How ‘COVID-19’ changes the balance of power: Winners and losers of emergency politics

Trougnouf (Benoit Brummer) / CC BY-SA (https://creativecommons.org/licenses/by-sa/4.0)

The latest developments show that, despite the severe disruptions, the EU policy-making machinery is looking for new ways to cope with the emergency. However, stark divergences on how to deal with the economic fallout of the crisis were already laid bare over a tense Council summit last week. An already-seen movie of reciprocal accusations between Northern and Southern countries was in full display, as the stability of the Eurozone starts shaking again. Conflicts along the East-West directory are also foreseen, as the Commission re-assesses the previously planned cuts to cohesion funding in light of the new emergency. 

While the emergency measures proposed by the Commission drew almost unanimous support among MEPs during the first ‘remote’ plenary session of the European Parliament, consensual policy-making is set to last little in the institution, as similar disputes are inevitably set to arise. Expect political groups to come up with different, often incompatible, recipes to heal the deepening malaise, adding fuel to the existing political disagreements on the preceding policy initiatives, such as the European Green Deal, which are suddenly at risk of being sidelined due to the changing priorities of EU institutions.

In this report, we look at the political impact of the current emergency situation. We found that the ongoing shift in the priorities of EU institutions is set to affect coalition-building dynamics at the EU level, as the stronger focus on economic affairs is likely to reverse, or at least compensate, the previously-observed left-ward shift in the overall balance of power after the EU elections.

We also look at the impact of the crisis on the strength of political forces at the EU level: while incumbents are benefiting from the emergency situation, future conflicts on how to revamp the EU economy will provide nationalist forces with significant opportunities to capitalise on the increasing malaise. 

*VoteWatch Europe is a leading intelligence source on EU policy-making. Our premium subscribers (such as EU public and private influencers, top universities, etc.), benefit from the most advanced analytical tools in EU politics. We also deliver tailored research, presentations or training on MEPs’ and governments’ likely positions and majority building in specific areas. If you are interested in a private service, send us an email ([email protected]) or give us a call (+32 2 318 11 88).

 

MEPs’ proposals mirror the Council’s debate in showing shifting policy priorities

Since the initial proposals tabled by the Commission were rather narrow in their scope, there was little room for MEPs to leave their footprint on the final legislative outcome when they voted last week. The only exception was a cross-party initiative to further prolong the derogations for air carriers from the obligations to use their airport slots for at least 80% of the time in order not to lose their allocation for the following period. Conversely, most MEPs rejected more partisan proposals, such as those put forward by the right-wing Identity and Democracy group to provide stronger financial support to the fishing industry and SMEs.

Alongside the developments in the Council, such debates are an early sign of the shifting policy focus of EU politicians. As we have already seen in the past, the priorities of EU institutions change in response to the developments taking place across the world. For instance, while the Juncker’s Commission started off with a strong focus on economic issues (creation of jobs, strengthening the Eurozone), migration started to take the centre stage as of 2015, due to the ‘refugee crisis’. In the same way, we should also expect future changes in the priorities of the current Commission, as public attention shifts to other policy priorities than the ones with which it started. Budget, economic and social issues are now expected to rise up in the policy agenda of the EU institutions, to the detriment of other initiatives, such as those related to the climate agenda. As we are witnessing, the leaders’ narrative has changed dramatically in just a few weeks from climate emergency to health and economic emergency.

How is this shift going to affect coalition-building dynamics in EU institutions? The renewed focus on economic recovery is set to provide economically-liberal forces such as the EPP with substantial opportunities to boost support for their agenda on economic growth, while increasing their incentives to moderate the ambition of regulatory initiatives (such as the European Green Deal) that would imply significant costs.

 

EPP to play a more pivotal role, as stronger focus on economic recovery is set to benefit Weber’s group

As shown in our previous report on the initial trends in the European Parliament, centre-right wing forces prevail with regards to issues concerning economic, budgetary and trade policy, whereas centre-left are more often on the winning side when voting on the environment, civil liberties and home affairs. For instance, the EPP was on the winning side 92% of the time when voting on economic and monetary affairs, while S&D won ‘only’ 72% of the votes. However, when it comes to environmental topics, S&D was on the winning side 86% of the time, while the figure is much lower for the EPP (68%). 

As the debate shifts away from the topics that favour a convergence between the centre and the left, the EPP is set to regain some of the ground that the group lost after the disappointing performance in the EU elections in 2019. This can also help counter the trend of decreasing cohesion of the centre-right group. In fact, as previously observed, the EPP is more divided on environmental policy, home affairs and gender issues, while the group is more united when it comes to economic regulation, budget and trade.

While the EPP is set to gain ground, the balance of power in the EP suggests that Renew Europe is set to retain its current title of ‘kingmaker’ due to its central position in the political spectrum. While the group has been veering towards the left over the past few months, also due to the rising French influence in the group, it is still unclear whether this trend will continue in light of the changing economic and social landscape.

As the economic situation keeps worsening, we also expect a gradual reduction in the level of focus on climate topics. The European Green Deal will still go ahead, but it is likely to face a bigger backlash due to the costs that it implies. This is likely to negatively affect the Greens, as they are likely to lose much-needed visibility due to the changing circumstances (the European Parliament is an important platform for the Greens, as they perform better in EU elections compared to the national ones – hence, they have stronger representation at the EU level).

Left-wing forces are more likely to gradually shift their focus to social policy, in particular as the social consequences of the economic fallout become more visible. Expect a stronger push for accelerating the current EU agenda on social policy, such as unemployment and taxation (as governments become more indebted, there will be stronger calls for cracking down on tax avoidance). However, some initiatives such as the one on minimum wage are likely to generate a stronger backlash from the employers, as they cope with the economic downturn.

In the long run, the shifting policy priorities of the public opinion might benefit GUE/NGL which, differently from the Greens, tends to perform better in a context of economic stagnation and high unemployment (as shown by its stronger performance in Southern Europe). This will pose additional challenges for Socialists and Democrats, as the group might have to fend off potential new challengers to its left, while at the same time trying not to alienate its more moderate supporters.

Nationalist forces ready to capitalise on EU divisions on Eurozone and economic sovereignty

Parties in government are the immediate beneficiaries of this crisis, as shown by preliminary polling data across the continent. This seems to be a typical occurrence of the rally ’round the flag effect’: a short-term boost in the support for governing parties during wars or international crises. At a time of increasing dissatisfaction of the electorate with incumbent politicians, this crisis is providing ailing establishment forces with a much-needed boost. The best example is the case of CDU in Germany, which was facing a period of turmoil after the resignation of its leader in February. The lead of CDU/CSU in the polls has more than doubled in just a few weeks, as the emergency overshadowed the internal fights on the future direction of the party. Conversely, opposition parties struggle to gain visibility during international crises, in particular those focusing on topics that are currently being overshadowed by the emergency situation (such as the environment or migration). 

However, longer-term scenarios look less promising for the incumbents, as the rally ‘round the flag’ effect fades away and the economic and social consequences of the health crisis take the centre stage. While an economic downturn was already set to happen soon due to inevitable end of the expansionary part of the economic cycle (including a downward correction of the inflated financial markets), the COVID-19 pandemic dramatically accelerated such negative economic trends. The financial splurge by national governments to deal with the crisis will lead to future debates on how to contain public spending, in particular as public finances will be under pressure in the upcoming likely recession. Therefore, we already see national governments shifting their focus towards the Eurozone, the banking union and macro-economic governance (with inevitable conflicts between North and South).

Such conflicts will test once again the resilience of the common monetary union, which was already dramatically shaken during the early 2010s Eurozone crisis. Prolonged deadlock and increasing frustration on both sides are likely to boost the popularity of the most nationalist factions, as they are set to capitalize on the shortcomings of intergovernmental decision-making. The increasing salience of the “North vs South” dimension is already quite visible in the public debates across the continent, which leads the electorate to read issues more in terms of nationality than political affinity. 

Nationalist forces will also play an important role in the upcoming debate on industrial policy, in particular with regards to ensuring local ownership or control of strategic industrial sectors, including medicines and medical equipment. While the debate on economic sovereignty was already ongoing before the crisis with regards to the digital, technological and energy sectors, the ongoing disruption of the global supply chain will further intensify the current discussions, with significant consequences for the future EU trade and industrial policy. Also in this case, while such debate provides the EU institutions with the opportunity to put forward new solutions and frameworks, nationalist approaches are likely to prevail in case EU cooperation fails to deliver.

Changing policy priorities – key takeaways for stakeholders

As economic and political cycles become shorter and shorter, stakeholders need to make sure they are prepared to deal with sudden twists and turns of policy priorities. This is why it is important to be as pro-active as possible, rather than just react to what happens, because policymakers might suddenly shift their attention towards issues that affect them. No stakeholder wants to be the one to get into panic mode because they are not prepared to cope with sudden policy developments. Also, while successful stakeholders know that relationships with policymakers should be developed over time, many still make the mistake of contacting politicians only when they need them (like the old friends who contact you after a long time only to ask you for a favour). For more tips, check out our previous list of top mistakes made by stakeholders in Brussels.

Note that a common mistake is not to collect all the intelligence that you need in advance. Make sure you start to identify potential allies, kingmakers and foes before you actually need to engage with them. As a leading intelligence source on EU policy-making, VoteWatch Europe can help you track the positions of key decision-makers. Our premium subscribers (such as EU public and private influencers, top universities, etc.), benefit from the most advanced analytical tools in EU politics. We also deliver tailored research, presentations or training on MEPs’ and governments’ likely positions and majority building in specific areas. If you are interested in a private service, send us an email ([email protected]) or give us a call (+32 2 318 11 88).

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