What’s Next for the European Parliament?

Former Prime Minister Jean-Claude Juncker of Luxembourg is the center-right European People’s Party (EPP)’s candidate for president of the European Commission. He is thus the leading candidate for the position. But is he the right man for the job? And is the process of his selection the right one?

Ideally, the EU Council—which comprises the leaders of member states—should first establish reform priorities for Europe and the European Commission before selecting the president. The leaders may claim to do just that, but in practice the process is watered down, and the priorities have been overly broadened to reach consensus, leading to the political dogfight over the top job.

Few objective criteria exist for a good president, beyond a command of English and French. The selection comes down to horse-trading. One trend has been that all Commission presidents after Jacques Delors’s successful tenure—Jacques Santer in 1995, Romano Prodi in 1999, and José Manuel Barroso in 2004—had been prime ministers. In other words, the nominating EU Council selected one of its own for the job. What, then, constitutes a successful prime minister’s platform to recommend him or her as president of the European Commission?

A track record of growth is one obvious thing to look for at a time of economic stagnation, unemployment, and debt burdens in the region. A leader who has presided over a decline in real GDP per capita ought to be less qualified. Figure 1 shows the trends in real GDP per capita since the beginning of the crisis for some EU countries, whose leaders have been mentioned as potential candidates.

Figure 1 Real GDP per capita, peak year 2007–08 = 100

fig20140617kirkegaard

Source: Eurostat.

Figure 1 shows the varied picture of real GDP per capita trends in the EU since 2007–08,1 with Donald Tusk, Poland’s prime minister since 2007, as the standout candidate with 117 percent of the precrisis peak. However, Lithuania’s president since 2009, Dalia Grybauskaitė, also has a strengthened case with her people’s economic welfare, now on average at 106 percent of the precrisis peak. Latvia’s (now former) prime minister from 2009 to 2014, Valdis Domdrovskis, is the last frequently mentioned national leader candidate, with a growth performance exceeding that of the EU/euro area, and with Latvians—on average at 98.6 percent of the precrisis peak—nearly regaining the real GDP per capita levels lost in the crisis.

On the other hand, the potential candidacies of Danish Prime Minister Helle Thorning-Schmidt and former Finnish Prime Minister Jyrki Katainen should be weakened. Since taking office in 2011, both have overseen further declines in their countries’ real GDP per capita. Both countries also remain 7 to 8 percent below their precrisis peak, a level lower than Troika program country Portugal! And based on his national growth track record, Juncker, Luxembourg’s prime minister from 1995–2013, should be all but ruled out because of the more than 11 percent decline in living standards in Luxembourg since the precrisis peak (though these standards were still the highest in the EU at €62,400 in 2013). Luxembourg’s real GDP per capita has thus declined more than Spain’s and Italy’s, and almost as much as Ireland’s in recent years.

The incoming European Commission president’s agenda will include defense of the commission’s bureaucratic turf, representing 28 member states, against the inevitable encroachments from new euro area–specific institutions, such as the European Stability Mechanism (ESM), the Single Resolution Fund (SRF), or a potential new euro group full-time president, all of which have been created in response to the current crisis. Whether this turf war is best carried out by a president from the euro area, or from a non-euro area state, is open to debate. It could be argued that Juncker—as a former Eurogroup finance ministers’ president, self-proclaimed federalist, and experienced hand in Brussels—would effectively thwart overambitious euro area–only projects. But it seems far from clear that non-euro area members would risk handing the leadership of the guarantor of a level playing field among all the EU-28 to a man with Juncker’s euro area credentials.

Ultimately it seems doubtful that these criteria will play a role when leaders begin to haggling.

In my next posting, I will discuss the selection process further.

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