Belgian Foreign Minister Hadja Lahbib poses with a European flag in a replica polling station box to encourage people to vote in the upcoming European elections.
Laurie Dieffembacq | Afp | Getty Images
The political makeup of the European Union will soon change as voters in all 27 member states will go to the polls from Thursday to Sunday.
Given the growing support for right-wing extremist parties, analysts expect the Union to adopt more protectionist policies with fewer climate targets and higher defense spending.
CNBC takes a look at why this election matters for Europe and the rest of the world.
Relations with the USA
Lawmakers and European Union officials widely cheered U.S. President Joe Biden’s election victory in 2020, viewing it as a new beginning for transatlantic ties. Up to that point, European officials had faced significant challenges from the previous administration of Donald Trump, which imposed trade tariffs, divided over climate promises and shocked establishment politicians with its combative style.
The future of the transatlantic relationship is still uncertain as US voters go to the polls in November and it remains to be seen whether Biden will remain in the White House or whether Trump will return.
But regardless of what happens, the EU has learned an important lesson: it may no longer be able to rely on the US for defense in the future. Trump has previously noted that he would not protect NATO countries from Russian attacks if they defaulted on their membership dues. Additionally, U.S. lawmakers took several months to approve new financial aid to Ukraine, raising questions about their long-term commitment to the cause.
Therefore, the next EU policymakers are expected to increase spending and work more closely with themselves on defense issues.
Relations with China
The European Commission, the EU’s executive branch, is expected to announce new tariffs on Chinese electric vehicles just days after the election.
The EU has walked a tightrope in its relations with China.
On the one hand, Brussels recognizes Beijing as a strategic rival, but at the same time wants to maintain cooperation on climate and geopolitical issues.
Green promises
After the 2019 EU elections, the bloc claimed it was a global champion of a climate-friendly agenda. However, with the imminent arrival of more climate-sceptic politicians in Brussels, there is an expectation that the bloc will relax some of these previous ambitions.
“The shift to the right in the EU Parliament would only allow for a slowdown in further environmental legislation and possibly even a weakening of existing agreements such as phasing out conventional cars by 2035,” analysts at Citi said in a research note in late May.
“This could include greater support for nuclear energy or even encouraging fracking for cheaper and more reliable gas,” they added.
Giorgia Meloni, Italy’s Prime Minister, during a final campaign rally of the Brothers of Italy before the European elections in Rome, Italy, Saturday, June 1, 2024.
Bloomberg | Bloomberg | Getty Images
The future of Ukraine
Following Russia’s invasion of Ukraine, Kiev applied for European Union membership and official negotiations could begin as early as this month.
Although this process will likely take many years to complete, it is already raising questions about how much the EU will need to change to accommodate Ukraine and other new members.
There is a general perception that the EU needs to adopt a qualified majority to get things done, rather than seeking the usual consensus. This would mean that decisions would have to be made without unanimity, as this becomes increasingly difficult as the number of member states increases.
Citi analysts also said there could be a “big shift in net contributions” with Ukraine’s possible entry into the EU, which would likely upset countries that are currently net recipients of the EU budget.
“An even larger representation of Eurosceptics is also likely to counteract bold reforms that could complicate enlargement,” the analysts said.
“It’s the economy”
A Europe-wide survey in March found that citizens see the economy, social justice and jobs as the most important dimensions for Europe’s future.
This is particularly important at a time when the bloc is still recovering from an inflation crisis that dominated most of 2023.
Goldman Sachs said in a research note in May that the EU faces three structural problems: a worsening demographic outlook, weak industrial investment compared to the United States and low productivity growth.
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2024-06-06 05:13:51
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