EU Politics: A Narrow Vote for Progress

By Holger Schmieding*

Ende gut, alles gut – all is well if it ends well? After some unsavoury back-and forth on the distribution of top jobs in the European Union, the European Parliament has narrowly elected Ursula von der Leyen as the successor to Jean-Claude Juncker at the helm of the European Commission.

Her five-year term starts in November. She received 383 votes, only slightly more than the required minimum of 374 votes. Five years ago, Juncker had been elected with 422 votes.

Institutional crisis averted

With yesterday’s vote, the EU has averted a major institutional crisis. On balance, the vote for von der Leyen could put the EU on track for some progress. But the unusually tight result also highlights the challenges von der Leyen will face.

Can von der Leyen make a difference? Probably yes — but only modestly so. And possibly not in the straightforward way that some observers may hope for.

The ambitious agenda she presented has more green, center-left and risk-sharing elements than German chancellor Angela Merkel has ever endorsed.

However, as head of the European Commission, von der Leyen will have little control over which elements, if any, will be enacted. But that she, as a modern German conservative, has put forward such an agenda can soften German resistance to some of the ideas she put forward. In that sense, her election may make a modest difference.

The vote in Strasbourg for von der Leyen also removes the last shred of doubt that Christine Lagarde will be the next ECB President. A few hours ahead of the vote, Lagarde resigned from the IMF, effective September 12th.

Limited powers

The powers of the Commission president are quite limited. The Commission takes the lead in enforcing EU rules and plays a significant role in EU legislation and regulation. It conducts trade (and Brexit) negotiations.

But the big decisions in the EU, such as those during the euro crisis, are taken by the heads of states and governments (the European Council) — rather than the Commission or Parliament.

As Commission president, von der Leyen cannot even pick her fellow commissioners who are nominated by member countries. She can, after careful consultations with member countries, only allocate more or less important portfolios to them.

Also, key decisions on Brexit will be taken just before von der Leyen takes office in November.

Ursula’s agenda

Von der Leyen laid out her agenda in a passionate speech at the European Parliament on the day of her election and in more detailed “political guidelines” published at the same time.

Given her limited power as head of the Commission, she was remarkably ambitious. Among many other issues, she proposed to:

• make the EU climate-neutral by 2050, with a cut of carbon emissions of 50% or even 55% by 2030 instead of the current 40% goal,

• unlock €1 trillion of green investment over the next decade as part of a “Green Deal for Europe,”

• introduce a European unemployment benefit reinsurance scheme,

• develop a framework for minimum wages that “pay for a decent living,”

• “make use of all the flexibility allowed in the rules“ of the Stability and Growth Pact,

• complete capital markets union and banking union, including a European deposit insurance scheme,

• grant the UK a further Brexit extension beyond 31 October if required “for a good reason,”

• support a right for the European Parliament to initiate legislation, currently a prerogative of the European Commission.

No treaty changes needed

The last promise should be easy to keep. Von der Leyen announced that her Commission will formally propose all legislative acts which the European Parliament wants to take up. No need to change the European treaties.

Whether or not she can keep the other promises will not be under her control, except perhaps in the sense that her choice of commissioner for economics and financial affairs can influence the discussion about how flexibly fiscal rules should be interpreted.

She may nonetheless make a bit of a difference.

*Chief economist at Berenberg Bank in London
**First published in theglobalist.com