EIM Politics Feb
Summary
The EP elections in 100 days may be momentous: a pivotal role in selecting the next Commission
President and ‘capturing’ the next Commission for the people of Europe. The chances of ALDE’s
Verhofstadt emerging as the centrist compromise – drawing some support from both Left and
Right - are non-negligible. Is Germany’s CDU tacking towards the sceptics? But the Eurosceptic
bloc in the Parliament is unlikely to be cohesive enough to shape policy. Chancellor Merkel’s visit
to the UK underlined – quietly - her central message that the process of re-enforcing economic
union by way of greater integration is a long way from finished. TheCityUK polling showed that
82% said they will give ‘a lot’ of thought to the potential impact on the UK economy of Brexit and
61% want to hear about possible consequences from business leaders.
(See our 2014 Timeline link for rolling update)
European Elections: The countdown has started: 100 days to go. Opinion polls are now
being aggregated to give an overall distribution of the 751 seats in the EP for the next term.
PollWatch 2014 predicts that the Socialists will win 217 seats (+23) and the centre-right European
People’s Party 200 seats (-74). Electionista puts the two main groups equal. With ALDE, both
pollsters agree these three parties would hold nearly two-thirds of the seats – down from 85%.
Eurosceptics may not be able to form a common grouping from seven states without support from
UKIP – sharply reducing their potential influence. But the German Constitutional Court’s scrapping
of the 3% threshold for German parties to gain an MEP may change this balance.
Commission President: This election will be different from the past as the new President of the
Commission must gain the support of the majority of MEPs – 376 votes.

The Socialists formally elected Parliament President Schulz as their Commission President
candidate but the British Labour Party stated they would not support him and the French
Socialist Party did not support him – at least initially. The absence of such support may be a
critical impediment.
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ALDE selected former Belgian PM Verhofstadt
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The EPP will vote on 7th March for their candidate and Chancellor Merkel’s support for former
Luxembourg PM Juncker puts him in pole position ahead of the other declared candidates,
Latvian PM Dombrovskis and Commissioner Barnier.

If none of these candidates can secure the 376 votes required, then power effectively shifts
back to the Council to propose an outsider who can. The IMF’s Lagarde is frequently
mentioned. However, it would be a major failure by the Parliament if it cannot agree on its
own candidate after this build-up. So the chances of Verhofstadt emerging as the centrist
compromise – drawing some support from both Left and Right - are non-negligible. (NOTE:
this author is a Lib Dem.)
The EP’s Constitutional Affairs Committee stated that the Commission President-elect should act
more autonomously than has been the case in the past when selecting the other members of the
EU’s executive body. They urge him/her to insist to Member States’ governments that “the
candidates for the office of Commissioner must enable him/her to compose a gender-balanced
college, and allow him/her to reject any proposed candidate that fails to demonstrate general
competence, European commitment or indubitable independence”. The committee asks that “as
many members of the next Commission as possible are chosen from among elected Members of
the European Parliament”. If the President (and several Commissioners) were chosen from MEPs,
then the Parliament’s effective influence in the next term would rise significantly. (For the UK, the
re-statement of the need for a European commitment may narrow PM Cameron’s options.)
EP President Schulz: "We will not allow more Europe with less parliamentarianism".
Speaking in front of the Council of Europe, Schulz stressed the importance of the cooperation of
national and European parliamentarians in order to ensure that the European executive is
adequately controlled and held democratically accountable. “Only through the cooperation of
national and European parliamentarians will we succeed in controlling the executive and holding it
democratically accountable. With the parliamentary week on the European Semester we have
opened a new chapter in the history of parliamentarianism. More than 150 delegates from 26
countries attended the last meeting. This is a strong sign that both sides want to promote
cooperation on democratic control of economic policy coordination. Our two institutions are natural
partners.”
CDU's draft European election manifesto more "Eurosceptic"? The CDU manifesto is said to
call for an "an effective regulation brake" and to say that the repatriation of EU powers should be
possible. The CDU manifesto apparently calls for an "an effective regulation brake" with decisions
needing to be "effective and more transparent". It seems to suggest that the European
Commission should be required to scrap an EU law if a majority of national parliaments says it
could be handled better at the national or regional level. It further reports that the CDU's sister
party CSU will launch its own distinct election campaign. CSU's top candidate Markus Ferber said:
"In our programme there will be things the CDU will hardly agree with, like the possibility for crisis
countries to exit from the monetary union. We are not eurosceptic but we are against the overregulation of every detail by the Commission.”
Reuters: EU must rebuild unity, address populists' concerns - Finnish PM. Finnish centreright leader Katainen said that mutual resentment between citizens of northern creditor states and
poorer debtor countries was fuelling euroscepticism and posed a threat to the 28-nation bloc's
unity.
The EU could develop its single market further, notably in energy, and boost defence cooperation
within its existing structures. Asked whether the EU treaty should be changed in the next five
years after European Parliament elections in May, Katainen said he was a pragmatist and most of
what Europe needed could be achieved by strengthening and extending its internal market. The
Finnish leader voiced support for keeping Britain in the EU, saying its liberal, free trading voice was
vital to the bloc. But he cautioned against calls in London to repatriate powers from Brussels,
saying the solution lay in better regulation. "I hope that the situation in Britain doesn't go too far
that then there is no way back.”
Dutch nationalist Wilders outlines case for a Dutch 'Nexit' from the EU. Wilders, leader of
the far-right Freedom Party (PVV) that is leading in Dutch polls for May's EP elections, presented a
study that claims the Netherlands would be better off if it left the EU. He urged voters to support
his call for "Nexit". Critics, quoted by the Dutch NRC Handelsblad paper, said it was based on
unrealistic assumptions and government officials were quick to dismiss its conclusions. The study
contradicts an official Dutch study on the benefits of EU membership. An economist at The
Conference Board, a rival think-tank, predicted that a Netherlands exit of the EU would be
disorderly and result in high economic losses for the Dutch economy as well as the euro area as a
whole.
France: CEPS/Pertusot & Rittelmeyer: The paradox of a more European yet more
eurosceptic campaign. Four months ahead of the European elections, the political landscape in
France does not look promising. Despite the innovations introduced by the Lisbon Treaty,
European elections in France seem set to remain "second-order national elections". Both small and
protest parties are likely to do well, while the governing parties will probably suffer a "protest"
vote. The rise of the radical right party and eurosceptic Front National (FN) will play an especially
important role in the campaign. One of the core questions in France for the next European
elections is whether there is any strong party – or even any party – left to defend a pro-European
platform; one that does not disparage the work of the European Commission or question the
nature and path of the European Union, not with a view to stimulating serious debate but to
scoring easy points among French voters.
Right-wing populist parties forge alliances ahead of the EP elections. Policy Network
argues that the intention of a number of radical right-wing populist parties to cooperate in the
European Alliance for Freedom, as announced by Geert Wilders and Marine Le Pen, is far more
relevant, as it is indicative for a number of significant transformations taking place within the
radical right. The 'Le Pen–Wilders' alliance, which will most likely include also the FPÖ, LN, SD and
VB (a seventh member still has to be found), is not the first attempt at cooperation between
radical right-wing populist parties, but these initiatives have often been short-lived and at times
fraught with difficulties. The reasons for their failure have been manifold: border disputes and
conflicting nationalisms, lack of ideological coherence, leadership strife and fear of guilt by
association.
Czech foreign minister Zaorálek: Rebuilding an EU based on trust. Writing for EV, Zaorálek
set out the new Czech government's view of the EU and the policy changes that this administration
will bring. “We intend to play our role to the full, acting as an active and reliable partner to push
forward the integration project…. Unlike in the past, the Czech Republic now recommends to its
people key reforms like the Banking Union, the fiscal compact and entry into the eurozone.”
Guardian: Matteo Renzi wins Italian senate backing for his coalition government. Italy's
new prime minister has gained the backing of the upper house of parliament for his fresh-faced
government, after he insisted the chance for change in the economically struggling country was
"real, concrete and immediate". He promised sweeping reforms to the country's slow-moving
justice system, vowed to boost foreign investment in Italy and clear the debts of the public
administration to private sector suppliers. He said Italy needed to put its public debt of more than
€2 trillion in order because it was "the respect we owe to our children", not because Angela
Merkel, the German chancellor, or Mario Draghi of the European Central Bank desired it. Strikingly,
Renzi said his government would push through a package of constitutional and electoral reform
that, among other things, would dramatically overhaul the senate. Advocates of the reform say
ending Italy's perfect bicameralism in which the senate and chamber of deputies have equal
legislative clout will help streamline the country.
Swiss vote is "pivotal decision with far-reaching consequences". In a popular vote in
Switzerland, 50.3 per cent of the population voted for the introduction of quotas limiting
immigration of EU citizens. This calls into question the EU-Swiss agreement and has been met with
regret and dismay in the Member States. For Brussels, there are now no easy options. Free
movement of people is one of its core principles. It sees it as integral to the single market. It has
reminded the UK of this and if it embraces a compromise with the Swiss, other countries might
choose to follow.
"The European Commission regrets that an initiative for the introduction of quantitative limits to
immigration has been passed by this vote. This goes against the principle of free movement of
persons between the EU and Switzerland. The EU will examine the implications of this initiative on
EU-Swiss relations as a whole. In this context, the Federal Council's position on the result will also
be taken into account." The European Council discussed the results of vote and underlined that
the introduction of quotas on immigration from the EU citizens goes against the principle of free
movement of persons between the EU and Switzerland as enshrined in the bilateral agreement in
place. EP President Schulz said the Swiss government now has to work out which conclusions it
draws from the referendum and whether it is possible to make this decision compatible with its
international commitments, in particular its agreements with the EU. The EPP said freedom of
movement was not negotiable and S&D said Switzerland was turning its back on one of the most
important elements of its relationship with the EU.
The UK and Europe – state of play after the Chancellor Merkel visit
The key event was
the
nearly-“State
Visit” of Chancellor
Merkel to the UK–
see my preview link
and the text of her
speech here.
The
speech
was
carefully calibrated to
avoid exciting hopes
of fundamental reform
of the EU’s system or,
conversely,
that
Europe is unwilling to
pay virtually any price to keep the UK in.
However, a key theme was the benefits of the single market and the need to “renew Europe in
keeping with the times”. Importantly, she recognised the failure in Maastricht “to back up
monetary union with a strong economic union”. So it is not enough just to survive, but the aim
must be to come out of this stronger than at the start. That requires “responsibility and solidarity”,
more competitiveness, stronger European institutions, dismantling further barriers to trade, and
“the euro states must back up monetary union with a strong economic union with a clearly-defined
and sustainable architecture”.
Perhaps the key passage was “Only through closer and more binding coordination of economic
policy can we prevent ourselves in the long term from getting into another severe crisis in the euro
area. In my view, this requires that we adapt the treaty basis for economic and monetary union
quickly in a limited and targeted way in order to ensure lasting stability for monetary union.” So
Germany will be happy to see a narrow change in the Treaty that focuses solely on deepening
economic integration. That does not seem to leave much scope for repatriating a wide range of
powers – disappointing many Tory Eurosceptics. But the Chancellor was at pains to stress the need
to cut superfluous red tape and pay more attention to the principle of subsidiarity – a very small
piece of red meat for Tory ‘sceps’.
So Chancellor Merkel’s central message was that the process of re-enforcing economic
union by way of greater integration is a long way from finished. PM Cameron is likely to
find that this process leaves the UK – sadly – ever more on the fringes of the EU. Even the new
Czech government has pledged to become the 27th Member State to sign the TSCG (the Treaty
that PM Cameron keeps saying he vetoed), seek to join the euro and, more immediately, join
Banking Union.
Almuth Möller, for the German Council on Foreign Relations, called on Brits to "be a bit more
upfront", and gave advice on what Angela Merkel should be saying in London:
 To start with, please do not overestimate your influence, or that of Germany. If you don’t
work to convince all other Europeans that your efforts at reform are to create a better EU,
and are not about mere self-interest, then you will soon find your efforts will go nowhere.
 Secondly, don’t place all your eggs in one basket, especially on an issue that is not even on
the table. The ways and means of treaty reform have changed.
 Surely you also understand that even with a dose of goodwill, the Federal Government will
not be able to give time and resources to your debate. Berlin places its energy on a
sustainable future for the eurozone. One might deem that absurd, but my government, in
direct contrast with the British government, has identified "more Europe" as the way to go.
Commission VP Reding: The UK and the EU – inevitably drifting apart? Speaking in
Cambridge, Reding warned that the City should not expect unfettered access to the single market
if the UK were to vote to leave the EU, saying that such a move would reduce its status to that of
an offshore centre. “The City would most definitely lose its unhindered access to the single market
in the case of an exit. Because EU Member States would obviously have no interest in supporting
what would then be an offshore financial centre competing with their own financial firms. And
companies from third countries would find London a much less attractive location to do business,
since it would no longer be a gateway to the EU's single market." She also warned that other
Member States could work together to undermine London’s very large financial services sector,
pointing out: “If the UK were to leave the EU, it would no longer be able to influence EU
regulation. It would have to live with the rules decided on by the EU countries – and these
countries, some of them with little or no financial services industry of their own, have very little
incentive to take the City’s needs into account.”
European Commission Secretary General Catherine Day: Britain’s desire to repatriate powers
from Brussels is likely to meet resistance from other EU Member States. “It is the position of the
British government that they want to repatriate competencies. That, to my knowledge, is not the
position of any of the other Member States. They want to discuss what’s done at European level,
what’s done at national level, how it’s done, but they are very clear in saying they are not talking
about repatriating competencies.”
Balance of Competences: UK Government publishes second set of reports: The UK
Government released the latest reports in its review of the impact of the EU on the UK economy
and society. The reports point to over-interference in areas such as environment and transport,
but concludes that the EU single market and external trade are on the whole beneficial for the UK.
According to the FT, the reports conclude that the balance of powers between Westminster and
Brussels in key policy areas is broadly correct. The eight Whitehall studies find that Britain’s EU
membership has bolstered trade, created wealth and brought benefits in areas from legal cooperation to the growth of football’s Premier League – not the answers Eurosceptics want to hear.
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TheCityUK publishes latest step in comprehensive EU Research Programme. The poll
conclusively reveals that the UK's decision on staying in the EU or exiting will be most swayed by
economic factors and what will create jobs, with most people wanting to hear far more from
business leaders on Europe. There is little doubt that the EU referendum debate is of great interest
to business in the UK, Europe and internationally. Indeed, there are few other issues at the
moment of such importance to this sector and for the UK’s economic future. Top-line findings from
‘TheCityListens’ include:
The economy and unemployment are seen as the most important issues facing Britain at 74%. The
issue of Europe currently ranks only 7th.
Fully 82% said they will give ‘a lot’ of thought to the potential impact on the UK economy; more so
than other factors such as immigration.
A little under four in ten (39%) are thinking of opting-out and three in ten (33%) want to stay in
Europe.
Of the “Euro Undecideds”, 61% say hearing from business leaders would be more important to
them than any other group in reaching a decision on whether to stay or leave Europe.
42% thought that firms’ access to customers in other European markets would be severely
impacted by leaving, the EU. Only 9% thought access would be better.
People also cited tourism (2.2% of GDP), manufacturing (10.1% of GDP), retail (5.6% of GDP) and
financial services (7.9% of GDP) as industries that will all be damaged by an exit from the EU. This
is especially concerning as the total number of people employed in these sectors is close to 5
million and their combined contribution to UK GDP is 25.8%.
21% of respondents cited the decrease in the numbers of businesses setting up in the UK if the UK
were to leave the EU as a key concern.
Those wanting to leave Europe give EU interference, immigration and costs as the main reasons.
Chief executive Chris Cummings said: "It is clear from the study that the EU debate thus far has
been too focused on opinions and not enough on the evidence. It is encouraging to see that the
British public wants to hear more from business leaders in order to help them make an informed
decision in the EU referendum. It is now important to make sure the business voice is heard so
that the public is given the facts and evidence needed in order to make an informed decision."