The weekly Vulcan View for the 25th to the 29th of June featuring analysis of the latest EU developments

KEY EVENTS THIS WEEK:

EUROPEAN UNION SUMMIT

Migration deal reached after marathon all-night talks
There was little time for rest on the first day of the highly-anticipated European Council summit which formally kicked off last night as EU leaders managed to strike a deal early this morning of the increasingly divisive issue of migration. Although leaders are scheduled to discuss a range of topics such as Brexit and EU reform, it was migration that overshadowed everything at the summit.
 
The meeting of EU leaders yesterday and today was billed as a make-or-break negotiation for the German Chancellor Angela Merkel. She is facing major pressure from her interior minister Horst Seehofer, who has effectively threatened to withdraw his Christian Social Union (CSU), which is the sister party of Merkel’s CDU party, from the coalition.
 
The summit began on acrimonious terms as the Italians, led by the still relatively new Prime Minister Giuseppe Conte, blocked every single conclusion from the afternoon discussions in an attempt to steer the agenda towards the evening’s migration debate. Rome had vowed to scupper any agreement unless other EU states did more to help with people arriving in first-line countries such as Italy.
 
In the early hours of this morning, leaders came to a tentative agreement that will firstly, see new ‘’centres’’ being established on European soil to house and process asylum seekers and secondly, to a put a plan in place to establish similar processing centres of ‘’disembarkation platforms’’ in North Africa even though no North African country has offered to co-operate on the matter. Any discussion of mandatory quotas was trashed after the Visegrad four quashed the idea of taking in refugees.
 
Leaders are also expected to discuss progress of Brexit and EU reform but both the EU and Prime Minister May have highlighted the lack of progress so far on Brexit, with EU Leaders emphasizing concern over the lack of a solution on the key issues of the EU-UK customs relationship and the Northern Ireland backstop. On the latter issue and in advance of the summit French President Emmanuel Macron and Ms. Merkel delivered a joint statement on EU reform, setting out proposals that include establishing a European Monetary Fund and a eurozone budget. President Macron hopes these proposals will better prepare the eurozone in dealing with shocks but opponents argue that these supports for struggling economies will undermine reform incentives.
 
For once, Brexit will not be the main topic of the European Council summit as these two-days was all about getting a deal locked in on migration. While Ms. Merkel may get some respite on the agreement reached early this morning she will hope to seal further bilateral or trilateral agreements with other EU states to take back more refugees in exchange for financial incentives.
 
While she may be able to count on allies in Paris, Madrid and even Athens in this regard, if she does not come back with sufficient substantive agreements to satisfy Minister Seehofer, she may very well face the disintegration of her government.  Such a result could lead to the trigger fresh elections, ending one of the most enduring premierships in the EU.     
 

BREXIT 
 
Tory ministers condemn businesses for Brexit warnings
The conservative party has for decades been seen as the party of British business & industry but the recent Brexit saga has slowly spoiled this image and it was shattered completely when one of most senior Conservative ministers condemned businesses for making Brexit warnings. Appearing on a BBC program last Sunday, Health secretary Jeremy Hunt criticised companies such as Airbus and BMW for making ‘’completely inappropriate’’ Brexit warnings over potential job losses and relocation.

In recent days, there has been a flurry of statements from some of the most prominent employers in Britain all calling for a soft Brexit. Despite the companies concerns and warnings over job losses, Mr. Hunt lambasted the firms, saying that they could weaken the UK’s negotiating strategy. In response to a question about companies’ concerns over Brexit, Boris Johnson, the foreign secretary, issued a less tactful “f**k business”.

These attacks come ahead of next week’s cabinet meeting at Chequers, where Mrs May and her allies will be pushing for a softer Brexit, whereby the UK would remain a member of the customs union and the single market for goods. Mrs May was careful to reassure businesses that her government will not ignore their interests and concerns over an economically catastrophic Brexit, saying: “We have listened carefully to the voices of business throughout the process. . . we will always listen to your voice”.
 

EU-USA RELATIONS

Trump’s trade war with the EU provokes problems at home 
US President Donald Trump has threatened to impose taxes “like never before” on the American motorcycle manufacturer Harley-Davidson, after it announced plans to move some of its production outside of the US. The relocation of Harley-Davidson is an embarrassing backfire for the President’s tariff strategy as the decision by the major US household name is in response to upcoming EU counter-tariffs on their products. The company was already in the process of closing a production plant in Kansas and opening a new assembly plant in Thailand to cater to the growing market in southeast Asia.
 
As always, the US leader was quick to issue his displeasure via twitter, tweeting “A Harley-Davidson should never be built in another country – never!” The US President also reiterated his threat to impose another round of tariffs on EU goods, this time targeting the automotive sector. News of the relocation plans is timely as it comes just after Mr Trump extended a White House invitation to the European Commission President Jean Claude Juncker to discuss trade.
 
While no formal arrangements for such a meeting in Washington between the two figures has been arranged, they will both be attending the NATO summit next month. The summit will make for an awkward encounter as Mr. Trump will more than likely criticise the lack of spending by his military partners while remaining allies such as the UK, Germany and Canada will push for the president to drop his imposition of tariffs
 

TURKEY
 
Erdogan maintains presidential grip of Turkey 
Turkey’s strongman, Recep Tayyip Erdogan, was earlier this week re-elected as President of Turkey, in a snap election that will consequentially see his government move from a parliamentary system to a presidential one, concentrating further power in the hands of Mr Erdogan, including the power to appoint public officials and intervene in the legal system. Opposition parties lamented the result, voicing fears that the country would now be subject to a one-man rule under Mr. Erodgan’s aspirational executive presidency. 
 
The President, who will now serve another 5-year term, has said that these increased powers will bring prosperity and stability. Erdogan’s supports, who voted him in with 52.5% of the vote, are pleased with the country’s growth over his 16 years in power and his positioning of Turkey on the world stage. However, the presidential and parliamentary campaigns were dominated by mounting concerns over the economy and the plunging Lira, as well as a reinvigorated opposition, led by Republican People’s party (CHP) challenger, Muharrem İnce, who won significant support by promising to restore checks and balances.
 
Mr Erdogan’s ruling Justice and Development party (AKP) nevertheless won 42.4% of the vote, and will have a majority in parliament, in coalition with the ultranationalist Nationalist Movement party (MHP). In his acceptance speech, Erdogan declared Turkey is “an example to the rest of the world”. With the President firmly back in control, he will begin to fulfil his ambition of celebrating the centenary of the Turkish republic’s 1923 foundation through massive investment prospects. Despite his desire to reach ‘’our country’s 2023 goal’’, a struggling economy and market fears may derail his dream project.

Compliments of Vulcan Consulting, a member of the EACCNY