European elections will be held on Sunday, and a new Parliament will emerge from them and, months later, a new Commission will have to face a global scenario even more complex than that of their predecessors. We have a lot at stake because Europe has a lot at stake.
The European economic situation is more fragile than it seems. At first glance, the data is much better than a year ago, but we must never forget that we are emerging from a crisis generated by a war that has not yet ended: it has only stagnated. In the coming months we can expect news regarding the ukrainian war, and we will have to react bravely. We must wait for news because it is unrealistic to think that the status quo can be maintained for long: either some ceasefire agreement is reached between Russia and Ukraine (which will hardly address territorial issues in the short term, as it would be politically inadmissible for both leaders), or one of the parties will have to give in. If it’s Ukraine, Europe will have a serious problem.
That doesn’t mean that Russia do not have other problems: among other things, because she does not feel comfortable with her increasing dependence on China, who has been helping him avoid sanctions by buying oil and selling him technological and military equipment. Russia has managed to relocate most of the oil that Europe has stopped buying, but not the gas, because redirecting it to China requires the completion of the Power of Siberia 2 gas pipeline. But China demands that Russia supplies it with gas at (heavily subsidized) domestic prices, and does not commit to purchasing more than a small fraction of the annual capacity of the 5 bcm gas pipeline. Its bargaining power derives from the fact that it can cover its gas import needs for the coming years quite well with current contracts, and it is in no hurry to turn to its “more than ally” (from which, on the other hand, it already supplies a price less than half of what Europe paid). That, of course, does not mean that China is going to let Russia fall: it will never allow the West, and in particular the United States, to claim an easy victory, because it would send a bad message for future confrontations.
If Trump comes to power, the supply of weapons to Ukraine could stop, and Europeans, in addition to the feeling of failure, would only be left to make bets on which would be the next Russian target.
In any case, by the time the new European Commission begins its journey, there will already be a winner of the United States presidential elections. Although Trump’s victory is not guaranteed, both Russia and China are interested in him winning: Russia, because Trump has promised to abandon Ukraine to its fate, and China, because he considers him a more transactional president than Biden. If Trump comes to power, the supply of weapons to Ukraine could stop, and Europeans, in addition to the feeling of failure, would only be left to make bets on which would be the next Russian objective. The tension in Taiwan, for its part, does not seem to be decreasing in the short term – whoever the new president is – and it is very possible that, if there is a confrontation between China and the United States for this reason, it will take place during the next legislature.
The problem of financing
Another challenge that the next European Commission and Parliament will face will be financing of European public goods such as defence, the green transition and the digital transition. All three things need money, a lot of money, but the EU is not prepared to provide it. At the level of public investment, because the new fiscal rules are going to represent a strong restriction on the governments’ room for maneuver; and, at the level of private investment, because European capital markets remain too narrow and too fragmented to absorb such high financing: large investment funds need very large volumes to prevent their acquisitions or sales from altering prices too much. (That is why the United States continues to attract part of European savings, as the Letta Report points out). Even if the Next Generation EU experiment comes to an end, the question will remain: how to finance these assets – and, more urgently, European defense – if not with more common resources, joint debt and a certain mutualization of the fiscal policy?
The excess of regulations and bureaucratic burden in areas such as agriculture, with great social opposition, runs the risk of becoming a decisive element in Sunday’s elections
Finally, the new EU will have to face another internal challenge: the regulatory. After years of leading the regulation of relevant aspects of international governance, such as data privacy, decarbonization or other aspects, a time has come when European regulation can become a dangerous slab for its competitiveness. Regulating well is not regulating a lot, and the geopolitical scenario of 2024 is not the same as before the pandemic. The excess of regulations and bureaucratic burden in areas such as agriculture, with great social opposition, runs the risk of becoming a decisive element in Sunday’s elections. The new Commission will have to ensure that the introduction of new standards and the application of the existing ones is done intelligently, otherwise there is a danger that citizen reaction will end up putting the entire strategy to combat climate change at risk.
In short, the new EU legislature that emerges from the polls on Sunday is not going to be easy. The problem is that many of the solutions to the aforementioned problems necessarily involve greater integration (of the single market, financial and fiscal) and a reform of treaties, but there is a danger that we will go towards a much more nationalist political configuration that minimizes any integrative impulse. Whatever the case, we better take the elections very seriously. Today, more than ever, the future of Europe – that is, our future – depends on the decisions taken in Brussels and Strasbourg being brave… and right.
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