Boris Johnson's weird proposal

The plan the British Prime Minister sent to Brussels today, regarding a withdrawal agreement with the EU, is a construction in the air. It’s not grounded on realistic operational premises, meaning, it is unclear in terms of its day-to-day implementation. And it plays with words and images, basically to show to the British voters this plan is different from the one Theresa May had agreed upon. It is not about substance and cooperation, it is about personal ambition and party politics in the UK. 

The EU leaders are not convinced. However, they played smart in their reactions to Boris Johnson’s proposal. They said they would look at it with the required attention. That’s a diplomatic way of saying we are not convinced but do not want to kill hope right away. Brussels does not want to give the British PM any chance that would allow him to blame the EU for a No Deal situation. It is true he will blame in any case, but without any definitive proof. 

Besides the confusing lines, the plan was presented almost like an ultimatum from the British side to the European one. That is not very smart. Key leaders in Europe will take such approach as an affront. Politically, Boris Johnson's tone calls for a response that might further complicate the Brexit issue. This is no time for “take it or leave it”, as the PM is saying. That is unwise, but not surprising as Boris Johnson is more interested in impressing the British nationalists than in finding a solution to his country’s future relationship with Europe. He is already campaigning. The bizarre Brexit plan he submitted today is part and parcel of his electoral strategy. Not much more than that.

The EC, Ireland and Apple: time to be reasonable

The European Commission´s decision regarding Apple is the new subject in the priority list of EU concerns. Two days ago, after a two-year probe, Brussels announced that the tax favours Ireland had offered Apple during many years had been judged illegal. It ordered the US multinational to pay tax arrears – just €13 billion plus interest, which adds another €1.4 billion to the bill.

Now, the government of Ireland says they do not approve of the EC ruling. They don’t want the money and consequently they have decided to seize the European Court of Justice for it to annul the decision taken by Brussels.

This matter raises a number of issues.

On the political front, there are several: it complicates the economic and trade relations with the US, taking into account that the US Administration itself has in the recent past imposed very heavy fines on EU companies; it questions the role of the EC on matters of national taxes, particularly when the country in question is at the periphery of the European economic space, has very limited resources and needs to attract investment to generate jobs; and there is the impact of all this on public opinion, at a time when the European citizens are drowning in deep tax waters, being taxed beyond the reasonable and seeing, at the same time, that the big corporations can do smart tax planning and pay amounts as low as 0,005% on gains, as Apple did in Ireland in 2014.

On the legal front, we can expect a long process. It will be a field day for lawyers and lovers intricate disputes.  It will particularly be interesting to study the arguments of each side. There will a new doctrine on multinationals, on national taxes, on investment advantages and benefits. It will be fascinating, if one is patient enough to follow the matter.

However, the best solution would be an arbitration. That´s what we have to recommend. There is a case, no doubt, but there is also an excellent opportunity to be realistic and even-handed.

EU recovery winds

In the EU, this month of July ends with a more optimistic note. At least, that’s what some analysts would like us to believe. They are now saying they see some signs that the worst of the economic crisis is past. That we might return to positive growth rates during the second half of the year.

If we look at the recovery in Ireland, we might come to the same conclusion. I am certainly very encouraged by the level of international investment the country is able to attract, which is a clear indicator that confidence is back and the overall macro-economic framework is getting the right shape. 

But one swallow doesn't make a summer. 

We can even forget Greece and its chronic development challenges. We cannot however be blind to the economic situations in Italy and Spain. These countries are not out of the woods. And they combine economic depression with political fragility. This is the worst combination we can have as one of the keys that opens the door of recovery is a strong government with a clear popular mandate and indisputable political legitimacy.