Tuesday afternoon I replied to an interesting Tweet on an alleged deal between France and Germany on the immigration crisis.

Mish: "The problem is the CSU will not play along with Eurozone finances."

Let's take another look, starting with Wednesday morning comments from Eurointelligence. Emphasis is mine.

Angela Merkel and Emmanuel Macron have an agreement. Whether you can call it historic, like Les Échos did, is another question. The roadmap has yet to be endorsed by other eurozone countries, and is prone to cause Merkel more trouble at home. The CSU already has called on the coalition committee to discuss the Meseberg results today. Bild reports this morning that the CSU's leadership is extremely unhappy about Merkel's acceptance of important parts of Macron's agenda. We wonder whether this might be open up another fault-line in the coalition in addition to immigration policy.

What exactly did the two decide upon for the eurozone? No big-bang reforms, no fait accompli for other member states, but broad principles for the budget and the banking union. Yes, you can call it historic in that Merkel agreed on the concept of a eurozone budget with own resources to be used to strengthen economic convergence within the eurozone. This had been a big German No in the past. It is also historic in a sense that the two decided to embark on a reform that will require a treaty change. Over the last few years, proposals were often dismissed for that reason alone.

But the size of the budget and the details of how it will work have yet to be worked out. This is left to the eurogroup, who need to come up with a proposal by the end of the year.

We were struck by the main headline in FAZ this morning: Macron supports Angela Merkel in her refugee policies. Is this true?

Macron said he agrees with Merkel that both want to achieve a harmonisation of asylum law in the EU. And their joint declaration condemns unilateral and un-coordinated action that would endanger Schengen. This is a clear snipe at Horst Seehofer's declared intention to send migrants back, starting July.

We consider this a fairly meaningless statement since progress for an EU wide deal is held up by the refusal of countries to agree to binding quotas. France is one of them, and Macron has not shifted his position. And we doubt very much that the likes of Matteo Salvini and Seehofer will be impressed by the joint declaration. Seehofer said European efforts had failed, and that it was time for domestic solutions. And Salvini has previously talked about an exit from Schengen. We are not sure what problem this would solve for him. Most of Italy's refugees do not come across the Schengen border, and he could flood the EU with unregistered refugees if he kept that border open - a much more potent weapon than a Schengen exit.

Stephan Löwenstein has an informed comment in FAZ on the role of Austria in this debate, the country that will take over the EU presidency as of July. Sebastian Kurz is a political ally of Seehofer and of Jens Spahn, Angela Merkel's conservative opponent inside the CDU. Kurz and Spahn were spotted having a coffee in a public cafe in Berlin. Vienna is also outwardly relaxed about Seehofer's threat to send back registered migrants - even though they would be sent back at the Austrian border. But Löwenstein notes that the position of the German and the Austrian right are hardly compatible, since they have different material interests.

Vienna's main focus in its EU presidency will be the protection of the EU's external border, and in particular the strengthening of Frontex. This is obviously not a project that can be implemented within a short time. Even if the European Council agreed on a road map for reform of Frontex, we doubt it would be sufficient to bring the likes of Seehofer and Salvini on board. Merkel's problem remains unresolved.

Deeper and Deeper Holes

That was all too easy to predict.

With every move, Merkel keeps digging deeper and deeper holes.

Immigration problems US Style

In the US, Public Outcry Forces Trump's Hand: Executive Order Prohibiting Family Separation Coming.

Here's the fundamental issue behind the problem: "There is an unlimited demand for free benefits and services."

Open borders and free benefits do not mix. For discussion, please see Trump's Immoral Immigration Tactics: What's the Libertarian View?

Mike "Mish" Shedlock

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