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Rising populism, Brexit and the future EU policy making – caught between a rock and a hard place

Posted: Oct 19, 2017 by Instinctif Partners

There are two key and to an extent interconnected issues dominating the political commentary on the EU today: one is Brexit and the other is the rise of populism and Eurosceptic nationalism in member states with some experts even claiming that the former is essentially a subset of the latter. Regardless of how one views either, the fact remains that they will both be the defining markers for the future (or lack thereof) of the European Union.

However, how much is EU policymaking affected by both these issues today and at the very pragmatic level of the way the EU functions? How much influence are these issues exerting on the day-to-day decision-making of the European Commission? Or on the political guidance the College gives to Directorates?

Given the predominance of politics over law in actual EU policymaking and the (increasing?) institutional weight of the Council in the EU architecture it is too evident to suggest that Brexit and the rise of populist and Eurosceptic parties in EU governments do and will continue to play a role. However, we do not know exactly how important and to what extent. Still, we can suppose that the Commission will want to try to keep member states as close as possible most likely by avoiding unnecessary antagonistic situations.

On the level of high politics, we are already witnessing acknowledgement of this fact. The European Commission seems to be taking a softer line on issues of migration quotas or at least to be somewhat silent on the Visegrad Four EU member states that continue to refuse to follow these quotas. At the same time, it seems that France and Germany agree in principle to the creation of a multi-speed EU with the willing and able moving to further (economic) integration and the rest staying where they are which would also mean that additional pressure will be exerted by member states on the European Commission for or against this proposal.

However, we believe that there may also be a significant and immediate impact of these two markers at low-level EU politics as well. We believe that the Juncker Commission is already in full gear to minimize as much as possible any issues which may antagonize these Eurosceptic political outliers and to generally create any discord which may be deemed unnecessary. We further believe that there is a determination to minimize antagonisms even at the cost of the Commission downplaying its role as Guardian of the EU Treaty – at least for now.

We would suggest that a potential litmus test for this is that in the months to come we may be witnessing the Commission walking away (as Treaty Guardian) from any issues of member-state EU law violations in non-harmonized areas (e.g. pharmacies or non-harmonized health issues) and in general from any other issue which may cause friction and does not create immediate and obvious problems in the functioning of the Single Market.

However, we believe that if this were the case then the Commission may be trading some ill-perceived breathing space now for a potentially insurmountable inflection point later. Because, once the door is opened for essential ‘carveouts’ of the EU economy to be granted to member states with complete liberty to do as they will, then it may not be long before the harmonised areas of the EU will also be impacted. Especially since any economy (and today even more so) is a complex and interconnected ecosystem and it may not be long before we begin to see the Commission giving in to member states in more ‘sacred’ harmonized areas like the Digital Single Market (e.g. a very permissive approach vis-à-vis national eID verification schemes that can help to artificially ‘close’ digitally national markets).

Therefore, as the Brexit negotiation will begin to truly heat up in the months to come, even more businesses and sectors in both sides of the Channel will be caught in the nexus between the Commission, member states interests, and Brexit. And therefore businesses will be facing rough EU and national regulatory waters to navigate.