Europe’s Year Zero: 4 days to reshape the Union
In three months’ time, European citizens will vote for their representatives for the next five years in the EU Parliamentary elections. But the subsequent phase will be the most crucial - the defining of the EU’s various bodies (that make the decisions) and the appointments of committee members, which will be the concrete output of the European parties’ negotiations behind the scenes.
This was the core of an insightful roundtable recently organized by the British Bankers’ Association, the third event in its Mapping Political Risk in Europe series looking at the changing political landscape in Europe and its direct implications for the financial and banking system. It goes without saying that Europe today is very different to that of 2009 – the last time European Elections were held. We’ve had a painful financial recession which has turned into suffocating stagnation; national news agencies have reported turmoil among populations alongside a surge of anti-European and extremist movements and, probably more than ever before, the effective role and even existence of the European Union is at stake.
However, citizens’ and local governments’ disaffection towards their selfish “Stepmother Europe” (with the constant shadow of Berlin over Brussels) doesn’t remove one fundamental fact: these elections are going to be more European than ever before, and are likely to influence the next round of national elections across the EU. We’ll also expect to see the public and media agenda dominated by financial and economics themes, as a common strategy to put the Eurozone back on the path to growth becomes the main priority.
While it is hard to speculate on the winners and losers, and with the current fragmentation of political alliances making the whole picture blurry (for a keen observer, Poll Watch will be offering regular predictions on the outcome of the elections), a more useful practice is to try and concentrate on some key points that the newly appointed Parliament will have to deal with, with a key focus being on how to avoid an even more severe economic crisis.
It is likely that all the EP committees should see a strengthening of their influence and responsibilities on several vital topics, such as the Internal Market and Consumer Protection Committee and the Economic and Monetary Affairs Committee (ECON). The latter plays a fundamental role in overseeing the economic and monetary policies of the EU, especially the regulation of financial services.
ECON, which will say goodbye to its current chairman, the British Liberal Democrat politician Sharon Bowles, will as a committee face several challenges, after the arduous task associated with the various drafts of MiFID (of which the technical aspects will need to be refined by ESMA, before handing them over to the European Commission for formal approval).
With Ms Bowles out of ECON, Britain’s position in the European establishment is going to be reduced, considering that other two influential UK politicians, Labour’s Peter Skinner and the Conservative Malcolm Harbour are also about to depart from Brussels. Is this the final sunset of the British presence in Europe? An ill-concealed feeling of being marginalised is something that many UK MEPs have often expressed, but now the situation seems to have taken a turn for the worse which several UK MEPs have reportedly described as ‘frustrating’.
Aside from geographical battles, ECON itself might run into significant structural changes. For example, the creation of a sub-committee for specific work (which other Committees are also facing), would affect how this committee can deal with major legislative and other issues as a principal body.
We can also expect there to be continued disagreement around the drafting of a European banking Union. While the idea behind it is widely accepted as inherently good – indeed vital - there has been much deliberation over the draft published in December 2013. For example, there is uncertainty if the ECB will be allowed to regulate and control UK based financial institutions, as it only controls the Eurozone currently.
Additionally, there is disagreement on what actually caused the 2008 crisis - a poorly regulated banking system, or business models based on exponential debt creation. The President of the EU Parliament, German socialist Martin Schulz has already stated that he considers this draft wrong, meaning the Parliament – in its current makeup at any rate - will likely vote against it. But some of his opponents, like his German compatriot Finance Minister Schäuble of the CDU, will likely insist on this draft going through after the elections.
In terms of how the European Parliament is going to look, we can probably expect a more polarized Parliament, with some decline in the influence of mainstream parties (thanks to a more politically mobilised European youth) and a strong emphasis on pro-consumer policies. The austerity dilemma is going to be at the top of many future MEPs minds as they’ve lived through it; reshaping Europe will be about teamwork rather than single protagonists and there are likely to be more powerful Vice Presidents (i.e. the more senior commissioners in the new European Commission), that are keen to heard in the public debate.
And what about the City of London? Perhaps it is time to regroup and see how it can work more closely with European counterparts in a new constellation in Europe that, as always, will resemble three dimensional chess.