European Parliament Elections—Setting Expectations

Thursday marked the beginning three days of voting across the 28 EU nations in the first European Parliamentary (EP) elections since 2009. Also, the first pan-EU elections since the eurozone’s debt crisis and 18-month long recession that ended in mid-2013. When the polls close, voters are expected to add more euroskeptics—members of parties favoring less federalism and, in some cases, leaving the euro. With euro jitters still lingering in the background, some suspect this will rekindle breakup fears anew. However, polls suggest euroskeptics gain some ground but fail to shift power away from more traditional European political parties. The movement toward a more integrated Europe likely continues and, with it, support for the common currency likely remains strong. Should polls hold true, the biggest influence I believe the euroskeptics may have is pressuring the pro-euro groups on economic policy.

European Union Government

• European Council: Heads of each EU member state with no formal legislative power. The Council defines general EU political directions (and addresses crises).
• European Commission (EC): Executive body of the EU, consisting of a President (elected by the European Parliament) and 27 commissioners selected by the European Council and the EU President. They are responsible for proposing legislation, implementing decisions and addressing day-to-day EU operations.
• European Parliament (EP): Directly elected legislative body of the European Union (five-year terms). The EP is an approval body. They do not initiate legislation, instead voting on and amending European Commission proposals. The EP directly elects the European Commission President and confirms the European Commission after its formation.

There will be slight structural differences in Parliament, regardless of the voting. Between 2009’s election and this year’s, the EU ratified the Lisbon Treaty, altering the structure of the body, modestly reducing the influence of larger nations like Germany. The EP will consist of 751 seats, 15 fewer than before. Representation will still be based on population, but with certain caveats. The Lisbon Treaty caps each member state at a maximum of 96 and mandates a minimum of six seats to all. This will automatically reduce Germany’s standing from the present Parliament and slightly boost the power of small EU nations. However, national distribution isn’t really at issue in the race. It’s much more about pro-euro versus euroskeptic.

At the EP, the major political parties form groups—superparties, if you will—with loosely similar ideological guidelines from a left/right perspective. We can then categorize these superparties further, based on their pro- or anti-euro status. The two biggest groups are the center-right European Peoples Party and the more left-leaning Progressive Alliance of Socialists and Democrats. The third largest is the centrist Alliance of Liberals and Democrats for Europe. These three largest groups support the common currency and tighter European integration. The Greens-European Free Alliance is mostly environment focused and overall pro-euro, but it contains some elements that lean euroskeptic. Polls project these pro-euro groups winning nearly 70% of the seats.

Euroskeptic groups likely take the balance, or around 30% of the seats. That is a noteworthy increase from 2009, but the bigger change since 2009 is the rise of a euroskeptic minority tied to eurozone debt crisis. Recent polls suggest euroskeptic parties will take 30.6% of seats, up from 2009’s 19.1% in 2009.ⁱ

Exhibit 1: Current European Parliament and 2014 Poll Data by Group

Parties in blue shading are considered pro-euro, those in orange euroskeptic.

Source: Vote Watch Europe, as of 05/20/2014.

Three of the four euroskeptic groups, the European United Left-Nordic Green Left (GEU-NGL), Europe of Freedom and democracy (EFD) and Non-Inscrits (NI)—seem set to gain seats. The NI—a group of members of parliament unaffiliated with the larger EP groups—is expected to win the biggest share among euroskeptic groups. It—and the GEU-NGL and EFD—tend to extremes (far left or right). The most centrist of the euroskeptic groups, the European Conservatives and Reformers, seems set to lose seats.

Some cite this shift toward extremes as a function of voter apathy—EP elections are seen by many Europeans as second-rate relative to their national elections. However, to some extent, voting trends suggest somewhat of a protest vote motivated by the euro crisis.

When Sunday’s voting is done, if the polls hold, control will remain with the pro-euro groups. But the elections might push the traditional powers (namely the European Council) to take some action to satiate a few of the demands coming from fringe parties, like enact “pro-growth” initiatives and/or relax deficit targets.

However, I don’t expect any of these measures to move the needle. The European Council retains the majority of the power in the EU, and there doesn’t seem to be a strong consensus amongst them on the direction of new, sweeping legislation. The election—even with more noise from euroskeptics—likely won’t threaten the common currency or EU’s solidarity.