Featured Analysis

How differentiated politicisation affects voting behaviour in the Council of the European Union | Europp – LSE Blog

Featured image credit: European Council

Decision-making in the Council of the European Union has long been characterised by a depoliticised consensus culture. Yet, as Brigitte Pircher explains, this has changed in the wake of multiple crises and increased politicisation of the integration process. Drawing on a new study, she illustrates how different facets of politicisation are uploaded from the member states to the EU level and subsequently affect governments’ voting behaviour in the Council.

The EU has been challenged and transformed by multiple crises throughout the last decade. First, member states have been asymmetrically exposed to economic stress, which has increased economic tensions and disparities among the member states. Second, the crises have enhanced politicisation in the member states, which places pressure on governments to adjust their policy positions at the EU level.

Scholars have previously identified geographical, ideological, and economic factors as pivotal drivers for governments’ position taking and voting in the Council of the European Union. A general assumption in many of these studies is that governments in the Council act largely insulated from domestic party politics and electoral pressure.

However, as these studies focus on the pre-Lisbon period, they do not account for the impact of the multiple crises that have occurred since – the financial, economic, Eurozone and asylum crises – or the increased politicisation of EU policymaking. In a new study co-authored with Mike Farjam, we focus on Council voting during the post-Lisbon era and take these recent political developments into account to explain governments’ voting behaviour.

Facets of politicisation

Politicisation can be conceptualised as a multi-faceted process where an issue (European integration) grows in saliency, while actors’ positions on this issue become increasingly polarised. Previous studies ascertained that Council voting reflects governments’ responsiveness to their domestic electorate. Therefore, we theorise that the growing Euroscepticism in the EU’s member states – which is either directly expressed by public opinion or channelled through political parties – is also key to understanding how governments vote in the Council.

We further argue that the left-right positions of national parties – both in government or opposition – as well as the growing polarisation between parties, such as increased party system fragmentation, shape Council voting. Moreover, we suggest that the effects of politicisation on voting in the Council are more pronounced in policy areas that were especially challenged by the recent crises – that is, in policy areas pertaining to economic and financial affairs, the internal market, and justice and home affairs.

We combine a new dataset comprising all member states’ votes on legislative acts in the Council between 2010 and 2019 with national-level data. To test the hypotheses, we use mixed-effect logistic regression and model government voting behaviour as a function of, among other things, party system fragmentation within the parliament, Euroscepticism separately for national governments and parliamentary oppositions, and a left-right wing positional score (RILE and RILE square), also separately for government and opposition. While RILE and Euroscepticism are based on the Manifesto Project Dataset (CPM), the variable party system fragmentation is based on the Comparative Political Data Set (CPDS).

Oppositional voting in the Council of the EU post-Lisbon

We find that 36% of all legislative acts were contested by at least one member state after Lisbon, which is a stark increase compared to previous studies. Most contestation occurred in relation to the environment and in our ‘others’ category. This was followed by the internal market; transport, telecommunications and energy; agriculture and fisheries; and, justice and home affairs. We observe the lowest level of contestation in economic and financial affairs. The United Kingdom was by far the member state that most often expressed opposition (votes against and abstentions) in all policy areas except for the environment, where oppositional voting primarily stemmed from Bulgaria, Hungary, and Poland.

Table 1: Opposition and contestation in the most frequently contested policy areas

In our cluster analysis, shown in Figure 1 below, we found a stable cluster of countries that most frequently opposed together in the Council, including the UK, Ireland, and Denmark. While Germany’s oppositional voting was relatively independent of other countries before 2015, it tended to align with the Netherlands, Belgium, and Austria from 2015 onwards. Lastly, and most importantly, after the 2015 refugee crisis, a new cluster of oppositional votes developed among the Visegrád Group.

Figure 1: Clusters of oppositional voting in the Council of the European Union

Note: Clusters are coded in colours. Countries’ positions in the figure correspond to their geo-centroids. The size of the circle surrounding a country indicates the frequency with which it opposed in the Council. Clusters were computed through a hierarchical cluster analysis.

The impact of politicisation on Council voting

We find that domestic national party politics, either directly driven by governments or indirectly channelled through opposition parties, substantially affects voting in the Council. While governments generally became more Eurosceptic in the post-Lisbon era, the impact of this on oppositional voting is only apparent in agriculture and fisheries, economic and financial affairs, and the internal market.

In contrast, in the areas of justice and home affairs and the environment, only the Euroscepticism of opposition parties has an impact on the voting behaviour of governments. This suggests that Eurosceptic opposition parties exert pressure on governments, who subsequently adjust their positions in the Council. In the context of the refugee crisis, and due to increased relevance of environmental topics, one may also interpret this as evidence for governments’ strategic voting behaviour to prevent future electoral losses to opposition parties.

Voting in the Council is, further, primarily driven by government and opposition parties with a centrist position on the left-right scale. This is plausibly traced back to the fact that the main opposers of the EU, radical right parties, tend to take a centrist position on economic issues. The position of governments on the left-right dimension only predicts voting in economic and financial affairs and the internal market. In contrast, opposition parties’ left-right positioning predicts voting in agriculture and fisheries; transport, telecommunications and energy; and our ‘others’ category. We, therefore, again find evidence that governments adjust their positions in the Council as a response to their national opposition.

Overall, governments are the main driver for position-taking at the EU level in the areas of economic and financial affairs and the internal market, whereas all other policy areas (except for agriculture and fisheries) are left to the national opposition and indirectly impact governments’ voting. Taken together, we find strong evidence for differentiated politicisation where ideological standpoints of political parties in government and opposition differently affect voting in the various policy areas. This may result in increased differentiated integration. Further research should, therefore, address the question of how EU politicisation transforms domestic political conflicts and how these conflicts are integrated into EU policy-making.

Setting Europe’s economic recovery in motion: a first look at national plans | Bruegel

Plans for spending European Union recovery funds submitted by the four largest EU countries reflect rather different priorities. So far, only Italy is interested in borrowing from the EU.

European Union countries are starting to set out how they plan to spend money from Next Generation EU (NGEU), the EU’s landmark instrument for recovery from the coronavirus pandemic. In late April, countries began submitting their recovery and resilience plans. A first quick analysis shows that the plans of the four largest EU countries, France, Germany, Italy and Spain, reflect rather different priorities, even if all meet the minimum expenditure benchmarks of 37% for climate and 20% for digitalisation.

Let’s briefly clarify what plans have been submitted. The total funding envelope for NGEU amounts to €750 billion at 2018 prices or €795 billion at current prices. NGEU includes seven instruments, of which the largest is the Recovery and Resilience Facility (RRF). This is composed of grants amounting to €312.5 billion at 2018 prices or €337 billion at current prices, and loans amounting to €360 billion at 2018 prices or €390 billion at current prices. Most recovery plans relate to RRF only, but in Italy’s plan, ReactEU (another component of NGEU) is also included. Italy also includes some extra spending from national resources in its plan. Here, we focus on spending financed by NGEU. It should be noted we do not examine whether spending plans constitute new spending, or also cover spending that was planned before the pandemic.

Of the four countries, only Italy’s plan envisages borrowing under the RRF and thus the Italian plan amounts to a much larger value (€205 billion = €69 billion RRF grants + €14 billion ReactEU grants + €123 billion RRF loans) than, for example, the Spanish plan, which amounts to €69 billion in RRF grants only. Nevertheless, the Spanish plan indicates the country might apply for RRF loans in the future.

The plans have rather diverse structures, which makes their comparison difficult. In particular, the four largest EU countries categorise differently the various spending priorities. On the green and digital components of sub-headings, France and Germany present precise numbers, Spain reports qualitative information, while Italy has a separate digitalisation and two green categories, but does not report whether other categories, such as education and health, have digital or green components. Nevertheless, all countries report the overall shares of green and digital spending. It would have been advisable to use a common template for classifying and reporting various spending categories and their green and digital components.

Thus, we can reasonably compare the overall shares of planned green and digital spending, while grouping all non-green and non-digital spending into a single group (Figure 1).

Germany plans to spend more than half of the EU money it will receive on digitalisation, while the other three countries will spend a quarter or less. In terms of euro values to be spent on digital priorities, Italy plans to spend the most at €42 billion, followed by Spain (€16 billion), Germany (€15 billion) and France (€10 billion).

France plans to spend half of its share of the EU money on green priorities, while the other three countries will spend around 40%. In terms of euro values to be spent on green priorities, Italy plans to spend the most at €86 billion, followed by Spain (€31 billion), France (€21 billion) and Germany (€11 billion).

Figure 1: Overall resource allocation in national plans

The sub-components of the plans also vary. The German plan includes little funding for non-climate and non-digital related policy areas, possibly because Germany is expected to receive the lowest amount in euros. The plans of the other three countries are much more diversified, and include policy priorities such as social inclusion, education, research, health, and even culture and sports in the case of Spain.

Table 1a: Components of the French plan

Table 1b: Components of the German plan

Table 1c: Components of the Italian plan

Table 1d: Components of the Spanish plan

Significant differences between plans can also be seen in their main spending item: climate. The plans set out similar priorities in this area, featuring, in order of importance, green infrastructure and mobility, green energy and buildings energy efficiency. But specific action plans differ significantly (Figure 2).

For instance, possibly because it receives the lowest amount in euros, Germany’s green infrastructure and mobility investments are entirely focused on the development of electric mobility, with incentives to foster the deployment of electric cars, buses and rail vehicles, and a push to develop electric car charging infrastructure. In Spain, starting from a larger euro amount, the plan foresees investments in the development of electric mobility, but also in public transport. Meanwhile, in both France and Italy, half of the investment focuses on the development of the railway system. In France, the focus is rail network modernisation and further development of rail freight and local lines. In Italy the development of high-speed trains is prioritised.

Green energy investments are also structured differently. Probably as a result of the same funding limitation, Germany focuses strongly on the development of a hydrogen economy, through a variety of instruments ranging from research funding to carbon contracts for differences to scale-up deployment. France also plans investment in decarbonised hydrogen, alongside aeronautics support projects and support for the development of key markets for green technology. Italy and Spain – also thanks to the larger resources available to them – plan sizeable investments in renewable energy and smart grids, in addition to support for hydrogen projects.

While investments in buildings energy efficiency follow a similar approach, concentrated on the renovation of both private and public buildings, Italy plans significant investment in climate change adaptation, while France gives greater attention to territorial cohesion in the context of adaptation.

Figure 2: The green components of national plans

We will build on this quick comparison of the plans of four EU countries with a Bruegel dataset covering all the plans. Stay tuned!

We thank Marta Dominguez and Mia Hoffmann for their help with the Spanish and German data.

Recommended citation:

Darvas, Z. and S. Tagliapietra (2021) ‘Setting Europe’s economic recovery in motion: a first look at national plans’, Bruegel Blog, 29 April

Policy Insight | Steering and Monitoring the Recovery and Resilience Plans | CEPS

This paper provides an extensive account of the procedures and rules of the Recovery and Resilience Facility.

It analyses the European Commission’s guidance and offers insights into how the process is being steered and how the implementation of the NRRPs will be monitored. The aim is to highlight not only the opportunities, but also the pitfalls of the RRF governance system. We find a number of difficulties on which member states and the European Commission should focus. A major risk is getting lost in administrative procedures and taxonomy exercises, and neglecting the fundamental pillar for a successful recovery, namely structural reforms that have a direct and lasting impact on the stability and resilience of the European economies and that are in line with EU priorities.

Find the full publication here

Policy Insight | Study on the Non-Financial Reporting Directive | CEPS

This report provides data analysis as part of the ongoing monitoring of implementation of the Non-Financial Reporting Directive (NFRD). The study analysed data on more than 17 million companies, gathered survey responses from more than 200 companies and conducted interviews with over 60 stakeholders.

Among the main findings is that there are about 2 000 companies (excluding exempted subsidiaries) in the EU27 that come within the scope of the NFRD. In practice, approximately 10 000 additional companies (excluding exempted subsidiaries) are obliged to prepare nonfinancial statements based on a broader transposition of the Accounting Directive and NFRD into national legislation. A further estimated 9 000 other public interest entities (PIEs) and large non-PIEs report without a legal requirement. The recurring administrative costs for providing non-financial statements under the NFRD are on average EUR 82 000 per year, of which about 40% can be fully attributed to the legal requirements. These costs depend, among other factors, on company size and sector, level of assurance, comprehensiveness and type of reporting. In addition, about two-thirds of the companies surveyed incur assurance costs, which amount to EUR 76 000 per year on average.

This is the final report of the “Study on the Non-Financial Reporting Directive” for the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA).

Find the full report here

 

CEPS authors: Willem Pieter de Groen, Cinzia Alcidi, Felice Simonelli, Alexandra Campmas, Mattia di Salvo, Roberto Musmeci, Inna Oliinyk and Silvia Tadi.

Can the German Greens benefit from a Merkel-less CDU? | Europp – LSE Blog

Featured image credit: Bündnis 90/Die Grünen Nordrhein-Westfalen (CC BY-SA 2.0)

The German Greens have selected Annalena Baerbock as their candidate for German chancellor ahead of the country’s federal elections in September. Marco Bitschnau writes that with the ruling CDU plagued by scandals and internal divisions, there is now a viable chance that Baerbock could lead the next government.

On 14 March, the German Greens (shorthand for Bündnis 90/Die Grünen) celebrated what was arguably their greatest ever success. In the federal state of Baden-Württemberg, best known for picturesque Black Forest villages, powerful car manufacturers, and a notoriously Pietist-conservative population, they not only became the strongest party again with a record result of 32.6%, but also surpassed Angela Merkel’s CDU (their junior coalition partner since 2016) by a margin of 8.5 percentage points. It was nothing less than a show of strength – and another humiliation for the CDU in its traditional southwestern stronghold. The party that has led all state governments between 1953 and 2011 was once again forced to concede defeat to an opponent they had long refused to take seriously enough.

Ups and downs

There are many reasons why the Greens prevailed in the South. One is their incumbent Minister-President Winfried Kretschmann, a popular 72-year-old former teacher who was swept to power by the Fukushima Daiichi nuclear disaster ten years ago. A member of the Maoist Communist League of West Germany in his youth, Kretschmann, with his distinctively Swabian accent and grandfatherly appearance, has turned into the poster boy of a new Green pragmatism that is unafraid of reaching across the ideological aisle.

It is this pragmatism that has grown increasingly attractive to a centrist electorate otherwise favouring the CDU or the liberal FDP, and that has led the Greens into coalitions with both. In recent years, they have agreed to such alliances in the federal states of Hesse and Schleswig-Holstein, leaving no doubt that they want to emancipate themselves from the rigid bloc logic (CDU-FDP vs SPD-Greens) that has defined German party politics for most of the post-war era.

This emancipation was in large part enabled by the SPD’s Babylonian captivity in an unpopular grand coalition and the fallout from the climate crisis. Particularly the impact of the latter cannot be overstated: whereas the Greens were polling around 11% in June 2018, they rose to an all-time high of 27% during the climate protests the summer thereafter.

They are peaking too early, many political observers feared, and the outbreak of the Covid-19 pandemic in February 2020 seemed to prove them right. Once the virus had tightened its grip on Europe, it soon became evident that this was a crisis benefitting the governing parties – just like other crises that the public experiences as immediate, instantaneous, and unanticipated, it engendered a rally around the flag effect of considerable proportions. Likewise, it became evident that global warming, as important as it may be in principle, cannot compete for attention during a once-in-a-lifetime pandemic. For the Greens, this meant falling poll numbers at a time when they were hoping to establish a new pecking order within the German centre-left.

Coalition games

They eventually recovered a little and now once again poll ahead of the SPD by a few percentage points (e.g., 7% at Kantar, 5% at GMS and 3.5% at Allensbach in recent polls). Yet the situation remains rather volatile, and party strategists are planning for different scenarios come September. The single most likely scenario is a narrow CDU/CSU victory in conjunction with a strong Green performance, followed by a Black-Green coalition that would focus on enacting bolder climate policies and continue the Merkelian project of gradual modernisation. This is the outcome expected by most but not preferred by all.

Especially the leftist wing of the Greens, mostly located in the Northern and Eastern states, is still beating the drum for a so called ‘Red-Red-Green’ or ‘Green-Red-Red’ coalition with the SPD and the socialist Left (Die Linke). And a ‘traffic light coalition’, where the Left would be swapped for the FDP, is also considered an increasingly realistic alternative. Both of these options have their advantages in theory (as they would leave the Greens leading the government) but would possibly rely on razor-thin majorities and entail a range of secondary complications. The Left’s reliability and willingness to compromise has been repeatedly doubted, and the FDP could feel outnumbered and pushed aside by two larger centre-left coalition partners.

Other post-election scenarios are scarce, the most obvious being the continuation of the grand coalition. In theory, both parties would have good reasons to at least consider this possibility: by maintaining the status quo, the CDU could calm troubled waters and the SPD avoid the loss of cabinet representation (and thus relevance). However, at this point, such arguments seem in vain – the end of the grand coalition is widely regarded as a fait accompli, and it would require a lot to change this view.

Neither the respective party bases nor the public would be likely to accept a more of the same message after substantial election losses. But since all other options are either modifications of the grand coalition (e.g., CDU-SPD-FDP) or have been ruled out emphatically (e.g., CDU-FDP-AfD), it still remains the most realistic alternative to Green government participation. Put differently, even the most probable coalition without the Greens is exceedingly improbable. All they need to do is avoid mistakes and seize the moment on Election Day.

Eyes on the chancellery

Yet, before this, they had to answer one essential question: who their candidate for chancellor would be. This is not a formal position, as the chancellor is elected by parliament and MPs are under no obligation to cast their (secret) ballots for their party’s nominee. But the expectation that the person selected as the candidate will lead the government if a majority can be secured is hardly ever contested.

Most often, the honour of being chosen falls to the respective party leader, but exceptions to this rule are not uncommon. A prominent example in 2021 is the SPD, who have announced vice-chancellor Olaf Scholz as their candidate, giving him preference over co-leaders Saskia Esken and Norbert Walter-Borjans. The CDU came close to following suit by sidelining newly elected leader Armin Laschet in favour of the more prolific, popular, and ambitious Markus Söder (leader of the CSU). However, the party ultimately backed Laschet in a vote on 20 April.

In any case, Merkel’s successor will face a tough campaign, for the departure of the successful four-term chancellor bears severe electoral risks for the CDU. With her statesmanlike appearance and unpretentious style, Merkel attracted many who would probably not have voted for her party on ideological grounds alone – and who could now reconsider their choice. The fickle loyalty of these Wechselwähler*innen may have provided the Greens with additional motivation to field their own chancellor candidate for the first time in history.

On 19 April, they announced co-party leader Annalena Baerbock, a political scientist, international lawyer, and expert on climate policy, as their candidate. To many casual observers, the decision to select Baerbock came as a surprise – they had expected the nomination of her fellow party leader Robert Habeck instead. A professional writer with a PhD in literature studies, Habeck served for more than eight years in the state government of Schleswig-Holstein, which provided him, in addition to greater name recognition, with valuable governing experience that Baerbock lacked. But, in the end, the 40-year-old mother of two proved that massive intra-party support and strong political instincts can be more important qualities.

Not that Baerbock and Habeck are that different. Both represent an adaptive and refreshingly non-ideological style that contrasts with the intransigency of the post-Schröder years. And both are aware of their historical opportunity to replace the SPD as Germany’s foremost centre-left force and possibly even win the chancellorship by appealing to the centrist voters the CDU needs to retain at all costs. This does not mean that traditional Green politics will be neglected, but rather that the ongoing transformation from an ecologist niche party into a proper Volkspartei has to be adequately reflected on the campaign trail.

The Greens have a strong hand, and if they play it right, they could make history in September. No doubt the CDU is aware of this, as its reaction has proven to be increasingly erratic. Plagued by a series of corruption scandals, lacking orientation, and facing the most dangerous challenger in more than fifteen years, one can easily imagine its quarrelling leadership nervously glancing at the (prophetic?) lines of Emily Dickinson, who once wrote that ‘the colour of the grave is green – the outer grave – I mean…’

Populism and Covid-19 in Europe: What we learned from the first wave of the pandemic | Europp – LSE Blog

Featured image credit: Rassemblement National

Populist parties are often assumed to benefit electorally from major crises. Yet as Giuliano Bobba and Nicolas Hubé explain, populist actors have found it difficult to politicise the crisis brought on by the Covid-19 pandemic. Drawing on a new book covering the first wave of the pandemic in Europe, they identify several lessons concerning the effect of crises on the electoral appeal of populist parties.

Several authors agree that crisis situations are a precondition for the emergence and success of populists, or at least that they can favour them. While the impact of Covid-19 has not been the same around the world, in many countries the pandemic has been the biggest health, economic and social crisis since World War II.

Given the peculiar nature of the crisis, however, it is not obvious how populists can take advantage of it. Like other catastrophes or natural events, Covid-19 is difficult to politicise, that is, to become an arena for political confrontation between parties with traditional divides (us vs. others; elites vs. people), at least in its early stages.

In a new book, we have brought together contributions covering eight European countries that were affected in different ways by the pandemic (the Czech Republic, France, Germany, Hungary, Italy, Poland, Spain and the UK). Our study presents a comprehensive comparison of how populist parties in each of these countries responded to the first wave.

Table 1: Impact of the first wave of Covid-19 infections in selected European countries

Note: The table includes figures from the start of the outbreak until 10 June 2020. Source: European Centre for Disease Prevention and Control

While populists sought to take advantage of the crisis, the impossibility of taking ownership of the Covid-19 issue has made it difficult to exploit the pandemic politically. In particular, populists in power have tried to depoliticise the pandemic, whereas radical right-populists in opposition have tried to politicise the crisis, but have largely failed to gain substantial public support. In what follows, we outline what we have learned so far and what we could expect in the next future.

Populists did not gain support during the pandemic

In terms of political support, as measured by voting intentions, populists have not significantly benefited from the crisis (Table 2). This is evident both in the short term, after the first wave (end of May 2020), and in the medium term (end of March 2021).

Table 2: Voting intentions for populist parties during the Covid-19 pandemic

Source: Politico – Poll of Polls

Although the success of populism is often interpreted as the result of an external crisis (i.e., economic, financial, political, migration, traditional values), this general pattern does not work when applied to the Covid-19 crisis. The peculiar nature of the crisis, as well as the implementation of similar policy solutions across European states, has largely prevented populists from using their usual proposals and rhetoric to gain centrality in the political arena and public support.

Left-wing and right-wing populists reacted differently

Our research found evidence that right-wing and left-wing populist parties reacted in different ways to the crisis. On the one hand, right-wing populism has identified new lines of conflict: an intensified emphasis on nationalism (and neo-natalism), and the (resulting) opposition of ‘we, the national people’, not only against the EU but also against some other member states. These findings confirm that even during the pandemic, right-wing populism is strictly intertwined with Euroscepticism.

Right-wing populist parties have been prevented from using their traditional appeal to the people as a basis for support and have instead emphasised the handling of migration issues. While in the Czech Republic, Germany, Hungary, Poland, Spain and the UK this included requests to close borders to reduce the risk of contagion from abroad, in France and Italy two right-wing populist leaders, Marine Le Pen and Matteo Salvini, accused governments of taking care of migrants instead of focusing only on nationals. On the other hand, left-wing parties (Podemos, La France Insoumise, and to a certain extent the Five Star Movement) did not use this kind of discourse. During the crisis, they were more focused on denouncing the lack of public investment in national health-care systems and the disastrous consequences of years of EU neoliberalism.

Being a populist in power or in opposition matters

Whether populist parties were in power or in opposition appears to have structured their discourse on Covid-19. Opposition parties attempted to politicise the pandemic at the end of the first wave, primarily blaming parties in power for their handling of the crisis, though with only partial success. No populist party attempted to politicise the pandemic in the manner Donald Trump did, by questioning the origin of the virus. The more marginal parties such as the Brexit Party, Vox, the AfD, and Konfederacja, have clearly radicalised their discourse based on nationalist, protectionist, and neo-nationalist agendas.

In contrast, parties aspiring to govern, such as the Rassemblement National, La France Insoumise, and Lega, have been much more cautious, focusing mainly on alleged government incompetence. On the other hand, the governing parties have tried to depoliticise the crisis using technical and scientific arguments and following the recommendations of national experts. For them, the crisis was an excellent opportunity to show their political competence, managerial skills and dedication to the people. A typical case is the Czech Prime Minister, Andrej Babiš, who emphasised his ability to govern the country through the crisis with the same success that he had achieved in managing his businesses in the past.

Again, a difference seems to have emerged between the left-wing and right-wing populists in power. Podemos in Spain and the Five Star Movement in Italy, as members of coalition governments, have based their political action on the advice of scientific and technical committees, while emphasising the need for more public investment in health care. At the opposite end of the spectrum, right-wing populists in power in the Czech Republic, Poland, and Hungary have primarily used scientific arguments to justify their political decisions, emphasising their leader’s ability to make informed decisions solely on the basis of the authority of their political leadership.

Populists as ‘crisis entrepreneurs’

While populist actors often operate as ‘crisis entrepreneurs’, most of them have been unable to exploit the pandemic. Evidence suggests that populists benefit more from a situation of continual complaint against new contradictions than from the actual outbreak of a crisis such as Covid-19, or, worse still, from a solution to it, such as Brexit in the case of UKIP.

As crisis entrepreneurs, populist strive to fuel a permanent crisis cycle. This is, in fact, the condition that allows them to take full advantage of crises in terms of political centrality and voter support. Of course, as already mentioned, not all crises are the same. Populists take ownership of the contradictions that best suit their view of society. The quest for this crisis ownership is what feeds the continuous process of naming, blaming, and claiming of systemic contradictions that populists implement as a political strategy.

The pattern typically begins with the emergence of a political contradiction, triggered by populists. The next step is for this contradiction to be publicly recognised as a relevant problem, before being exploited by populist politicians, who then push it toward becoming an actual crisis. Finally, populists do not limit their focus to a single contradiction, but instead trigger this cycle for all contradictions they identify at a given time. The initial phase is when populists can benefit the most from a crisis while in the final phase, the climax, the contradiction finds a solution or a compromise that weakens the issue.

During the pandemic, all political actors suddenly found themselves in the final phase, where a crisis had broken out and a solution had to be found. This is the worst condition for populists because citizens perceive problems as real or experience them directly. Political responses must be rapidly implemented. At these critical junctures, disputes and polarisation often leave room for forms of political collaboration or non-hostile, tacit agreement in the name of national solidarity. However, as soon as this state of emergency ends, populists begin to implement the permanent crisis strategy again, fostering the emergence of new contradictions. This is exactly what happened in the eight countries we analysed between February and May 2020.

From the Covid-19 crisis to multiple crises: a new breeding ground for European populism?

In our view, crises per se do not necessarily favour populism. On the contrary, it is populists who fuel a ‘permanent crisis cycle’ that consists of a continuous search for ‘crisis ownership’ around stable or emerging political contradictions. The Covid-19 pandemic is an interesting case where populists were not able to obtain this kind of ownership at an early stage of the crisis. However, the consequences of the management of the pandemic – in health, economic and social terms – are multiplying critical situations that could lead to real crises in the coming months.

As we all know, unfortunately, the health crisis is far from over or under control. Covid-19 has entered the political routine and governments are oscillating between economic, public health, and preventive policy measures. Once in the coming months the first vaccination campaign is over, the situation will evolve to a new standard – far different from the previous one – in which the political struggle will take place and people will have to live. This normalisation of the Covid-19 crisis is likely to give opposition parties more opportunities to politicise the policies implemented by governments and possibly take advantage of the crisis. Populists in power and in opposition, therefore, will face opposite challenges, the outcome of which will determine the characteristics of European populism in the post-Covid-19 age.

For more information, see the authors’ accompanying book, Populism and the Politicization of the COVID-19 Crisis in Europe (Palgrave Macmillan, 2021)

Policy Insight | The power surplus. Brussels calling, legal empathy and the trade-regulation nexus | CEPS

The EU may not be a superpower but it holds a ‘power surplus’ when it comes to the trade-regulatory nexus. The strategic challenges posed by the deployment of this power surplus are the subject of this paper, which argues that in order to be a responsible regulatory power and positively influence the multilateral agenda, the EU needs to develop a coherent overall approach to the external dimension of its regulatory policies.

In this spirit, and in most cases, the EU would be ill advised to project itself as a model or to seek to ‘weaponise’ its regulatory powers in pursuit of unrelated foreign policy goals. Instead, it should wield this power to enhance the regulatory compatibility between its own and others’ jurisdictions through cooperation rather than relying on the passive market-based influence of the so-called Brussels effect. This is simply a way to be faithful to its core defining philosophy of legal empathy.

The CEPS Policy Insight by authors Ignacio Garcia Bercero and Kalypso Nicolaïdis offers a typology of different forms of external EU regulatory impact, a discussion of the risks of either underuse or overuse of the regulatory power surplus, and considers the ‘good global governance’ model implied by a principled geopolitical role. It moves on to discuss a unifying conceptual framework to encompass this approach, under the umbrella of ‘managed mutual recognition’ as the operationalisation of legal empathy. It concludes with six specific suggestions as to how the EU can best exercise its regulatory power through a closer integration of trade and regulatory policies.

 

Download the full publication here

 

This paper can also be found at the European University Institute as a School of Transnational Governance Policy Report.

Can responsible investing encourage retail investors to invest in equities? by M. Brière and S. Ramelli | European Capital Markets Institute (ECMI)

On 16 March, the European Capital Markets Institute (ECMI) published a commentary by Marie Brière and Stefano Ramelli, named Can responsible investing encourage retail investors to invest in equities? which acknowledged that the low participation of retail investors in the equity market is a concern for many countries. It is a necessary condition for the development of capital markets in Europe and a key factor for funding post-Covid economic recovery. Recently, savers’ appetites for responsible investment has grown, but little is known about the consequences of this development on individual investment decisions. 

Employee savings plans constitute a unique laboratory for studying these choices. In a recent research article (Brière and Ramelli, 2021), the impact of introducing responsible funds into the investment choices of more than 900,000 French employees was analysed. The addition of a responsible option to the menu of funds led to a 7% increase in the equity allocation of new investments. Given that the average equity allocation is around 13%, this increase is substantial and represents an encouraging result for retail investors’ participation in the equity market. The role of social preferences further explains this phenomenon.

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About the authors

Marie Brière is Head of Investor Research Center at AMUNDI, Affiliate Professor at Paris Dauphine University, Senior Associate Researcher at Université Libre de Bruxelles, and Member of the ECMI Academic Committee.

Stefano Ramelli is PhD Candidate at the Department of Banking and Finance, University of Zurich.

What next for Angela Merkel’s CDU after two regional election defeats? | Europp – LSE Blog

Featured image credit: European Council

Disappointing results in two regional elections on 14 March have raised doubts about the potential for the CDU to remain in power at Germany’s federal election in September. John Ryan writes that with the party suffering from accusations of corruption and growing public dissatisfaction over its handling of the Covid-19 pandemic, it is no longer unthinkable that an alternative coalition without the CDU could form the next German government.

The Christian Democratic Union (CDU), the ruling party of German chancellor Angela Merkel, has been dealt bitter blows in two important state elections. While the results are in part a reflection of regional politics, they also function as a practical indicator ahead of September’s federal election. The results also raise questions for the new leadership of the CDU and for the selection of the party’s next chancellor candidate.

Record low vote shares

In Baden-Württemberg, the Greens won 32.6% of the vote (up 2.3%), while the CDU, junior coalition partner to the Greens until now, reached only 24.1% (down 2.9%) when compared to the last state election in 2016. In Rhineland-Palatinate, the Social Democrats (SPD) came first again with 35.7% (down 0.5%) ahead of the CDU, which led there in opinion polls until last month but secured only 27.7% (down 4.1%). This means that in both regions, the CDU received record low vote shares.

The SPD has managed to maintain its numbers in Rhineland-Palatinate, in part thanks to the popularity of state premier, Malu Dreyer. In Baden-Württemberg, the extremely popular Winfried Kretschmann has been in office for ten years. He is the only Green party member to serve as a state premier in Germany.

The elections on Sunday came at a delicate time for Armin Laschet, the new leader of the CDU. The poor performance by the Christian Democrats has undermined his authority and weakened his bid to run as the CDU/CSU’s joint candidate for chancellor in September’s federal elections. Various polls taken in the last few months, before a series of corruption scandals emerged and before the poor regional election results, found voters preferred the CSU’s Bavarian state premier Markus Söder as their future chancellor by a wide margin. While traditionally the position of party leader would have automatically placed Laschet into the chancellor candidate role, the election results and polling signals mean that Söder is now the favourite to become chancellor candidate.

German media reported that as many as a third of those eligible to vote in Baden-Württemberg had already cast their ballots before the corruption scandals broke. In Rhineland-Palatinate, the figure was even higher, at almost 37 percent. Due to the Covid-19 pandemic, many voters chose to cast their ballots by mail this year ahead of Sunday’s election date. With less lead time, the results could have been even worse for the CDU.

Both regional election results open the way for potential regional alliances of the Greens, SPD and the liberal Free Democrats (FDP). That coalition construct, also known as a traffic light coalition due to the official colours of the three parties involved, was already the governing coalition in Rhineland-Palatinate following the 2016 elections. CDU leaders now fear the same constellation of parties could gain enough support to leave their party in opposition in Baden-Württemberg and at the national level following September’s federal vote.

Corruption accusations and Covid-19

The CDU/CSU has seen its support decline significantly in recent weeks due to the fallout from the corruption scandals and growing dissatisfaction with the government’s handling of the Covid-19 pandemic. Germany’s comparatively slow vaccination programme has been described as a “debacle” and a “Covid nightmare.” Yet as damaging as this has been, it was the accusations of corruption that constituted the biggest blow before Sunday’s elections.

The scandals centre on allegations of profiteering in mask procurement deals and foreign donations. They have already led to the resignation of two CDU members and one CSU member of the Bundestag. Nikolas Löbel, a now former MP for the CDU, bowed to pressure after revelations that his company earned commissions of about €250,000 for brokering protective mask sales contracts, while Georg Nüsslein, from the CSU, faces accusations he received €600,000 to lobby for a mask supplier.

Meanwhile, the magazine Der Spiegel reported that CDU parliamentarian Mark Hauptmann was paid €16,744 by the Azerbaijani embassy in Berlin to advertise a shopping weekend in Baku in a local newspaper that Hauptmann publishes in the state of Thuringia. According to the report, the payment was made after Hauptmann had worked for years to establish cordial ties with Azerbaijan, consistently siding with the country despite its controversial human rights record. The governments of Taiwan and Vietnam also paid for ads in the newspaper, according to Der Spiegel. Axel Fischer, a CDU MP from Baden-Württemberg, has also had his parliamentary immunity suspended amid a criminal investigation into whether he accepted bribes from Azerbaijan. He denies any wrongdoing.

On 12 March there was a deadline set for lawmakers from Germany’s governing conservative bloc to declare in writing that they had not profited from the Covid-19 pandemic. This is the CDU/CSU’s “worst crisis” since a campaign-financing scandal at the end of the Kohl era that brought down the leadership, ushering in Merkel. The scandals are already morphing into a broader examination of MPs’ extra-parliamentary income, and such scrutiny seems likely to trigger more uncomfortable revelations.

The end of the road for the CDU?

As of now, most observers are betting on a tie-up between the Christian Democrats and the Greens following September’s federal elections. A continuation of the current coalition between the conservatives and the Social Democrats is likely to be a mathematical option after the election, but it is not a constellation either side is eager to renew after governing together for most of the past decade. A three-way coalition between the Greens, Social Democrats and Die Linke would not currently have enough support. There is however a chance over the next six months that the Greens, SPD and FDP could build enough momentum to form a traffic light coalition. Upcoming opinion polls may show that these three parties gain more support.

Given the corruption accusations and Covid-19 vaccination delays, trust in the chancellor and her cabinet is weakening. For several weeks now, public approval of the government’s pandemic management has been sliding. This is hardly surprising in view of the many glitches in the vaccination and testing drives, the broken promises, the resurgent number of infections and a chancellor who is no longer able to assert herself against powerful state premiers. Merkel’s party has announced a ten-point plan to tighten regulations on lobbying and bribery in the Bundestag. The plan foresees the prohibition of paid work on behalf of third-party interests in the Bundestag. But this may be too little too late.

The realisation after these two elections is the very real prospect that Germany may emerge from the September elections without the CDU/CSU being part of the government. The CDU/CSU is still the most popular party in Germany for now, but one federal poll showed its support at only 29 percent (the party’s lowest ever), raising questions over whether it will get enough votes to form a coherent government. The regional elections affirmed the national trends that the slow rollout of vaccines and the recent accusations have left the CDU/CSU struggling to contain the damage. The level of Covid-19 infections in Germany remains stubbornly high. The availability of vaccinations remains low. Patience is also wearing thin over endless lockdowns.

Armin Laschet as the party’s leader – but not as their chancellor candidate – has seen his popularity diminish over his handling of Covid-19. In comparison, Markus Söder, the CSU leader, has remained cool headed during the pandemic. The CDU/CSU had agreed to choose their chancellor candidate in May, but as results and opinion polls are showing a negative outcome, the decision to appoint their candidate may have to be brought forward. Angela Merkel’s CDU needs to rethink fast. As the long-serving chancellor bids farewell, her party faces the real prospect of losing its grip on government altogether.

Policy Insight | It’s time to rethink the EU’s Russia strategy | CEPS

Anti-regime protests in Belarus and the poisoning of Alexey Navalny have brought EU-Russia relations to their lowest point since the 2013-14 Ukraine crisis. High Representative Josep Borrell’s trip to Moscow last month, aimed at re-establishing common ground, instead led to the expulsion of three European diplomats and a joint press conference in which the EU was accused of being an “unreliable partner”.

Borrell has concluded that Russia is no longer interested in constructive dialogue with the EU. Even the more dovish member states will now face pressure to adopt a more assertive stance towards Russia. In developing a more robust approach, however, member states must remain conscious of the fragile state of continental security in Europe.

The five guiding principles: between toughness and engagement

The Foreign Affairs Council (FAC) of 22 February discussed how the EU’s relations with Russia could evolve within the context of the five “guiding principles” laid out by Borrell’s predecessor Federica Mogherini. Following the Ukraine crisis, which marked the failure of the Lisbon-Vladivostok vision of a ‘Greater Europe’, these principles aimed to carve out a new equilibrium between toughness and engagement with Russia. This equilibrium now appears to have collapsed. Although they will not be jettisoned, changing circumstances point to the need to de-emphasise certain principles and firm up others.

Two of the principles – demanding full implementation of the Minsk agreements as a precondition to lifting sanctions and cooperating selectively with Russia where interests align – were evidently rooted in the lowest common denominator among member states that favoured engagement and those that preferred a more hawkish stance. Borrell’s more recent calls for a European “language of power” have failed to transcend this reductionist approach, as the term can satisfy both those who interpret it as a push for more autonomy from the US and those who see it as calling for a firmer approach towards Russia.

These intra-EU divisions have damaged the cause of Europe’s strategic autonomy. The Minsk agreements, the German Nord Stream 2 pipeline, and Emmanuel Macron’s proposed Russia reset have solidified the attachment of many smaller member states to NATO. The result is a vicious circle: Moscow continues to believe that the EU has effectively outsourced its security to Washington and therefore prioritises the dynamics of its rivalry with the US, which in turn has a deleterious effect on EU-Russia relations. This trend has also reinforced the illusion that Moscow can pursue cooperative relations with individual member states without engaging with the rules-based framework that ties those states together.

It has become increasingly difficult to square the other three principles – pursuing closer relations with Russia’s post-Soviet neighbours, enhancing EU resilience to Russian threats, and increasing support for Russian civil society – with selective engagement. As great power relations have worsened and Russia has drifted towards authoritarianism, ties between Brussels and Moscow are in danger of becoming fully adversarial, on a par with the US-Russia relationship. A prolonged confrontation, while undesirable from the standpoint of preserving a stable European security order, is now perhaps inevitable. With little prospect (or appetite) for meaningful strategic engagement with Moscow for the foreseeable future, member states should recalibrate their collective approach to Russia in a manner that balances toughness and restraint.

Towards a new approach: balancing toughness and restraint

For the first time, ministers at the recent FAC agreed to make use of the EU’s Global Human Rights Regime to impose restrictive measures against individuals responsible for prosecuting Navalny and repressing the protests that followed his arrest. (The US followed up with measures of its own.) This move allows Brussels to claim a win without imposing more wide-ranging sanctions that might have invited a more serious reprisal from the Kremlin. Yet while human rights promotion will remain part of the EU’s DNA, reflexively resorting to sanctions has become a poor means of addressing the problem of Russia’s divergence from European norms.

With the liberal international order seemingly in crisis, Russia has come to view Western humanitarian measures and pronouncements not as expressions of universal values, but rather as weapons aimed at destabilising its regime. Moreover, a survey released by the German database Statista last month shows that Vladimir Putin remains the most trusted public figure for 29% of the Russian population, compared with just 5% for Navalny. Although support for Putin has declined from its post-Crimean high in 2014, the regime remains resilient and the legacy of the disorderly 1990s has not yet faded from public memory. Taking aim at what Moscow sees as its internal affairs will only convince Russian authorities that they have little to lose by cracking down further on protestors and perceived opponents. It also risks escalating the regional security dilemma when paired with a US-led Euro-Atlantic security order that Moscow perceives as exclusionary and threatening.

Moreover, the EU’s demand that the Minsk agreements be implemented as a precondition for restoring ‘business as usual’ reinforces the misperception that the pre-2014 status quo was rosy. EU-Russia ties throughout the post-Cold War era suffered from a fundamental asymmetry of aims, with Brussels envisaging a rapprochement based on shared values and Moscow emphasising its desire to be treated as an “equal”. The latter embodies a centuries-old tendency in Russian foreign policy and should not be derided as a mere feature of the Putin ‘system’, which in any case pursued a relatively liberal foreign policy in the early 2000s. Russia’s initial desire to join the West after the Soviet Union’s collapse was more a reflection of a brief turn in European and global history than a permanent shift in how Russia interprets its interests. In short, the conflict over Ukraine is a symptom and not the cause of the European security order’s current malaise.

A more strategically minded approach would focus on buttressing the other two non-engagement-related principles. Working with Washington to enhance resilience to external challenges is an obvious interest that the EU shares with the Biden administration. That said, with Brexit and Donald Trump in the rear-view mirror, the EU’s deteriorating relationship with Russia will become an even more central driver of European strategic autonomy over the coming four years. This threatens to deepen existing fault lines between the transatlantic alliance and the Sino-Russian entente, which would undermine the EU’s efforts to strengthen the rules-based foundations of interstate relations.

Member states must therefore demonstrate that a more robust EU approach towards Russia will balance transatlantic cooperation with a strong autonomous component. To that end, the forthcoming EU Council meeting should launch a process aimed at exploring forms of differentiated integration for Ukraine, Georgia and Moldova that would include some of the benefits of membership. Such a move would add a political and strategic dimension to the Commission’s goal, expressed in last month’s Trade Policy Review, of supporting the greater alignment of these three countries with the EU’s regulatory model. With no resolution to the Donbass conflict in sight, this could also provide a path for the EU to enhance its commitment to Ukraine while simultaneously reducing the Ukraine-centrism of its Russia policy.

Placing emphasis on the neighbourhood rather than on developments within Russia would send a balanced signal to Moscow. By providing greater incentive for the Association Agreement countries to deepen their alignment with the EU’s political and legal criteria, member states would affirm that the EU regulatory order is an established fact of Europe’s security architecture and should not be derided as a mere economic arm of NATO. At the same time, it would make clear to Moscow that the door remains open to cooperation on areas of shared interest. If Russia comes to see the EU as a more sovereign actor, then this may open space not only for sharper adversity but also more effective dispute resolution.

Strategic inaction is not an option. Moscow will likely remain able to sustain lofty geopolitical ambitions for decades, despite its economic and demographic challenges. Alternative sources of liquified natural gas and the gradual greening of Europe’s economy threaten to remove one of the few remaining areas of complementarity in EU-Russia relations – oil and gas imports – leaving military deterrence and coercion as the primary means for Moscow to advance its interests in Europe. Simply waiting for the Kremlin to crack is not a recipe for ensuring the EU’s security.

Since the Ukraine crisis, the EU and Russia have appeared content to live indefinitely with the reality of a fragmented European security order. Moscow sees the liberal international order as undergoing an existential crisis, while the West believes that Russia is in irreversible decline, leaving neither side prone to compromise. It was naïve to assume that such a situation could continue indefinitely without a sharper breakdown in relations. Seven years after the annexation of Crimea, it is no longer possible to continue muddling through.

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