In his State of the Union speech on 13th September to the European Parliament, Jean-Claude Junker, the EU Commission President, was able to present an upbeat message and – for the time being – a lessening of the electoral threat from European Eurosceptic populist parties.
All this will have emboldened the Commission President to reinstate initiatives towards further EU integration – actions that remain anathema not only with the Brexit agenda in Britain but also to a number of EU27 accession states that dislike further integration – especially Hungary and Poland.
Junker no longer conveyed the tone of pessimism, as had been the case in his previous 2016 speech in which he warned of an existential crisis – brought on by the non-EU mass migration crises of 2014 to 2016. Challenges for the EU had also extended to the rampant growth of populism and the on-going financial troubles facing the Eurozone.
The ‘wish’ list in support of further integration includes an extension of the Schengen free travel area to incorporate the latest post-2007 accession states of Bulgaria and Romania. This is at a time when the EU Commission is in conflict/combat with other Eastern European members who are refusing to implement refugee quotas. Poland, Hungary and Slovakia have been on the frontline on this, refusing to implement quotas – with their more or less homogeneous societies – imposed by Brussels. Their leaders express no appetite for further EU integration and capitalize on the EU’s Brexit problems as an opportunity to champion further decentralization of Brussels control. The mantra of ‘taking back control’ is, therefore, not just a British phenomenon.
EU states will not be supportive of changes to national vetoes on important matters such as tax and foreign policy. To hold the EU27 together, further attempts to create a ‘closer union’ may appear to be too ambitious, although it is hard to see how the European project can develop further without widening the Euro currency area to those outside the Eurozone – for example to the Czech Republic, Hungary, Poland and the long overdue implementation of a banking union.
Part of Jean-Claude Junker’s vision sees the installation of an elected EU president with full executive powers to include the chairmanship of EU Council summits, a post held with popular acclaim by Donald Tusk as President of the EU Council. There is no evidence of support for this approach from EU leaders. Adverse reactions came from both ‘old’ and ‘new’ Europe. Lars Løkke Rasmussen, the Prime Minister of Denmark, wasted no time in rejecting the idea, defending the status quo saying how important it was to retain a European Council president as a “voice of member states”.
Demands for Reform
The election of Emmanuel Macron as newly elected President of France will have fueled Junker’s reforming zeal to have a fellow traveller for his dream of further EU integration. Macron’s interest here relates more to the reform of the Eurozone and curtailing the influence of the IMF in Eurozone affairs – which has been viewed as particularly unhelpful in the case of Greece and its turbulent history of bailouts and demands for substantial debt relief.
President Macron is focused on a renewed Franco-German axis to strengthen the European project in the short to mid-term. The re-election of Chancellor Merkel, as polls expect, will be crucial to both Junker’s aspirations for European integration as well as Macron’s – who wants more investment and a common budget to help prevent renewed existential crises in the bloc. Macron’s recent visit to Greece provided a platform to endorse his line for greater financial solidarity with weaker members of the Eurozone, saying the Greek people had “paid a very high cost”, that the Eurozone needed to “become more integrated” and “get out of this sort of internal civil war whereby everyone looks at their little differences”.
In Athens (during the 6-8th September) he stated that the bloc had to “get its independence back” by setting up its own European monetary fund to help prevent crises; his criticism of the IMF for its role in tackling the Eurozone debt crisis was coupled with his support for the creation of a European Monetary fund (EMF) advanced by Germany. It remains to be seen whether Merkel and Wolfgang Schauble, her veteran finance minister, will agree to the establishment of a eurozone budget aimed at future financial crises.
A Note of Optimism
Regarding trade, Juncker cites the successful CETA agreement with Canada – as well as progress with Japan – as models for seeking new trade pacts with Australia and New Zealand. He may well see this as stealing a march on the UK – who are not able to enter non-EU trade agreements until after March 2019 and not before the end of transitional arrangements. The UK’s overriding ambition is to forge non-EU trade deals especially with those two countries – formerly part of the British Commonwealth and now known the ‘Commonwealth’.
Tough Negotiations Ahead
The UK’s International trade department has been proactive with preliminary negotiations in India and Japan (and the USA) but is finding that future plenary negotiations will be tougher than expected. This is not just because those countries have indicated their priority to cut deals with the EU – the far bigger market. This is because of UK immigration and visa policies – for example, restricting the right of students to stay in the UK after graduation.
The EU – Japan trade deal augurs warnings for a UK – Japan trade deal if it doesn’t mirror the former. Japan will scrutinize transitional and permanent arrangements between post-Brexit Britain and the EU to ensure that its car industry, in particular, has full access to the EU markets it presently enjoys. If not, it may influence future Japanese investment in the UK.
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