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Euro/Atlantica (USA-NATO-Partners) Gianluca Pastori

The European elections and their transatlantic impact

The European elections of May 23-26, 2019 will not impact only on the EU internal dynamics but also on the system of the transatlantic relations. The provisional results (updated at June 26) allot 182 seats on 751 to the Christian-democratic European People’s Party (EPP), 154 to the Progressive Alliance of Socialists and Democrats (S&D), 108 to the of Renew Europe, 75 to -European Free Alliance, 73 to the sovereigntist forces of Identity & Democracy (ID), 62 to the and Reformists Group (ECR), 43 to European Free and Direct Democracy (EFDD), 41 to the Confederal Group of the European - Nordic Green Left (GNU/NGL), and the remaining 13 to minor forces and non-inscrits MPs1. In the next weeks, this picture will grow simpler. Once inaugurated, the Parliament will choose the new President of the European Commission (EC), the vice-presidents and the twenty-seven commissioners, one for each member state. Then the procedures will be open to appoint the heads of the different institutions; first of all, the President of the European Central Bank (ECB), since the mandate of the current President, Mr. Mario Draghi, is expiring on October 31. It will be a long process, which the electoral results make more difficult, since the traditional EEP/S&D majority has lost more than seventy MPs, passing from 54% of the total seats to 43%. As stated above, the results of this process will be important not only for the future of the EU. The EU is a US strategic partner and, in an historical perspective, one of the greatest successes of its foreign policy. The Atlantic region is the most integrated economic area worldwide. Regional trade is worth 5.5 trillion dollar/year and supports some ten million jobs. Scientific and technological cooperation, as well as cooperation in the industrial sector, is fundamental for both the US and the EU and not even the recent cooling down of the bilateral relations seems to have affected this state of things. Finally, the European countries are a traditional US political and military ally; a security bond – embodied in the Atlantic Alliance and in NATO – lasting since 1949 despite the tensions that repeatedly affected it. In recent years, US political events have placed the US-EU relationship under increasing strain. However, many common interests remain, covering the full spectrum of the political, economic and military dimensions. This is why, for the new European institutions too, transatlantic relations will remain on the top of the agenda. In the commercial field, the (EP) ratifies the agreements that the EC signs and has an advisory role on its mandate. In this way, the new Parliament can have a part in a possible EU-US agreement. On March 14, 2019, the EP rejected (with a non-binding decision) a draft resolution to open negotiation with Washington2. The background was the compromise reached in summer 2018 by the President of the EC, Jean-Claude Juncker, and President Trump to defuse a trade war on the tariffs imposed on US aluminum and steel imports. Aim of the Trump- Juncker compromise was opening negotiation on tariffs affecting the industrial sector (already quite low) and to harmonize the regulatory standards. However, on the terms of a possible agreement there are different positions among both parliamentary groups and member states, with largely in favor and largely against. Agriculture (which was not part of the Juncker-Trump compromise) is another critical sector, due to the relevance that some states attach to regulations on subsides, genetically modified organisms and geographical indications.

1 Updates are available at the EP Internet page: https://election-results.eu. Non-inscrit MPs are members of parties that do not belong to a political group. 2 For a timeline of the US-EU trade negotiations see http://www.europarl.europa.eu/legislative-train/theme-a-balanced- and-progressive-trade-policy-to-harness-globalisation/file-eu-us-trade-talks; on the Juncker-Trump compromise see US and EU reach deal to calm trade war fears – as it happened, “The Guardian”, July 26; 2018, https://www.theguardian.com/business/live/2018/jul/25/trump-juncker-trade-talks-tariffs-cars-business-live.

Osservatorio Strategico 2019– Year XXI issue I 8 Euro/Atlantica (USA-NATO-Partners)

In the energy sector, despite growing LNG import from the US3, both the Congress and the administration have talked about possible sanctions to stop the building of the Nord Stream 2 pipeline that, once completed, will significantly increase EU dependency from Russia4. Finally, if the US decision to postpone the adoption of tariffs on automotive imports has smoothed tensions, it has not ruled out a possibility that could heavily impact on the future of the EU-US agreement5. Open questions do not regard only goods. Services (mostly digital services) are the fastest growing sector in both US and Europe. US and Europe together account for some 75% of world’s digital content production, while in 2017 the US exported to Europe more than 200 billion dollars in digital services. The US are also the main consumer of European digital enabled services “outside of the bloc”. All these flows could be negatively affected, in the future, by different choices in terms of privacy and data protection. The US-EU Privacy Shield currently regulating the transatlantic data exchange impacts on the activities of 4,000 firms and is revised on a yearly base (the last revision dates to October 2018). In the past, the EP has already asked the suspension of the Shield due to its non-compliancy with the European General Data Protection Regulation (GDPR) and until the US will not appoint a permanent data protection authority as required in the Shield itself. Moreover, the EU is in the process of adopting new rules in the data protection sector, first of all, an ePrivacy Regulation aimed at replacing the Privacy and Electronic Communications Directive (2002) as a new step towards the completion of the digital common market. In this sector, the EP is traditionally in favor of a restrictive approach to data protection while the sector’s operators (and the US great players among them) point out how too tight regulations could have negative consequences on technical innovation and led to financial losses worth billion dollars. Technology transfer and data protection impact on EU-US relations also through the debate on the role of firms like Huawei and ZTE and on the growing weight of China in the EU economy. There are several positions on how to deal with this new Chinese prominence. Officially, the EU considers China a “systemic rival” but different member states have other attitudes. In March 2019, signed a non-binding memorandum of understanding (MoU) in view of a possible participation to the Belt and Road Initiative (BRI), while eleven EU members states from central and eastern Europe (, , , , , , , Poland, , , and ) participate, together with Beijing, to the "16+1" forum (which could become “17+1” with the possible accession of Greece6). In several EU countries Chinese firms are active in the infrastructure sector (from port and harbor management to the development of last-generation TLC systems) and this presence could increase after the signing and ratification of the investment agreement that Beijing and the EC are negotiating since 2013. At EU level, there are fears of an excessive opening toward the PRC. The Italian MoU raised cold reactions in Brussels as well as in Washington7, while a recent EU document defines China no more a “strategic partner” (as it has

3 http://europa.eu/rapid/press-release_IP-19-2313_en.htm. On the US side the figures of the Energy Information Agency (EIA), Europe’s liquefied natural gas imports have increased lately, but remain below 2011 peak, Oct. 25, 2018, https://www.eia.gov/todayinenergy/detail.php?id=37354. 4 S. Holland, T. Gardner, Trump considering sanctions over Russia's Nord Stream 2 natgas pipeline, “Reuters”, June 12. 2019, https://www.reuters.com/article/us-gazprom-nordstream-usa/trump-considering-sanctions-over-russias- nord-stream-2-natgas-pipeline-idUSKCN1TD267. 5 N. Chrysoloras, B. Baschuk, EU, Japan Reprieve from Trump Car Tariffs May Be Short-Lived, “Bloomberg”, May 16, 2019, https://www.bloomberg.com/news/articles/2019-05-16/eu-japan-reprieve-from-trump-s-auto-tariffs-may-be- short-lived. 6 E. Kavalski, China’s “16+1” Is Dead? Long Live the “17+1”, “The Diplomat”, March 29, 2019, https://thediplomat.com/ 2019/03/chinas-161-is-dead-long-live-the-171; on Italy and the “Belt and Road Initiative” see A. Chatzky, China’s Belt and Road Gets a Win in Italy, Council on Foreign Relations, New York - Washington, DC, March 27, 2019, https:// www.cfr.org/article/chinas-belt-and-road-gets-win-italy. In the past, two other EU countries have entered the BRI: Greece (August 2018) and Portugal (January 2019). 7 A Giuffrida, Italy rattles US and EU with likely support for China's Belt and Road, “The Guardian”, March 20, 2019, https://www.theguardian.com/world/2019/mar/20/italy-rattles-us-and-eu-with-likely-support-for-chinas-belt-and-road; Italy’s plan to join China’s Belt and Road Initiative ruffles feathers, “The Economist”, March 21, 2019; on the possible

Osservatorio Strategico 2019– Year XXI issue I 9 The European elections and their transatlantic impact been for more than fifteen years) but a “negotiating partner; maybe a sign of the Union’s will to find a new balance in its relations with a country that is increasingly perceived as both an economic and technological challenger and a political competitor, promoting with its international posture a different institutional model and an alternative system of governance8. In the military field, the expenditure of the European NATO members has been a constant source of complaints from the US, although it has been Donald Trump who, recently, raised the issue with the greatest strength. In the last few years, the tensions that this attitude has fuelled have led several actors to revive the idea of a European defence identity. Despite the EP has a limited role in this realm, it adopts the EU budget, which funds the Common foreign and security politics (CFSP) and, in its framework, the Common security and defence politics (CSDP). From this point of view, the next Parliament will play a role in setting the level of ambition of the European defence by defining, among the other, the amount of the European defence fund (EDF). The target is reaching 13 billion euros in 2021-27, so to finance a long list of joint industrial projects, as well as the mechanism of the Permanent structured cooperation (PESCO), which in its turn keeps together twenty-five states in thirty-four common programs9. A wealthy EDF would mean more resources to be devoted to common defence, in line with the American requests. However, Washington has repeatedly expressed its annoyance for the fact that its national industries will be excluded from the procurement programs founded by the EDF; it has also reaffirmed the well-known fears that the military efforts of the European countries could be in contrast with their NATO role. In its turn, the EU has repeatedly affirmed that its aim is searching a synergic relationship with NATO, avoiding competition and duplications, and that the projects currently under way only aim at strengthening its defence capabilities in line with the pursuit of the common goals. In this perspective, a strengthening of the Eurosceptical forces (both right- and left-wing) and of their vision of security as mostly a national issue could lead to a decline in common expenditure, with negative effects not only on the existing programs but also on the broader system of the transatlantic relations. In the past months, the launch of the European Intervention Initiative (EI2) has shed light on of the differences existing among the EU member states and among them and the United States10. These differences risk to grow deeper, on the one hand due to a “Brexit effect” that pushes on the foreground the clash between integrationist and sovereigntist forces, on the other due to the weakening of the “centrist bloc” traditionally controlling the EP. It was this bloc that – due also to its weight in the other European institutions (the EC and the ) – has been able, until now, to elaborate the Union’s defence and security vision and to incorporate this vision into a series of common mission. With reference to the “Brexit” process, some analysts have pointed out the risk of an over-politicization of the defence issue and warned against the negative consequences of transforming the debate on this issue into a partisan one11. On the other hand, the risk is that, due to the new political balance, this process of “partisanization” could gain strength

impact on EU-China relations of Italy’s accession to the BRI see the remarks by F. Manenti, The Italian Gateway for BRI toward Europe, CeSI - Centro Studi Internazionali, [Rome], 2018. 8 Joint Communication to the European Parliament, the European Council and the Council, EU-China - A Strategic Outlook, JOIN(2019)5 Final, Strasbourg, 12.3.2019, https://ec.europa.eu/commission/sites/beta-political/files/ communication-eu-china-a-strategic-outlook.pdf; an analisys of the implòicatrions of this new posture is in V. Zeneli, Italy Signs on to Belt and Road Initiative: EU-China Relations at Crossroads?, “The Diplomat”, Aprli 3, 2019, https://the diplomat.com/2019/04/italy-signs-on-to-belt-and-road-initiative-eu-china-relations-at-crossroads. 9 N. Wallace, European Parliament approves defence R&D deal with national governments, “Science/Business”, April 18, 2019, https://sciencebusiness.net/news/european-parliament-approves-defence-rd-deal-national-governments. 10 On this aspect see G. Pastori, La NATO e la sfida di un’identità militare europea: la European Intervention Initiative (EI2), “Osservatorio Strategico [CeMiSS]”, vol. 20 (2018), n. 1, pp. 13-19. 11 On these aspects see, recently, A. Pannier, European defence cooperation after Brexit: The Politics of Acronyms, “Atlantic Community”, Feb. 20, 2019, https://atlantic-community.org/european-defence-cooperation-after-brexit-the- politics-of-acronyms.

Osservatorio Strategico 2019– Year XXI issue I 10 Euro/Atlantica (USA-NATO-Partners) in the next months, due also to the sensitiveness of some tasks that the European armed forces are discharging (maritime patrolling, border security, immigration control). As already said, it still needs several weeks to the EP to be fully operative. However, in the formation of the parliamentary groups some elements are emerging, apparently contradicting the early assumptions. First, the expected (and, in certain quarters, feared) “sovereigntist wave” largely failed to materialize, although in several countries the Eurosceptical forces have scored a relevant success. Second, the elections have confirmed the crisis of the traditional centre-right (EPP) and centre-left (S&D) forces, as well as the trend towards a greater fragmentation of the political space. These dynamics have already affected – although on different scale – many European countries in the last ten years but at EU level they are a brand-new challenge to the parties that have led the process of integration and, until now, have tried – more or less successfully – to control it. Another question relates to the impact of the new European balance on the domestic politics of the different member countries and on their international posture. The problem is twofold. The strengthening of the sovereigntist parties at EU level will promote their strengthening at national level too and -- in case -- such a strengthening will impact on their attitude toward their international partners, first of all the United States? In recent years, the relations between the US administration and an EU led by the “centrist bloc” has been of the difficult; on the other hand, it is not sure that a strengthening of the Eurosceptical forces within the EP could really affect this state of things. What seems to be sure is the fact that the new EU political balance, while not jeopardizing the EPP/S&D leading role (which could be strengthened by extending the alliance to the liberal forces of “Renew Europe”), will make increasingly difficult to elaborate a meaningful consensus, especially on a set of politically sensitive issues like human rights, trade and immigration, on whom the “centrist bloc”, in the past, has already shown some weakness. Emphasizing this weakness, acting on the cleavages existing within the “centrist bloc”, could be an effective strategy, for the Eurosceptical forces, to capitalize their electoral success and to gain a greater political leverage12. Excluding the UK (where Nigel Farage’s Brexit Party, with 30.5% of the votes, gained 29 seats on 73, five more of the seats gained in 2014 by UKIP with 26.6% of votes), the option of an exit from the Union is not in the political horizon even of the most radical and anti-European forces. Rather, the true issue at stake seems to be the definition of the Union’s political birder, i.e. the distribution of power between national and supranational (“common”) institutions. A division that – as stated above – will impact on the EU ability elaborate its own politics and to cope with the challenges it will be faced in the coming years, from the definition of its potential role in the emerging multipolar international orders to the response to give to the global challenges of security, development and environment protection.

12 Divide and Obstruct: Populist Parties and EU Foreign Policy, The German Marshall Fund of the United States, Washington, DC, May 27, 2019, http://www.gmfus.org/publications/divide-and-obstruct-populist-parties-and-eu- foreign-policy.

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