“Since a politician never believes what he says, he is quite surprised to be taken at his word.”
There are more elections being held around the world in 2024, and sooner than expected. We knew it would be better to focus more on geopolitics this year, but not to this extent.
Why Did Sunak Call an Election Sooner than Expected?
There has been some speculation that UK PM Rishi Sunak called a surprise early election to accept a great job opportunity at a hedge fund or one of the California-based tech giants, similar to Nick Clegg. The finance crowd knows that Sunak's net worth, primarily thanks to his wife and her family, is more than the total assets managed by most hedge funds. Similarly, the tech people wonder why their firm would hire a right-wing former senior Tory politician, post-Brexit, who will be far from the corridors of power under a new Labour government with a large majority.
While we're speculating, the notion that Sunak wants to vacate his premiership before the war in Ukraine widens to the rest of Europe seems as plausible as others. Thus far, the real election contest between the right vs. far right is playing out as we suspected, even if it's portrayed by the mainstream as Labour vs. Conservative.
France Government Bond Spreads Widening
The OAT/Bund (France/German government bond yield) spread has continued to widen since France's President Emmanuel Macron decided to call early legislative elections in response to disappointing results for his La République En Marche party in the European elections. Meanwhile, we've been busy subscribing to all the local French journals to set up the data feeds and do what we usually do best. Your recommendations are welcome. Let's begin with a long-running topic we hope to put to rest very soon…
Israel-Hamas
The United Nations Security Council (UNSC) resolution adopts Biden's ceasefire proposal in Gaza by 14-0 with Russia abstaining from voting. The US resolution passed ahead of the one Algeria was trying to put forward before the UNSC, ordering Israel to comply with the late-May ICJ ruling to end its military operation in Rafah.
Reading between the lines: The US was successful in convincing Israel to limit its Rafah offensive in exchange for intelligence on the whereabouts of hostages held in Gaza.
The Times of Israel reports that Channel 12 TV has seen a copy of Israel's ceasefire proposal on which Biden based his speech late last week. It reports that Israel has offered Hamas a permanent truce in hostilities before all hostages are returned. The domestic political situation in Israel is very fluid, so a lot can happen in the coming days which may surprise us. PM Bibi Netanyahu's main political rival, Benny Gantz, also quit the war cabinet over the weekend. Netanyahu has also been steadily closing the gap with Gantz in public opinion polls.
France Snap Polls
There's a lot of online commentary and analysis as to why Macron called early legislative elections, with the first round to be held on June 30, and July 7 for the second round. Olivier Blanchard's post on X has gathered a lot of attention:
It's unclear if Macron's decision is a smart gamble, or whether he was left with no option but to dissolve the French National Assembly. The French electoral system could help Macron contain the damage from his party's dismal performance in last weekend's European elections. Marine Le Pen’s far-right National Rally (Rassemblement National or RN) secured 31.4% of the vote in the European Parliament elections, while Mr. Macron’s centrist alliance, Besoin d’Europe (BE), scored just 14.6%.
Nobody's every lost gambling a high stakes bet on the EU..
Here are a couple of articles we've selected for some context:
Le Monde
Why Macron decided to call snap elections
A small group of close confidants quietly worked on this high-risk scenario. Allies of former president Nicolas Sarkozy pushed President Macron to take the plunge. Sunday's catastrophic score in the European elections precipitated the decision.
According to Le Monde, only 8 members of Macron's inner circle were consulted in the discussion to dissolve the National Assembly.
Former Paris senator Pierre Charon, a loyal support of former President Nicolas Sarkozy has claimed credit for persuading the president to call snap elections.
Snap elections in France: How it works, precedents, and consequences
Following the far-right Rassemblement National's sweeping victory in the European elections, Emmanuel Macron has decided to dissolve to the Assemblée Nationale for the first time since 1997.
French conservative party leader backs alliance with Le Pen, prompting backlash
The president of Les Républicains, Eric Ciotti, said he thinks his party should form an alliance with the far-right Rassemblement National. He then rejected calls to resign after widespread opposition among key figures in his own party.
Le Figaro
Legislative elections: the RN given largely in the lead, according to a survey.
20 days before the legislative elections, a poll credits the RN with 34% of the vote, far ahead of the NUPES and the Macron camp.
According to a Harris Interactive-Toluna poll released on Monday, the RN is credited with 34% of voting intentions for the June 30 election, which, according to the institute, would allow it to obtain a relative majority in the Assembly a week later, with 235 to 265 deputies. The macronists, with 19%, could only expect 125 to 155 seats.
In such an outcome, the President will be responsible for international affairs, while the Prime Minister and ruling majority in the Assembly would be in charge on the domestic front. Commonly referred to as a ‘cohabitation' government.
Euro 2024
Here are the betting odds for the most important competition in Europe this summer:
