Europe in 2019 will not just be the year of Brexit. It will also witness the election of a new European Parliament (“EP”), the choice of a new president of the European Commission and of a new Commission, as well as the appointment of a new president of the European Council and of the European Central Bank. All this under the spell of the next “Multiannual Financial Framework,” a five-year budget plan for the years 2021-27, which will be under discussion throughout the year.

On February 13, the European Commission presented a communication on how to deal with the budget challenges, and another one on the institutional “options” for next year (see here). The heads of state and government will have a first informal discussion on all this on February 23.

They will not yet discuss names –  it is too soon – but will touch on how the leaders will be chosen, and the composition of the Commission and Parliament. Indeed, four years ago, when Juncker and his Commission were appointed, some of the institutional innovations of the Lisbon treaty were implemented for the first time, and it was agreed that their interpretation required further debate. But this debate did not take place until now: the challenges of the ensuing years – with the migration crisis, the rise of populism in many members states and the unexpected result of the Brexit referendum – prevented EU leaders from looking too much to the future.

A few ideas were launched in September 2017 by Jean Claude Juncker and the new French president, Emmanuel Macron (we reported on them here). They are further elaborated in the communication presented last week by the Commission. Five institutional issues are identified: the procedure for the election of the president of the Commission; the composition of the European Parliament; the composition of the European Commission; a possible double-hatting of the Commission and Council president; the organization of “citizen’s dialogues.”

We will examine each of them in their historical context and highlight the pros and cons of the options presented. 

1. The procedure for the Election of the President of the Commission

For the replacement of Jean Claude Juncker next year, the Commission is proposing to use the same procedure that resulted in his election in 2014. It is called the “Spitzenkandidaten,” or “lead candidate” procedure, as the chosen president must be the candidate chosen by the political group in the EP receiving the highest number of seats in the election.Continue Reading Elections and appointments in 2019: the EU institutional debate

As we mentioned in our previous reports (here and here), “sufficient progress” in the first phase of the Brexit negotiation could not be achieved before the European Council of October 19-20, 2017 – so the heads of government decided to wait until their next meeting, on December 14-15, to assess whether the second phase, dealing with the future relationship, could be launched.

By the end of November, the UK government made progress on the sensitive issue of the financial settlement, but it took a frantic week of high political drama to finally reach the “sufficient” agreement, just in time (see our post here on her abortive lunch with President Juncker, and the agreement that was reached following objections from Northern Ireland).  British Prime Minister Theresa May was warmly applauded by her 27 EU colleagues when the decision to launch the second phase was made by the European Council on December 14.

The second phase will start formally in February 2018 with a discussion on the “transition period” between the day of withdrawal and the entering into force of the new treaty.  To that end, the European Council adopted guidelines in December (here), and on January 29, the Council of Ministers agreed a new mandate for the Commission negotiator Michel Barnier (here).

The discussion on the future relationship itself will only start later in spring.  The talks will initially concentrate on a political declaration on the framework of this future relationship, which will be attached to the withdrawal treaty.

The Second Phase of the Brexit Negotiations

As is now well-known, the logic for the two-phase approach in the Brexit negotiation stems from Article 50 of the EU treaty. The withdrawal treaty is a specific instrument which should be agreed upon by qualified majority within 2 years after the procedure has started under Article 50.  However, it must take account of the future trade relationship between the remaining EU Member States and the country leaving the EU.  The negotiation on the future relationship, however, will take more time, and will be conducted based on the model of trade negotiations between the EU and third countries, which at the end of the process requires the agreement of all EU Member States, ratified by national parliaments.

The EU therefore split the negotiation of these issues in the separation that posed the greatest political difficulty off into the first phase, with negotiations on the framework for the future trade relationship only beginning in phase two. The end of the first phase, however, does not mean that the negotiation over the past is over.  Numerous technical issues still need to be addressed and the December joint report (see here) will need to be translated into a legal instrument that will form the basis of the
Continue Reading Brexit Negotiations, Phase 2: Transition, Trade, and Trouble Ahead

In its meeting of December 14-15, the European Council should be deciding whether to launch the second phase of the Brexit negotiation which is the discussion on the future relationship between the UK and the European Union after Brexit.

This is eighteen months after the Brexit referendum and almost nine…
Continue Reading The Brexit Negotiations:  High Drama at Lunch

The third round of the Brexit negotiations, at the end of August, was not very productive. This was despite the British side’s publication of an impressive number of position papers over the course of the summer. These covered various technical questions but also the sensitive issue of the participation in the customs union and how to avoid reestablishing a border between Northern Ireland and the Republic of Ireland.

The documents were not well received by the EU side, not only because a number of them anticipated negotiations on the future relationship, but mainly because they brought no realistic solutions. Rather, they confirmed the EU’s view that there was no real leadership on Brexit in London and that the negotiators were constrained by an official position that had become unrealistic: that the UK could, with no harm, leave the customs union and the internal market as soon as by the end of the two years foreseen by Article 50 of the EU Treaty.

In view of the impasse, the EU therefore asked for a postponement of the fourth round of talks scheduled for the week of 18 September. The talks were indeed postponed for a week.

A Softening in the UK’s Position

In the interim, in an attempt to break the deadlock, Prime minister Theresa May, in a speech in Florence on September 22, presented a revised UK position aimed at relaunching the negotiations on a better footing.

The most important novelty in the Prime Minister’s “Florence speech” related to the transition period, aimed at bridging the gap between the UK withdrawal in March 2019 and the beginning of a new trade relationship. Theresa May suggested in her speech that this period should last “around two years,” in order for the UK and the EU to be able to “implement smoothly” the new arrangements concluded. Importantly, she accepted that, during that period, market access “should continue on current terms” and that the framework would be “the current structure of EU rules and regulations”. This means that, contrary to the UK’s former position, during that period it would remain in the EU internal market and customs union, and would respect the principle of free movement of people as well as the jurisdiction of the Court of Justice of the EU (“CJEU”).

A few days after the Florence speech, on 26 September, the president of the European Council Donald Tusk travelled to London to discuss the way ahead. After his talks, he said that he felt “cautiously optimistic about the constructive and more realistic tone of the prime minister’s speech in Florence and of our discussion”, adding that the speech indicated that “this philosophy of having a cake and eating it is finally coming to an end”.

Nevertheless, the fourth round of negotiations, held in the last week of September, saw little concrete progress on the “separation” issues currently under discussion – citizens’ rights, the Irish Border, and the UK’s financial settlement (the “exit bill”).

All attention then turned to the Conservative Party Conference, which took place in London on October 1 to 4. Discussions at Conference in London confirmed that the Cabinet remains divided on Brexit. Notably, the Foreign Secretary, Boris Johnson, in a newspaper column, expressed positions much harder than those outlined by the Prime Minister. However, amid speculation that he was about to mount a leadership challenge on the Prime Minister – an attempt that was seen as having failed – the Foreign Secretary rowed his comments back somewhat towards the Prime Minister’s softened line.

There was minimal progress during the fifth round of negotiations, which took place on October 9 to 12.

Changing Views on a “No Deal” Brexit

At the start of the negotiation process, the view in Brussels had been that there as a significant risk that the UK would “crash out” of the EU without a deal – either by choice, or simply because the negotiations would not succeed in the time available, and given the divergent positions either side of the English Channel. (For further analysis on this scenario, also known as the “cliff edge” scenario, see Sir Michael Leigh’s blog post, here.) This view was reinforced by the Prime Minister’s statement, in her Lancaster House speech of January 17, 2017, that “no deal is better than a bad deal” for the UK.Continue Reading Brexit Negotiations in October: Softened Stances, but no “Sufficient Progress”

The election in Germany, even if disappointing for the current coalition, allows the most respected European leader to remain Chancellor. She can continue to steer the European engine, with a new French counterpart, impatient to test his European agenda – as outlined in a speech in the Sorbonne on September 26.

Is this the light at the end of a long tunnel? The end of the somber decade which started with the financial crisis, then the crisis of the Eurozone, the mass migration of 2014/15, the referendum on Brexit in June 2016, and the unexpected result of the American election?

At the beginning of this year, electoral campaigns in Austria, the Netherlands and France as well as the political debate in Italy gave populist eurosceptic parties center stage, and many across the EU believed they might win a majority of the vote.

But they failed. Everywhere. Brexit, far from being divisive, brought the 27 closer together. President Trump’s unilateral moves boosted security and defense plans at the European level. In France, Emmanuel Macron was elected with an ambitious European agenda. Unexpected economic growth all over the continent (except in the UK) reinforces a return to self-confidence.

A Return to Euro optimism?

As European Commission President Jean Claude Juncker noted in his “State of the Union” address on September 13, “the wind is back in the EU’s sails”. And as always when the Union comes out of a crisis, new steps are now being envisaged in the EU’s integration process.

This does not mean that spectacular changes will come soon. The framework will remain the current treaties. The fundamental problem of the distance between the institutions and the citizens remains, as well as the fear of globalization they are accused of encouraging. But many weaknesses – shortcomings that preexisted the crisis or were brought to light by it – can now be dealt with.

This blog explores briefly the various fields in which this new “Euro-optimism” will be tested. Not surprisingly, the debate will continue to oppose, on the one hand, those who favor more cohesion and solidarity, and so want to reinforce the role of the Commission or facilitate decision making; and on the other, those who want governance to remain as much as possible in the hands of national governments.

The influence of the latter, which has prevented progress over the last ten years, might be reduced now that populist and nationalist voices have been (temporarily) silenced – though of course we shall have to see the outcome of Italian elections next year. However, some strong mistrust remains, notably between the “old” and “new” Member States, as well as between the North and the South. The return to economic growth should help mitigate these divergences.

The governance of the Monetary Union and the Eurozone

Most economists agree that the Eurozone needs further reform. A roadmap for reform has been articulated since 2011 by the presidents of the EU institutions. But, apart from the setting up of a “Banking Union”, the other elements of the reform were never really discussed, due to the diverging views between Germany and most other Member States over financial “solidarity”.

But these ideas continued to float in the air, and were revived recently by the President of the Commission and the French President.

Even on the campaign trail, Macron espoused the creation of a separate Eurozone budget. He now suggests that this could be funded through (harmonized) corporate taxes, and managed by a “Eurozone Finance Minister”. He has also mooted the creation of a Eurozone Parliament.Continue Reading Europe’s Future: the Wind is Back in the EU’s Sails

On May 7, President-elect Emmanuel Macron greeted his jubilant supporters in the grounds of the Louvre to a serenade of the Ode to Joy, the anthem of the European Union. He had won the second round of the French Presidential election, dismissing the far-right Marine Le Pen’s challenge by…
Continue Reading President Macron and the Brexit Negotiation

On Thursday, December 15, at the end of the traditional end-of-year European Council, the 27 “remaining” heads of state or government of the EU had a short meeting, without Theresa May, to set out how the Brexit process would be handled by “the 27,” once the UK has notified its…
Continue Reading Six Months After the Brexit Referendum: Preparations in Brussels

The surprising victory of Francois Fillon

Since 27 November, the favorite to become the next French President in the Spring 2017 election is Francois Fillon, someone nobody a month ago would have given any serious chance to get to the limelight. He received more than 2/3 of the votes in the second round of the ‘primary’ organized by the party of the Right, ‘Les Républicains’ to select their candidate for the presidency.

The election of the president of France happens in two rounds with a two weeks interval. In the first round all candidates having raised a basic support can participate; in the second only the two frontrunners compete. The collapse of president Hollande‘s socialist party makes it almost certain now that the two will be Fillon and Marine Le Pen, the candidate of the extreme right ‘Front National’, who is forecast to gain some 30 % of the votes in the first round.

Selecting the leader who could beat Marine Le Pen was thus the main challenge of the Right’s primary. The stakes indeed go well beyond internal French politics. Not only is Marine Le Pen’s party racist, anti-Semitic and ferociously anti-immigrant, she is also aggressively Eurosceptic. She even promised a referendum on the withdrawal of France from the European Union. After the Brexit referendum, she posted: “Victory to liberty! As I have been demanding for many years, we now need the same referendum in France and EU countries.”
Continue Reading Electoral volatility – the case of France