European Parliament elections and state of the Union

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By Yiannis Tirkides

The elections for a European Parliament next week are perhaps the most significant in its history, particularly given the economic and political fragmentation that has been sweeping the continent since the crisis that inflicted it earlier in the decade.


The polls suggest that the European Popular Party will win the biggest number of seats, but it will be weaker than before and certainly far short of a majority.

The Social Democratic Party will weaken even more and nationalist, populist and Euroskeptic parties will increase their seats and voice in the parliament.  

Such an election result will not be a surprise. It will only reflect the political and economic fragmentation in the European Union today.

Yet, a strong voice from the European Parliament and strong leadership at the European Commission and other important supranational institutions like the European Central Bank will be needed to take the bloc forward in the next five years and create the conditions for the reforms that will be necessary to strengthen and enhance its reach.

The elections for the European Parliament will take place during 23-26 May. Leaders will meet on 28 May to discuss the results of the elections.

They will make an attempt to appoint a commission president at the June 20-21 summit. The new commission president will have to be ratified by the European Parliament.

The current state of the union is rather disquieting. National parliaments are fragmented. Governments at even the core countries including Germany and France are weak.

In Germany, the transfer of power within the Christian Democratic Union with Merkel’s departure, coupled with the weakening of the Social Democratic Party, that together form the governing coalition, amount to dysfunction at a time when critical decisions will have to be taken at the union level.

In France, the government is constrained by the yellow vests protests and increasingly unable to undertake necessary reforms internally, including for pensions and unemployment insurance. 

At the EU level, the French proposals for greater risk sharing and a large Eurozone budget will face opposition from northern countries.  

In Italy, the coalition government might be united against the European Commission over its budget and spending plans, but it is also divided on a host of other issues from immigration to infrastructure projects.

An early election cannot be ruled out. At the same time, the economy is fragile and burdened by high government debt, growth stagnation and stress in the banking sector.

Meantime, populist and nationalist forces will continue to exert asymmetric influence, posing a threat to the cohesion of the European Union with staying power, because the forces that produced them in the first place, are not going away very soon.

The crisis of previous years has left the union more fragmented, more uneven in terms of economic performance, and more unequal in terms of income distribution at the national and supranational levels.

Under these conditions, it is more difficult to reach agreement on fundamental and pressing issues such as structural reform or the deepening of the Eurozone.

Additionally, growth is slowing. On the trade side, there are protectionist tendencies globally and disputes with the United States at the bilateral level.

Brexit remains a source of risk for the continental bloc and southern European countries remain vulnerable.  All these factors increase economic risk in the bloc.

The US threatens to increase tariffs on imports of European cars unless concessions are made in a bilateral trade treaty over agricultural products.

The agricultural sector is heavily protected across Europe and it will not be easy to include it in a comprehensive bilateral free trade agreement with the United States.

Failure to reach an agreement might lead to higher tariffs by the United States on European cars and retaliatory measures from Brussels.

Brexit has been postponed until October but there is still no clear strategy going forward.

The UK might face a change of leadership in the government party, an early election or even a second referendum. The delay creates new sources of uncertainty.

Fragility in southern Europe particularly in Italy is perhaps the most serious economic threat posed against the European Union.

Public debt remains high in southern countries, and banks, holding a considerable amount of it, are vulnerable.

Italy, in particular, has reached an understanding with the European Commission on its budget for the year but has failed to convince about the sustainability of its finances.

Europe today is not facing the kinds of existential threats it was facing at the height of the financial and debt crisis in many of its member countries.

The threats facing the union today are more structural.

The architecture of the Eurozone is not complete; the integration process is stalled; the social repercussions of the financial and migration crises are fragmenting the political system across the continent nullifying attempts at reform.

The elections for the European Parliament are more critical than before exactly because of this confluence of problems inflicting the continent.

As such, the elections might provide the trigger for a renewed effort against disintegration. If not, it will be a pity!

The writer is Economic Research Manager, Bank of Cyprus the views expressed are strictly his own