What game are Angela Merkel, Germany’s Chancellor, and Emmanuel Macron, France’s President, playing with Boris Johnson, Britain’s Prime Minister? Are they playing cat and mouse or have they opened the door to a new era of European detente?
With what seems unprecedented haste, the German Chancellor went out of her way yesterday to clarify that she had not said her British counterpart – as widely reported in the UK press- has only 30 days to come up with an alternative to the Irish backstop.
What the Chancellor now says she meant to say, was that theoretically a “solution” could be found in 30 days. But that she meant to say was that Johnson has until October 31 to come up with an alternative solution for the Irish border.
It was an unusual clarification, not what you would expect from the German Chancellor who is, or certainly has been over her reign, an inscrutable master of guile and not one to give anything away.
So, Merkel’s correction was an astonishing admission, which has given Johnson 70 days to come up with a new deal. That’s dynamite, and changes the mood of negotiations in an extraordinary way and shows that his walk away no deal threats have worked. For now at least.
What’s even more remarkable is that the EU’s monarch manque, the President of France, Emmanuel Macron, did not try to take Merkel’s lifeline away from Johnson at their Elysee meeting. Indeed, he backed the lifeline, saying he agreed with Merkel that an alternative could be found but of course he had to remind everyone that the backstop remained “indispensable.”
During his press conference with Johnson at the Elysee, he also reminded us that: “On m’a toujours dépeint comme le plus dur de la bande.” But then came the twist: Monsieur Hard Guy went on to add that there was little time left to alter the existing deal “substantively” .
To my mind, adding that “substantively” was a softening of his position: it meant that something could be done. And that’s all that was needed.
Traders know how to recognise an open door – or at least a chink – when they see one. The chink opened by Johnson’s European tour was enough to cause the pound to bounce up brightly against both euro and dollar: these traders make their living from reading the runes.
It’s no surprise that Merkel and Macron are changing their tune. They want a solution as badly as Johnson does. Their economies, and those of their EU neighbours, are in the doldrums while Italy once again is plunged into chaos.
Germany is close to recession while France is not far behind. New figures from the Purchaser’s Managers Index for the eurozone showed that the region had a tough time in August with industrial output falling for the seventh consecutive month.
The PMI index crawled up to 51.8 in August from 51.5 the previous month, and it is being held back by Germany which is not far off dipping into technical recession for the third quarter of the year.
According to the PMI, the region is close to stagnation and businesses reported a serious drop in confidence: jobs are down and company investment is down. When they meet next month, the ECB’s policymakers are widely expected to cut interest rates deeper into negative territory at its next meeting in three weeks.
The ECB is also looking at starting again its bond-buying programme by the end of the year while looking at other measures to help kickstart growth.
Pulling the plug on the UK is not going to help – Germany and Britain’s economies are now tied tightly together. The German authorities may say they can cope and are ready for a no deal, but behind the scenes their industrialists, particularly the car manufacturers, are sweating heavily. They do not want a no deal. Indeed, many in German business are putting pressure on Merkel to open more than a chink of the door to the British.
Nor does Macron need no deal, whatever he says or threatens. Britain and France are the biggest non-US military powers in Nato, both spending the most and, until now, being in the driving seat of military adventures on the international scene. Traditionally, the heads of the military of both sides of the Channel have worked extremely closely and amicably together, both on security and day to day operations.
Professor John Keiger, a former research director in the Department of Politics and International Studies at the University of Cambridge, pointed out in a fascinating article this week, that Macron might turn out to be Johnson’s saviour in more ways than one.
For ambitious Macron’s reign as France’s new Napoleon has not been as successful as he would have liked. France has its own huge internal problems with the “yellow vests” and the growing band of Frexit campaigners. It is increasingly isolated internationally.
Macron is also having a tough time with President Trump and, despite the fine diplomatic gestures, has tense relations with much of the EU, particularly Germany with which it vies for power.
As Keiger notes: “ Britain is at a crossroads in her strategic interests”, lying as it does between the continent and the Atlantic.
Perhaps that’s why Macron was not as bombastic as he might have been with Johnson.
As well as our deep military relationships, France has a big trade surplus with the UK – £9bn to be precise – because of its fine wines, foods and fishing.
Like Merkel, Macron cannot afford for the UK to crash out and has now opened the door to alternative solutions, despite his tough guy image. He wants his cake, his patisseries and his macaroons.
Now, Johnson has to find the sweetest cake of all to solve the Irish border problem. There is a solution staring him in the face, one that Theresa May should have suggested for three years ago. Its an ace in the pack for Johnson to play : the UK could ask to stay temporarily in the European Economic Area until long-term arrangements are worked out.