EU leaders will be constrained by deepening divisions

Subject EU institutions. Significance The European Council’s choices of heads for the European Commission, ECB, Council and the High Representative for Foreign Affairs and Security Policy represent continuity. All are Western Europeans and all belong to centrist groups in the European Parliament (EP). However, the influence of the centre is declining in some institutions while that of peripheral groups is growing. Impacts Ursula von der Leyen's appointment as Commission president is destabilising to governing coalitions in Germany and Italy. Eastern and Central European countries believe that von der Leyen will adopte a more lenient stance on rule of law issues. Von der Leyen will support French President Emmanuel Macron's plans for European defence autonomy. Christine Lagarde’s nomination to head the ECB looks more like a political than a technical appointment.

Author(s):  
Josep Borrell

On 7 October 2019, Josep Borrell took part in his confirmation hearing at the European Parliament as the designated High Representative of the Union for Foreign Affairs and Security Policy / Vice-President of the European Commission for the 2019-2024 term. Both in his introductory remarks and in the ex- change with the MEPS, as well as in his final remarks, Mr. Borrell presented his vision for the European Union’s foreign policy. He called for European unity to develop a truly integrated Union foreign policy that corresponds to its stature as a global player and highlighted both challenges and opportunities for Europe in an international context that is more defiant than expected.


Subject ECB succession. Significance Mario Draghi’s term as ECB president ends in October. The race for his succession is open and closely linked to the May European Parliament (EP) elections and the resulting appointment of a new European Commission president. Impacts The governing council’s collegial views will smooth out the new president’s position. If there is further political turmoil, the new president will have to prevent a resurgence of credit fragmentation within the euro-area. If Weidmann is appointed, markets will reprice rate expectations upwards, as he is urging policy normalisation.


Subject The possible economic impact of the EU investment plan (the 'Juncker Plan'). Significance The EU investment plan launched by European Commission President Jean-Claude Juncker just over a year ago has made a slow start. This will encourage doubts that have existed since the scheme's inception about its operation and likely impact. Impacts Even by 2020, the EU economy will still probably require every effort to boost growth and make up for lost investment. Given continuing strong demand for high-grade bonds and equity investments, it should be possible to achieve the fundraising target. The plan could become a vehicle for Chinese investment into the EU: China is talking of 5-10 billion euros in future investments. The geographical distribution of funded projects could be politically sensitive within the EU. The plan could come under scrutiny during the UK EU referendum campaign; UK projects may come too late to have an impact before the vote.


Subject Proposed reform of the EU comitology procedure. Significance The little-known ‘comitology’ procedure plays a key role in EU regulation. In recent years, this process has been breaking down as member-state expert representatives in comitology committees often abstain from voting, forcing the European Commission to take controversial decisions on its own (and accept any blame for them). In response, the Commission has proposed reforms that would pressure member states to take a position on (and hence political ownership of) controversial regulatory decisions. Impacts Government representatives, interest-group representatives and corporate lobbyists will be most affected by comitology reform. Despite adding transparency and avoiding blame-shifting to Brussels, the reforms would probably not help the EU’s image with citizens. The European Parliament might demand -- as part of any final reform package -- an increase in its involvement in the comitology process.


Subject European Commission concerns about the rule of law in Poland. Significance The Commission has sent a formal Opinion to the Polish government, activating the first stage in the EU's 'Rule of Law Framework'. It expresses concerns about respect for the rule of law in Poland (a fundamental founding value of the EU), and in particular about the Polish government's handling of the crisis over the Constitutional Tribunal (TK, for Trybunał Konstytucyjny) Impacts Poland's EU position is likely to suffer as a result of the dispute, making it more difficult for it to achieve other political goals. Polish politics will remain unsettled and polarised, with the opposition using the Commission's Opinion to challenge the government. Legal uncertainty may translate into lower investment by individuals and enterprises dampening economic growth in the medium-to-long term.


Subject Polish/EU frictions. Significance The European Commission has taken the unprecedented step of warning of a "clear risk" of a serious breach of the rule of law in Poland. Many in Brussels and Poland hoped that the appointment of a young prime minister and a major cabinet reshuffle signalled a rapprochement. On early evidence, at least, they may be sorely disappointed. Impacts Poland’s position in the EU will become more constrained as the rule-of-law conflict is exploited in negotiations on unrelated issues. In openly censuring Poland, the EU sees an opportunity to prove its credentials as a bulwark against populism and extremism. If Poland is pushed too far, the EU’s actions may undesirably strengthen anti-EU sentiments in one of its largest member states.


Significance Proposed measures include a plan outlined by European Commission President Jean-Claude Juncker in September, wherein the EU would oblige technology firms to remove terrorist and extremist content within one hour of being notified by the authorities or face fines of up to 4% of their annual turnover. Impacts Social media firms will invest more in automated filters -- regardless of their drawbacks. Removing extremist online content may impair law enforcement work by limiting their access to relevant materials and networks. Terrorist and extremist outfits will adapt to evade filters.


Subject Prospects for the EU to end-2019. Significance Centrists will still be the dominant force in the European Parliament (EP), accounting for around 70% of its members (MEPs). Nevertheless, the fragmentation of the centre coupled with the rise of Green and Eurosceptic parties will limit the scope for consensus-based politics, potentially reducing the EP’s influence with the European Commission and Council.


Significance Member states have asked the European Commission to spend the next nine months developing a plan containing “high impact and visible projects” to rival the BRI. While EU efforts to counter the BRI are not new, the political will has never been as strong as it is now. Impacts China will seek to make the BRI more attractive, such as by launching more initiatives to tackle climate change. Europe will remain distant from the US position on China, unless Germany gets a Green chancellor or Macron loses the 2022 election. The deterioration of the EU's relations with Hungary and Poland over rule-of-law issues could push those countries closer to China.


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