The Week Ahead: 10 -16 December

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by Brian Daigle , December 11, 2017

 Brexit moves to round two. U.S. Congress heads towards budget battle. German government moves closer to a coalition. Judge calls for arrest of former President Kirchner. All in The Week Ahead.

UK: Brexit moves to round two amid confusion 

• The EU has indicated it is ready to sign off this week on the UK moving to the next phase of Brexit – free trade talks. This comes after the UK moved over to the EU position on several issues: the rights of EU citizens living in the UK, a Brexit divorce bill, and the framework for a resolution to the Ireland border question.
• However, the deal concluded with fuzzy language on the border issue. It promises “full alignment” of British and EU regulations in the event that a later deal does not take place on Ireland. But Northern Irish DUP MPs and the Republic of Ireland are already interpreting the arrangement differently.
• Brexit negotiator David Davis has added to the confusion, saying that all of these arrangements, including the divorce bill, are contingent on the UK receiving a free trade deal and the 2-year transitional period it has sought. Both the Labour Party and Chancellor of the Exchequer Hammond indicated, to the contrary, that the divorce bill would be paid with or without a final deal.

GRI take: In terms of next steps, there are calls for a “Canada plus plus plus” free trade deal (which members of the European Parliament as well as several academics have indicated is unlikely); or a bespoke “in-the-customs-union-not-in-the-customs-union” deal. The UK’s prospects for getting what it wants will suffer from the fact that EU negotiators are already frustrated by the intra-cabinet arguments over what the deal really means and what the UK should be willing to give up. There is also mounting pressure from non-EU partner states against the UK receiving more favourable treatment than them.

US: Congress heads towards budget battle while Republicans grapple with tax cuts

• Last week, the U.S. government avoided another shutdown by agreeing to extend government funding until December 22nd. This date was chosen by House Speaker Paul Ryan and House Congressional Republicans with the expectation that Democrats would not want to extend negotiations beyond that and miss the winter holidays.
• However, that means the Republicans and Democrats now have less than 2 weeks to form a budget that gets at least some Democrats on board. Even if the Republicans could pass a bill in the House with no Democratic defections, they’ll need at least 8 in the Senate to avoid a filibuster.
• Democrats have given a list of negotiating priorities in order to get their support, and have received a lukewarm or negative response from their Republican counterparts. Chief among their concerns particularly for House Minority Leader Nancy Pelosi is formalizing the protected status – soon to be revoked – of tens of thousands of undocumented immigrants who came to the United States as children, known as Dreamers.
• Additionally, Republicans and Democrats remain at loggerheads over raising spending levels, with Democrats calling for parity between any increase in defense spending with non-defense spending, and Republicans only supporting the former. Senate Minority Leader Chuck Schumer also struck a defiant tone, noting that Republicans would have to start real negotiations and that any shutdown would be blamed on them.

GRI take: Given hardcore conservative members in both chambers are likely to vote against anything, the main question is whether Democrats will play hardball in the next few days. Trillions of dollars in spending are at stake.

GERMANY: Government moves closer to a coalition

• Negotiations to form a government in Germany after the September elections have been the most difficult in Chancellor Angela Merkel’s 16-year career.
• A grand coalition arrangement was ruled out by the Social Democrats, forcing Merkel to negotiate with trickier smaller parties like the Free Democrats. An effort in October to bring them in to form a majority failed after the Free Democrats walked out.
• However, last week the Social Democrats decided after reelecting Martin Schulz as leader that they would be open to negotiations with the CDU to form a government in Germany, particularly as Merkel has indicated she would prefer another election than to rule by minority, which could further erode support among the SPD and raise the support of far right parties.
• Some divisions existed on this question, with many of the youth wing indicating that the constant compromises made by the left in these coalitions to hemorrhaging support. However, they were able to secure a list of demands to join a coalition, including the abolition of private health insurance, allowing certain family reunions for refugees, and extending aid to retirees living in poverty.

GRI take: While the CDU has balked at several of these demands, they did indicate support for negotiations with the SPD on another coalition. This week may spell an end to one of the longest coalition negotiating periods in modern German political history.

ARGENTINA: Politics roiled again as judge calls for former President Kirchner’s arrest

• Last Friday, news emerged that judge Claudio Bonadio had called for the arrest of former President Cristina Fernandez de Kirchner as well as former Foreign Minister Hector Timmerman under charges that they had both conspired to cover up an investigation into the 1994 bomb attack of the AMIA Jewish center in Buenos Aires in order to promote stronger trade relations with Iran.
• A previous case charging similar crimes was dismissed last year. Former President Kirchner, now a senator who enjoys immunity, has called the investigation a form of intimidation instigated by President Macri.
• One of the last major cases that called for the stripping of immunity of a member of Congress to aid an investigation fell short in July, when former Kirchner Housing Minister Julio de Vido failed to be expelled by the lower house by falling just short of the two-thirds vote necessary.

GRI take: History suggests that former President Kirchner will maintain her position and many of her political opponents have suggested this is exactly why the former president sought a senate seat. However, the midterm elections may have altered this conclusion, following President Macri’s coalition wins in all 5 major metropolitan areas, where he was able to strengthen his position in the Senate and House, though still without a majority in either chamber. The Congress is expected to receive a formal request from the judge this week, and congressional leaders have indicated they intend to debate the move.