A CONTENTIOUS YEAR AWAITS THE EU IN 2019

Source: Stratfor

2019 is shaping up to be an extraordinary year for the European Union. A few months after the United Kingdom leaves the union in March, the bloc will elect a new European Parliament. That election will be followed with the selection of a new European Commission and new presidents of the European Central Bank and the European Council. This will be the first time in EU history that posts and seats in so many key institutions have been filled in the same year. And while these changes will generate a new political order that will take the union into the next decade, they also will come as key states are appearing vulnerable and anti-EU strength is growing.

May 2019: The European Parliament

The battle for the EU institutions will start in May 2019 with the elections for the next European Parliament. Voting will take place across the bloc between May 23 and May 26, as every member state selects its representatives for the supranational lawmaking body. The Parliament is integral to the making of legislation in the bloc, so its ideological composition influences policy on the Continent. Polls suggest that the European People’s Party (EPP), the transnational group that represents the Continent’s main conservative parties in the Parliament will win the most seats, followed by the Socialists and Democrats (S&D) which represents center-left parties. But the polls also suggest that these parties will fail to get a majority of seats, partly because Euroskeptic and nationalist parties are expected to make a strong showing.

These elections will also have an impact within most EU countries. In theory, candidates for the European Parliament should have a supranational agenda, and voters are supposed to appoint their representatives with an eye on EU issues. In practice, however, many candidates tend to focus on domestic problems, and voters tend to use the elections to reward or to punish their national governments. As a result, the elections become a test of the popularity of governing and opposition parties across the bloc.

In Germany, the country’s mainstream parties are in decline and the governing coalition is shaky. The vote will show whether emerging forces such as the nationalist Alternative for Germany party (AfD) and the environmentalist Greens can continue to grow in popularity. In France, a poor performance by President Emmanuel Macron’s La République en Marche, or LRM party, would weaken him as he is trying to introduce structural reforms to make his country’s economy more competitive. In Italy, the vote will lead to a friction within the government’s ruling alliance, because the two parties in power- the populist Five Start Movement and the right-wing League will run separately, which will spotlight how their political agendas diverge.

June-October 2019: The European Commission

The parliamentary elections will also influence the appointment of the next president of the European Commission, the bloc’s executive arm. The new Commission will take over in November 2019 for a five-year period. According to EU guidelines, the commission president is chosen by the member states in a qualified majority vote, ‘taking into account’ the results of the parliamentary elections. Once the countries choose a nominee, he or she has to be ratified by the European Parliament.

But in 2014, the appointment was made for the first time using a process known as ‘Spitzenkandidat’, or lead candidate, meaning the commission president has to belong to the party that obtains the most seats in the European Parliament. The idea is to increase democratic legitimacy by establishing a direct link between the Parliament elections and the commission president. Europe’s two largest families of parties have already appointed their lead candidates. The EPP has chosen Manfred Weber, a prominent member of Germany’s Christian Social Union, and the S&D has selected EU Commission Vice President Frans Timmermans, a Dutch national.

But some countries argue that the Spitzenkandidat mechanism, which is not in any EU treaty, undermines the role of national governments in appointing the commission president, and some small political parties argue that the system gives too much influence to the big party families. France is one of the main critics of the Spitzenkandidat system. Macron’s centrist LRM party is not part of any of the European party families, and it stands to lose a lot with the lead candidate system. LRM is currently negotiating an alliance with other centrist parties, but even if there is an agreement, it will probably not be enough to win the election.

If the polls are correct and the European Parliament elections result in a legislature in which no group controls a majority, France will lead the push to appoint the commission president through a political negotiation among governments instead of the Spitzenkandidat mechanism. No matter who is in charge, the next European Commission will be supportive of European integration. But a conservative commission would probably focus on negotiating free trade agreements and reducing immigration from outside the bloc, while a progressive commission is more likely to focus on ensuring greater economic cohesion among the member states.

The allocation of portfolios, or areas of policy responsibility, within the European Commisdsion will be another subject for negotiations. Each member state has one commissioner, and in theory the commissioners represent the interests of the European Union as a whole, instead of their country of origin. But in practice, national governments want ‘their’ commissioners to be in charge of important portfolios such as foreign affairs and economic and financial affairs. In recent years, the trade portfolio has gained relevance as the union pursued free trade agreements around the world, and the commercial competition portfolio, which includes business mergers and anti-trust law, caught the spotlight because of its investigations of the tax affairs of large multinational companies.

October 2019: The European Central Bank

The eight-year term of Mario Draghi as president of the European Central Bank (ECB) ends on October 31, 2019, and the succession fight will be fierce. According to EU rules, member states elect the bank president through a qualified majority vote, but in practice the selection is the result of negotiations among the members of the eurozone. Under Draghi, the ECB introduced the bond-buying quantitative easing program and took interest rates to record lows. In 2012, he promised to do ‘whatever it takes’ to protect the eurozone, suggesting that the bank was ready to buy an unlimited amount of bonds from any eurozone countries in trouble (a promise that never materialized but contributed to the stabilization of the group).

Some of the bank’s policies were not well received in Northern Europe, where Draghi’s critics argued that the low interest rates had punished savers in the north and that the bond-buying program has rewarded irresponsible governments in the south. So far the bank has had Dutch, French and Italian presidents, and some officials in Berlin believe it’s time for a German president. This has led to speculation that Germany will push Jens Weidmann, the president of the Bundesbank and one of Draghi’s loudest critics, for the post.

But Southern Europe is resistant to him, and Berlin may decide not to spend too much political capital in defending his selection when so many important EU positions are available (German media recently suggested that Berlin will focus on appointing a German to the EU Commission presidency instead of the ECB). This could open the door for a compromise candidate, who could either be a different German national or someone from a smaller Northern European country who is easier to the south to accept. A Northern European national could undo Draghi’s expansionary monetary policies, but the new president’s choices will most likely be dictated by events rather than ideology.

November 2019: The European Council

Of all the positions to be filled next year, the least influential is probably the presidency of the European Council, which includes the heads of state and government of the EU members.

The president is in charge of leading council meetings and helping to achieve consensus among the member states. He or she also represents the European Union abroad and contributes to the bloc’s foreign policy. But, at the end of the day, council decisions are made by the national governments, and the president has little influence over them.

While the members of the council choose the president through a qualified majority vote, the election in practice is the result of a political compromise. Since the selection happens toward the end of the year, the governments in the European Union may try to use the presidency to preserve the balance of power in the bloc by awarding the position or region that was short-changed during the negotiations for the other roles.

Winners and Losers

The selection of the leaders of the key EU institutions involves finding a workable combination of satisfying national interests (as governments push candidates who are in line with their views) and of balancing power between the north and the south, and to a lesser extent, between the east and the west.

Next year’s picks will be particularly notable because the bloc’s main political powers will be on shaky ground. In Germany, the country’s mainstream parties are in decline and the governing coalition is shaky. The vote will show whether emerging forces such as the nationalist Alternative for Germany party (AfD) and the environmentalist Greens can continue to grow in popularity.  In France, the nationalist right will probably perform strongly in the European Parliament election and further erode Macron’s political capital. In Italy, its Euroskeptic government will probably reduce Rome’s chances of naming its people to high positions. Spain will try to make a comeback at the top of the EU leadership after a decade of crisis, but Sanchez heads a minority government with just 84 lawmakers in the 350-seat house and early elections may be called.

As the main EU powers weaken, others are emerging. Northern European countries led by the Netherlands have increased their cooperation in recent months. This group, colloquially known as the New Hanseatic League (made up of Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands and Sweden), is critical of plans to increase the sharing of financial risk in the eurozone and wants a stricter enforcement of EU fiscal rules. Facing an anemic Germany, these countries will insist on having a greater role in the selection of the new members of the main EU institutions. Central and Eastern European countries will also demand a greater presence in EU institutions, but disagreements over meeting EU recommendations on the rule of law in Poland, Hungary and Romania could make it hard for them to influence negotiations.

As a result, the European Union will face two simultaneous challenges in 2019. The first will be to prevent the selection negotiations from deepening disputes within the bloc. The second will be to deal with a more fragmented political landscape, as the mainstream parties will likely lose grounds, some of which are very critical of Continental integration. EU leaders will have to face these challenges while some key member states are politically fragile, while some countries are gambling with financial risk and while others are critical of the bloc’s federalist push. More importantly, an inward-looking union that focuses on its institutional disputes will probably be less effective in dealing with its external challenges, whether they be trade disputes with the United States, reforms of the World Trade Organization or China’s growing presence in Europe.