July 8, 2016
Two weeks after the historic United Kingdom (UK) referendum on the European Union (EU) and under the shadow of Brexit, the European Parliament (EP) this week met in Strasbourg, the EP’s official seat, for its final plenary session before the summer recess.
Across the English Channel, the political fallout in the UK continues to unfold in dramatic fashion: resignations, mutiny and leadership races galore. Most notably, the past week’s Brexit related news has been dominated on the one hand by the resignation of Nigel Farage from the leadership of the UK Independence Party (UKIP) and on the other by whispers in the corridors of the EP regarding Chancellor Angela Merkel’s dissatisfaction of the handling of Brexit by European Commission President Jean-Claude Juncker. At the centre of EU policymaking, the scene was set for lively debate as Brexit continues to send shockwaves across the continent and EU leaders wrestle with Europe’s new reality.
This snapshot provides insights into key discussions taking place in the corridors of the European Parliament in Strasbourg.
With the UK government currently unwilling to invoke the Article 50 exit procedure, the sabre rattling looks set to continue across the board. Consequently, unpredictability for businesses and investors will linger on.
Some MEPs have expressed frustration that for a large part of 2016, the UK has kept the EU hostage. The deal brokered between the EU and David Cameron at the February European Council was preceded by immense pressure, resulting nonetheless with the EU giving more concessions to the UK. Post-referendum, the February deal is now off the table and the UK won’t trigger Article 50 until the Conservative Party has appointed a new leader on 9 September. The longer the UK takes to pull the Brexit trigger, the more markets will continue to react negatively to the prolonged uncertainty.
From a political point of view, the UK’s hesitation will inevitably serve to further agitate and antagonise EU counterparts, who will be less willing to negotiate a ‘fair’ deal. On the extreme side, there are also suggestions that some German and French MEPs are calling on the EU to invoke Article 7 of the Lisbon Treaty, thus suspending the UK’s voting rights in the Council.
The most high profile British EU official is Jonathan Hill, the Commissioner for Financial Stability, Financial Services and Capital Markets Union, who has announced that he would step down from his post as of 15 July. Upon his departure, his portfolio will be assigned to Latvia’s Valdis Dombrovskis, the EU Vice President for the Euro and Social Dialogue.
The reshuffling has implications for the political balance of power within the EU institutions. With Dombrovskis (affiliated to the European People’s Party Group in the EP) taking over Hill’s (affiliated to the European Conservatives and Reformists Group) responsibilities, the Socialists and Democrats group (S&D) demanded something in return. A letter sent from President Juncker to the President of the European Parliament Martin Schulz on 7 July revealed that Pierre Moscovici’s (S&D) role as Commissioner for Economic and Financial Affairs will be enhanced, with greater responsibility for representing the Commission internationally. Moscovici is also expected to have a greater role on issues related to the Stability and Growth Pact as well as Greece. With regards to the UK’s replacement for Lord Hill, President Juncker is set to receive the new candidate, Sir Julian King – the UK’s current Ambassador to France – on Monday 11 July following his nomination by David Cameron. The purpose of the meeting will be to determine the candidate’s suitability. But this process is unlikely to be quick or smooth given that both the EP and the UK national parliament is expected to have their say on the appointment. The final decision shall be taken by European governments and the European Commission President.
The fallout of the Brexit vote is still playing out and questions will continue to be raised concerning the political legitimacy of UK MEPs in the coming months as we approach the midterm of the EP – particularly UK MEPs holding positions of influence e.g. Vicky Ford (Chair of the Committee on the Internal Market and Consumer Protection) and Ian Duncan (rapporteur on the review of the Emissions Trading System).
During the EP debate on the outcome of last week’s European Council, the leader of the European Conservatives and Reformists (ECR) and UK MEP Sayed Kamall said that UK MEPs are still fully entitled to continue their normal duties, including the drafting of reports and opinions, as well as the chairing of committees. Having resigned from his rapporteurship of the Emissions Trading System negotiation the day after Brexit, UK MEP Ian Duncan decided this week to resume his role following support from fellow MEPs. Although not outlined explicitly, the motivation behind this move was linked to the fact that the ECR was ready to appoint a Polish MEP to replace him; one who would have been far less eager to facilitate compromises given Poland’s heavy dependence on highly emitting fossil fuels and the country’s track record on climate change.
The Lisbon Treaty was supposed to give the EU a stronger position on the world stage. Yet, the EU has struggled to demonstrate shared responsibility. The power of decision making rests predominantly in the hands of the Member States, whose leaders can rarely see beyond their own national goals, their mandates and political cost of their actions.
Where do we go from here? One camp is arguing for a return to intergovernmentalism, emphasising the importance of national sovereignty and free trade. On the flipside, pro-integration and federalists are fighting tooth and nail to save the European project, while also recognising that circumstances have changed and things need to be done differently. The EU has seemingly lost its attractiveness and is in need of reform from within. In this respect, Brexit has come at a timely moment as the EP is about to begin discussions on the ‘future of Europe’. Three reports are on the table which will touch on the following issues:
The report on EU Treaty Change will be presented to the Constitutional Affairs Committee of the EP on Monday 11 July by Guy Verhofstadt, the leader of the Alliance of European Liberals & Democrats. The report provides a platform for discussion on the ‘future of Europe’. We expect to see proposals resurface for a two-speed Europe and it has also been suggested that there will be a proposal to abolish the European Council, leaving decision making instead to the Council of Ministers. The debate could turn into a fully-fledged battle between Eurosceptics and federalists but the advent of Brexit should provide ample learning experience for policy makers as well as awareness of public sentiment. The challenge for federalists will be to show appreciation of the sentiment across Europe and find balanced and realistic proposals on how to reform Europe without pushing a strong federalist agenda. Brexiteers and Eurosceptics also need to come to the table with concrete and credible proposals, which have until now been distinctly lacking.
Using its right to propose own-initiative reports such as the three aforementioned reports, the European Parliament is positioning itself as an important power broker and idea shaper. The outcome of these reports could play a significant role in defining a path forward for the EU, with or without the UK. Lest we forget, the European Parliament will have to give its consent to any deal that is struck on Brexit between the EU and the UK. The European Institutions are set to enter the summer recess period as of 15th July. They will return towards the end of August with bated breath for the results of the Conservative leadership race.