Stratfor's 2019 Second-Quarter Forecast predicted that the May election for the European Parliament would result in a fragmented legislature and a slower and more complex parliamentary process. The forecast for Europe also highlighted that the most recent vote would mark the beginning of a dispute between member states to appoint the leaders of the main EU institutions.
The votes have been counted in Europe and the results are in. As expected, the European Parliament elections, which ran from May 23 to 26, resulted in a fragmented legislature; the center-right European People's Party (EPP) and the center-right Socialists and Democrats (S&D) lost ground to emerging forces, including the Alliance of Liberals and Democrats for Europe (ALDE), the Greens and the Euroskeptic Europe of Nations and Freedom (ENF).
Here are the main takeaways of the vote:
A More Fragmented Parliament
For decades, the EPP and the S&D controlled a joint majority of seats in the European Parliament, which meant that an agreement between them was all it took to pass legislation. That will no longer be the case in the next legislature because the EPP and the S&D will have to canvass smaller parties to pass legislation. This will give parties such as ALDE and the Greens a greater role in shaping EU policies. While ALDE is pro-business and wants to reduce bureaucracy in the European Union, the Greens support policies to reduce Europe's carbon footprint and improve rights for workers across the Continent. The latter initiatives could become problematic in future negotiations over free trade agreements with non-EU countries because the EU Parliament could pressure the commission to include these kinds of provisions in deals.
Parties including the Alliance of Liberals and Democrats in Europe and the Greens will have a greater role in shaping EU policies going forward.
While the Euroskeptic parties improved their parliamentary representation, they are not strong enough to influence the legislative process in a meaningful way. A more fragmented parliament also means a slower legislative process and greater chances for conflict between the EU Parliament and the European Council, whose approval is required to pass EU laws.
The Race for the Main EU Institutions Is On
In the next six months, governments in the European Union will have to appoint presidents for three of the most important institutions in the bloc: the EU Commission (around September), the European Central Bank (around October) and the European Council (around November). These decisions will come in addition to replacing some of the senior staff of the three institutions. The trio of appointments are interconnected, in part because EU governments will try to find a balance between geography and ideology when it comes to distributing power within the bloc. Germany and France, the European Union's main political powers, are both eyeing the presidency of the European Commission, the bloc's executive arm. The "loser" of this dispute, or a member of a like-minded country, will probably be given the presidency of the European Central Bank, while the presidency of the European Council (the least relevant of the three appointments) will probably be a consolation prize for the region that lost the other two competitions.
In the coming months, EU governments will have to appoint presidents for three of the most important institutions in the bloc: the European Commission, the European Central Bank and the European Council.
These are not minor disputes: The commission is in charge of proposing legislation in the European Union, represents the bloc abroad and handles negotiations on issues such as trade agreements. The new commission will have to hit the ground running, especially since the European Union and the United States are still struggling to negotiate a trade agreement (agriculture remains the primary obstacle) while the White House's deadline for the bloc to come up with ways to limit its exports of cars to the United States will arrive in November. The European Central Bank, in turn, sets the monetary policy for the 19 members of the eurozone and will be a key player in any future crises in the currency area. While there is not a direct connection between geography and ideology, southern Europe is likely to push for an ECB president that continues some of outgoing ECB President Mario Draghi's signature policies — such as low interest rates and bond-buying programs — while northern Europe is likely to push for a more orthodox president.
The elections also triggered domestic repercussions across the European Union. In Italy, the governing League party's strong performance will increase disputes with its coalition partners in the Five Star Movement, especially as the League will look to introduce policies that the Five Star Movement opposes — including competing for big infrastructure projects and granting more autonomy to Italy's northern regions. At the same time, the League will push to cut taxes in Italy. This is something that will irritate the European Commission, which is worried about the impact on Italy's deficit.
In Germany, meanwhile, the worse-than-expected performance of the governing center-right Christian Democratic Union (CDU) and Social Democratic Party (SPD) is a reminder that this is an awkward alliance that nobody wanted. While the parties are likely to stick together, the collapse of the government and an early general election cannot be ruled out. This is exactly what's happening in Greece, where the ruling center-left Syriza party decided to call an early election after its poor performance in the EU Parliament vote. The vote is expected in late June or early July. The French government, for its part, had a bittersweet election: President Emmanuel Macron's En Marche party lost the election to the right-wing National Rally, which shows that many voters are not happy with the Elysee and could force the government to slow down its reform agenda. But Macron's party is allied with ALDE in the European Parliament and expects to be a key member in the future legislature.
The elections for the EU Parliament in the United Kingdom produced mixed results. On one hand, support for parties that want the United Kingdom to remain in the European Union was slightly higher than support for parties that want to leave the bloc. This only adds to pressure on leaders of the Labour Party, the main opposition party, to abandon its current ambiguity about a second Brexit referendum and openly support a new vote.
When it comes to Brexit, the question still remains the same: What kind of exit to push for?
On the other hand, the absolute protagonist of the election was the Brexit Party, which obtained 32 percent of the vote. This result will influence the leadership contest within the Conservative Party — which obtained a disappointing 9 percent, its worst-ever result — as a large number of people who voted for the Brexit Party are former Conservative voters. The outcome will convince the Conservatives to finally "deliver Brexit" and try to regain the votes they lost. The question remains the same, however: What kind of Brexit to push for? Surveys suggest that a hardliner (who considers that a no-deal Brexit is an acceptable outcome if London cannot negotiate a satisfactory deal with Brussels) stands a better chance of becoming party leader (and therefore the next prime minister) than a softliner. The new Conservative leader should be appointed in late July, and no matter who becomes the next prime minister, their first attempt will be to negotiate an orderly deal with Brussels.