enfeebling election.

In the Guardian that staunch European, Tim Garton-Ash, reports that when Macron received the Charlemagne Prize in ancient Aachen (surely as premature as Obama’s Nobel?) he reminded his largely German audience that he was tackling the French public spending ‘fetish’ and other tough reforms before urging them to address their own ‘perpetual fetishism for budget and trade surpluses’. Angela Merkel gave it ‘two perfunctory handclaps’, says TGA.

Ouch all round. But those German surpluses, achieved via an artificially low exchange rate (the euro) and domestic austerity which is the enforced on the uppity Greeks and Italians, are a source of legitimate resentment in Athens, Rome and – much more important – Trumpista Washington, especially when coupled with niggardly defence spending and any sign of emollience towards Russia.

At the weekend Merkel bestirred herself in an interview with the Frankfurter Allgemeiner Sonntagszeitung to move slightly towards a eurozone budget and a European Monetary Fund (EMF). It would help struggling EU members with both long-term loans and short-term credits – but at the price of structural reforms and supervised budget discipline. It fell far short of Macron’s ambitions – 30 billion euros against ten times that amount – but went far enough to guarantee resistance from the Five Star-League populist coalition in Rome which is looking for a fight, if only a fake one.

Brexit’s putative cousin, ‘Quitaly’, is just talk so far (probably). The coalition wants to tax less and spend more, to expel migrants, reverse pension reforms and be nicer to Mr Putin. But if Italians have suffered under the euro – no real wage increases for 30 years – they will suffer more by leaving. So would we all. Fortunately most want to stay. Perhaps they should back Macron’s eurozone reform plan against Merkel. Or is that too subtle for professional provocateurs and impossiblists?

Where does Britain feature in all this? Not a lot. The Foreign Office, much diminished by successive prime ministers, talks a good post-Brexit game about maintaining Britain’s ambitious global role by working harder and being more selective – much as the Scandies do – in the international goals and campaigns it pursues. ‘We belong to 80 organisations and are only leaving two,’ they say, while admitting that 65 million people do not have the clout of a 500 million bloc in an age of macho power politics, Trump vs Xi.

The FCO clearly hopes to recapture turf and budget from DexEU after Brexit, possibly from DFID too. The Treasury, conspicuously quiet in recent weeks, is hoping to steer No.10 into cutting some sort of deal with Team Barnier over mutual access, regulatory alignment etc for goods, but not services. The Bank of England fears Philip Hammond may also sell the pass on rule-taking over financial services, a disastrous outcome when the City is the dominant player in Europe – as few UK industries are.

Few insiders dispute that morale in Whitehall is low as officials loyally struggle to implement a Brexit strategy that most privately believe is already proving harmful to British interests, whatever the tabloids say about ‘Booming Britain’. They point out that in three important decisions in the Trump-Brexit era, on climate change, the Iran nuclear deal and the relocation of the US embassy in Israel, Theresa May’s government has sided with ‘Uncle Jean-Claude, not with Uncle Sam’.

Demoralisation (‘intellectual stimulus is what keeps people going’) or disaffection may explain why intrepid Sunday Times man, Tim Shipman, got hold of a lurid scenario for a ‘no deal’ Brexit. New European readers will not have been shocked to learn that the Port of Dover would collapse ‘on day one’ – even in the second worst version of what might happen – and that food shortages would emerge in Scottish and Cornish supermarkets within days. Medical shortages might take a fortnight.

Official briefers responded as they do. Shipman’s report was based on papers (‘locked in a safe’) that were merely drafts, much work has since been done to prevent the ‘completely false’ talk of a domesday outcome for hard Brexit. Iain Duncan Smith called for officials with ‘courage and imagination, not frightened rabbits’. Jake Mogg opined that there is nothing to worry about. Twitter spoke of betrayal. But officials take their cue from elected leaders and leadership’s absence is not confined to Failing Grayling’s rail network or the cabinet’s conspicuous divisions on immigration (Sajid Javid deviating from May’s intransigence on skills and students) and that eternal third runway at Heathrow. The foreign secretary once promised to lie down in front of the bulldozers. Is this an opportunity too good to miss? No, he’ll break it.

So the collapse into bankruptcy of Carillion is not this year’s only systemic failure. Both PM and chancellor are back with negative scores in the ConservativeHome website ratings, now topped by Michael Gove, whose portrayal as a treacherous windbag in BBC comedy show Tracey Breaks the News failed to enrage Tory activists as much as her sly sketch about Jeremy Corbyn inflamed the Labour leader’s base. Tory donor, Crispin Odey, is calling for Gove to displace May and deliver a proper Brexit.

I do not see it happening, the risks are too great, though MPs and the CBI are very restless again. May has decided that the gridlock in the parliamentary timetable is now so bad – so many bills, so many policy papers overdue – that she must stage her showdown over the EU Withdrawal Bill with the peers next Tuesday, one eye on the EU summit, I expect.

Enter, stage left, Corbyn’s baffling amendment which would give the UK ‘full access’ to the single market and ‘shared institutions and regulations’, but not the actual single market that peers and rebel Remain MPs, Tory and Labour, seek. By rejecting the Lords’ Norway/EEA amendment the shadow cabinet guarantees its defeat because few Tory rebels will back a Labour plan. A feeble fudge for party unity? Cynical sabotage? Collusion with No.10? Briefed on Tuesday night to selective media (never a good sign) it was not immediately clear. Starmer sounded unconvincing on Wednesday’s Today programme.

My hunch remains that May will suffer a couple of flesh wounds next Tuesday, boxed in a little tighter by the soft Brexit options, but that neither Tory Brexit ultras, nor their Remain opponents, will want to bring her down. It is not loyalty which stays the Brexit dagger, but fear of something worse: compromise with uncomfortable facts of life and their own inability to fashion Brexit options that can withstand the harsh light of day. That or Corbyn. The trade bill showdown over the customs union issue in October will matter more.

Two years from the referendum, exactly one year from May’s disastrous ‘strong and stable’ election flop – June 8, 2017 – ministers are still divided. In fairness so are the City, wider business and assorted analysts. ‘No deal’ WTO terms have been exposed as fantasy in the Trump-Xi era, but various mixes of single market/customs union/Norway/Canada/Starmer’s new bespoke are contested by experts. David Davis seems to have conceded his ‘max fac’ model of trust-and-technology at the Irish border won’t work. A prolonged transition as a rule-taker beckons for Britain.

What about Best for Britain’s second referendum campaign, or ‘plot’ as the Mail calls campaigns of which Paul Dacre doesn’t approve? YouGov pollster, Peter Kellner, reports that UK public opinion is slowly getting buyer’s remorse. An estimated million Labour Brexit voters are apparently having second thoughts, in contrast to Tory Remainers who are edging the other way. Couple that with the 4 million of the 17 million Brexit voters who failed to vote for May’s hard Brexit last June and the Grim Reaper’s steady cull (1.2 million oldies dead since 2016, 1.4 million young new voters) and we are close to a Remain majority, says Kellner.

What a difference a positive Labour campaign might make in such a situation, he adds. Indeed, but that’s another big if. And the politics are awful unless a huge swathe of Brexit voters – not Kellner’s micro-movements – decide to own their mistake of June 23. ‘Typical of anti-democratic Brussels, it always engineers another referendum to get the ‘right’ result,’ they would say.

And could we rely on Jean-Claude Juncker’s team to behave or even our own arch-Remainers not to make as complacent a mess of their campaign as they did last time? Tactless remarks about market turmoil teaching Italians not to vote for populists from EU budget commissioner, Guenther Oettinger, were not encouraging. Nor were ‘more work, less corruption’ advice from J-C J himself. It may all be true, but when were most mainstream European politicians – let alone the populist impossiblists – brave enough to be honest with their own voters, in cosy Luxembourg or soft-currency Berlin.

By the same token, when Will Hutton pens a passionate plea to reverse the self-harming Brexit folly, this unrepentant eurozone champion does not help his case by failing to acknowledge the zone’s own structural problems. Persistently impoverished regions are not confined to Britain. And what terms would Brussels impose on a British government seeking to reverse Article 50? Fewer opt-outs, I suspect.

In a speech to European lawyers in Lisbon last week, Michel Barnier was tactful, even gracious, about the progress made towards settling the Brexit terms. But he was frustrated about Britain’s persistent inability to state its own precise terms or ‘accept the consequences of its own decision’ to leave. And, while insisting ‘there is no ideology or dogmatism on our side’, he was as flint-hard as any Rees-Mogg on insisting that the integrity of the rules-based single market, as supervised by the ECJ. Rees-Mogg may want to open UK borders. France will not reciprocate. We are not ready. They know it. To cite a topical example Barnier invoked the EU’s new data protection system, the GDPR rules we are all having to deal with. The UK government is proposing that it stays inside the one-stop-shop provided by the GDPR’s data protection board.

‘It believes that this is in the interests of EU businesses.

‘But let us be clear: Brexit is not, and never will be, in the interest of EU businesses,’ said Barnier.

Chilling words for Britain, words not wholly free of ideological dogma either. French philosopher, Bernard-Henri Lévy’s one-man play, Last Exit Before Brexit, is playing in the Remain heartland of Knightsbridge and is unlikely to shift many votes in Sunderland. To make many Leave voters opt for compromise with Europe may need some mutually existential threat from Donald Trump, far more destructive, Ed Conway, than his property cowboy’s trade tactics have wreaked so far.

It might just happen, but the Brexit cliff – its falaise in Lord Lawson’s adopted tongue – looms over the Port of Dover.

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