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An unlikely fan

Will the European Parliament become German neo-Nazi’s best friend? It might sound ludicrous, but it may very well be so…

How?

Germany’s high court ruled on the 26th of February that the country’s 3% threshold to enter the European Parliament is unconstitutional because it discriminates small parties. This might come as a surprise coming from a country with a high electoral barrier (5%) for national parliamentary elections, but the Constitutional Court believes such measure is not necessary in the European arena.

The German electoral threshold tries to prevent a chaotic crowd of little parties from paralyzing the Bundestag and lawmaking as occured during the Weimar Republic. However, the high court found this cannot apply in a European contest because national parties, always small in the European context, form big groups in the European Parliament and also because the Parliament does not have legislative initiative.

The court had already ruled against a 5% threshold in Europe in 2011 for the same reasons and the new requisite (3%) was fixed by law only last year. But even this reduced barrier the Constitutional Court has found unjustified and too discriminative of small parties under the circumstances. Effective immediately, or more precisely May 25th, this will have both obvious and unexpected consequences.

The aftermath

The sufferers of the  change will be both the SPD and the CDU. It will be them who will lose seats to small parties that make it to the European Parliament for the first time.

As you can see in the graphic (HT @eleccionista), if there had been no threshold in 2009, the CDU, together with the CSU, would have obtained three seats less and the SPD two.

All seems to indicate that Alternative für Deutschland, one of the most enthusiastic opponents of the polemical threshold will be little affected by its elimination. Latest polls indicate it should get around 5% of votes and some expect it could get as much as 7%. In any case, well above 3%.

The more mainstream FDP might after all benefit much more than AfD, even if it is just for the tranquillity. Polls suggest a 3 to 4% of votes which would have assured representation anyway, but the party has every reason to fear marginality after not making it into the Bundestag in September by a small margin.

However, the most obvious benefiters are all those small parties that could never dream of making it into Strasbourg. It will now be enough to get approximately 1% of the vote, which as many as 7 or 8 new parties could attain. This includes the Pirates, a sui generis anti-system movement mostly advocating against intellectual property and for internet freedom; the ÖDP, an environmentalist and conservationist force; the populists Free Voters and the far-right liberals The Freedom.

So far so good as 2.8 million votes that were virtually “lost” in 2009 election will now get representation in the European chamber. However, this might have some unwanted consequences, and not only for the European Parliament. The neo-Nazis NPD can very well get at least a seat.

The NPD

The National Democratic Party of Germany or the only significant patriotic force in Germany, as they would put it, is represented in two of Germany’s state parliaments but has never made it into the Bundestag. In the 2004, 2009 and 2013 Federal elections it obtained around 1.5% of the vote, very far from the 5% of national threshold and also very far from the 3% of the European threshold that would have applied without the Constitutional Court rule. Although it is very hard to predict the results of such small parties, this could be the picture (HT @watchpoll2014)

poll watch

If they do make it, it will not be much of a threat to the functioning of the European Parliament (as the high court noted in its ruling) but rather to German politics. Just as the euro-sceptics do, the NDP will use the European Parliament as a platform for notoriety and financing and will try to influence the political agenda back home, rather than at European level.

Such a victory as getting a seat in the European Parliament, will be a moral thrust for a very marginalised party and it might reinvigorate it when it seemed it had reached its ceiling.

Moreover, this new competitor might heat up even more the immigration debate. Both AfD and CSU have been playing this card for a while now and they will have to do so even further if they want the anti-immigrant vote to stay with them.

Whatever the short term consequences, it appears the ruling against the threshold will fuel the neo-Nazis and give them renewed influence in Germany. As long as the party does not get banned altogether, as the 16 regional governments have asked the Constitutional Court to do.

In the meantime the NPD will be the unlikely fan of the European Parliament.

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I will do whatever it takes (and so he did)

Europeans will vote on the future of the European Union soon enough, but in the meantime one of the biggest changes in the history of the Union is already in motion: the banking union.

There are still a lot of unresolved questions and great difficulties the EU will have to solve if the banking union is to become a reality any time soon. But the first big step towards it, the Single Supervisory Mechanism (SSM), will come into action as soon as this autumn.

The ECB will undertake the task of coordinating the SSM by directly supervising significant credit institutions and working alongside national supervising authorities to oversee less important institutions.

According to article 6.4 of the Regulation of the European Parliament on the SSM, an institution will be considered significant if: the total value of its assets exceeds 30 billion Euros, if their assets account for more than 20% of a participating state’s GDP and if they have received or requested public financial assistance directly from the European Stability Mechanism (ESM) or the European Financial Stability Facility (EFSF). Also, the ECB might on its own initiative consider an institution as relevant due to its cross-border activities.

The agreement over this supervising mechanism is a great triumph for the Union but it raises new questions. For instance, what can the ECB do when drastic measures such as shutting down a bank are required? The necessity of a single resolution fund for failed banks and single deposit insurance to prevent bank runs are indispensable to be truly done with the profound contradictions in the single currency. However an agreement on these mechanisms is still far, especially because of the enormous costs they would suppose for the Member States.

But this two missing pillars of the Banking Union are not the only credibility problems the new SSM will be facing. The acting of the ECB as an independent body can be questioned because of the leading role it has assumed in weathering the storm of the Euro crisis.

The European Parliament asked the ECB what its role in the Troika was. It answered that it was to give advice and to work in liaison with the Commission to assess the economic conditions that accompanied the financial aid bailed-out countries received.

But that is probably an understatement. Troika literally means a government or alliance between three members with the same amount of power and consequently the ECB has played a key role in designing and revising the measures bailed-out countries had to apply.

In fact, according to information appearing in Die Welt and Sueddeutsche Zeitung last march there are doubts within the ECB about continuing in the Troika because it could create a conflict of interests.

Furthermore, ECB has been shielding German and French banks, both greatly exposed to Greek and other bailed-out countries’ sovereign debt, to avoid their default. With Greek’s debt writing off in 2012, some of this bad debt went out of the system. But some is still there and it will be now ECB’s job to point that out and call for the banks to assume the loss of the money they still have in Greek bonds. Article 18 of the Commission Proposal for the new SSM, as approved by the European Parliament, states that credit institutions should fully internalise all costs caused by their activities, including that of investing in bad sovereign debt.

Also, it will be the ECB rather than the national supervising systems the one supervising and telling the big credit institutions of bailed out countries what to do. That would put the ECB on both sides of the table in the negotiation and monitoring of measures between the Troika and bailed out countries and banks.

There has also been much discussion around the stress tests the ECB is to set in motion before the starting up of the SSM. The ECB needs to set new and high standards for Euro zone banks if it wants markets to trust its supervising role at all, but it is uncertain how far it will go. For it will be ECB’s job to find a solution for those banks that reveal as unviable from the results of these stress tests. All this without counting on a single resolution fund or other automatic funds set for this purpose.

Besides, the ECB has been trying hard to get credit flowing towards companies in depressed economies, especially by maintaining really low interest rates consistently. However, now higher legal deposits might be required in order to limit some banks’ risk exposure. That will raise interest rates and restrict access to credit; creating conflicting priorities within the ECB as supervisor on one side and as central bank, responsible for credit flow on the other.

It all comes down to how hard the ECB has worked to ensure the survival of the Euro and the future of the European Union. A year and a half ago, Mario Draghi pledged to do whatever it took to save the euro, and that changed everything, for better and for worse. Perhaps it was the only way around the crisis of the single currency but it is futile to deny that this has compromised the ECB’s so called independence. If the point comes where the ECB has to honour its position as supervisor or defend the interest of the Union, one will wonder. Maybe the time has come for the ECB to step down as part of the Troika and concentrate on its new role.

More on the new SSM:
A measly triumph

Not Only the Swiss are Showing their True Colours

Le Pen, Farage and Wilders are ecstatic.

As the leaders of three of the biggest far-right eurosceptic parties in Europe they could not help congratulating themselves on the Swiss vote to impose quotas on immigration:

“This is wonderful news for national sovereignty lovers throughout Europe,” said Nigel Farage, leader of UK’s Independence Party (UKIP). “A wise and strong Switzerland has stood up to the bullying and threats of the unelected bureaucrats of Brussels.”

The heir of France’s National Front (FN), Marine Le Pen thinks that “This Swiss victory will reinforce the will of the French people to stop mass immigration.”

Geert Wilders, head of Dutch Party of Freedom (PVV), sees eye to eye with Le Pen and tweeted: “Fantastic, what the Swiss can do, we can do too: cut immigration and leave the EU.”

You would think that as politicians who state again and again that they have nothing but people’s best interest at heart, this could not be good news to them. After all, nationals from their countries will have a harder time to get jobs in one of Europe’s most dynamic economies.

Instead they are treating the Swiss referendums as an early Saint Valentine’s gift. They see it as a thrust to their campaign to the European Parliament and you can be assured they will not mention the adverse effects the result of Sunday’s vote may have on Switzerland.

The EU-Swiss agreements, which include freedom of movement and access to European Single Market, operate on a “guillotine clause”. This means that the termination of one agreement means the automatic termination of all the others. It is worth noting that the EU is Switzerland’s largest trading partner and accounts for 60% of Switzerland’s exports.

Furthermore, a close observation on the results of the Swiss referendum paint a picture the anti-euro parties should not like.

Swiss Vote on Immigration

In this graphic*, Swiss cantons are represented by circles of different sizes proportionately to their population. Also, they are distributed vertically accordingly to the percentage of foreign population they have and horizontally according to the percentage of “Yes” vote that the anti immigration initiative got in the referendum.

So, in general terms, those regions with the highest proportion of foreign population have voted against restricting immigration from the EU. Or in other words, the people who would be most affected by the innumerable and frightful problems the immigration causes according to FN, PVV and UKIP are the ones who do not seem to mind much the presence of foreigners.

If this parties are not racist, demagogic and ultranationalists and, as they claim, their sole motivation is the objective problems EU immigrants cause in their countries; they should never use the Swiss referendum as an electoral weapon.


*Here you can look at this and other graphics on Swiss vote on immigration quotas (it is in French)

More information on this subject:

Switzerland votes to cap immigration – everything you need to know

EU Anti-Immigrant Parties Take Heart in Swiss Vote

Switzerland faces ‘difficult talk’ with EU after immigration referendum

Schulz needs Merkel

The European People’s Party (EPP), the largest group in the European Parliament, is not very enthusiastic about the new appointing system for EU Commission presidency. Or so it seems.

All groups running for the European parliament have to nominate a candidate to preside the European Commission and, ideally, the biggest parliamentary group’s nominee will take over as Barroso’s successor. All the big European families have already appointed someone except for the EPP, who will officially elect someone as late as March.

This is not a tiny factor. Although everyone is more or less playing along to this new appointing system, there is no guarantee that the Council of the European Union* will honour the voter’s choice when proposing a new president of the Commission to the European Parliament.

As always, that will depend on a complicated negotiation among national leaders. And 12 heads of state or government of EU member states belong to the EPP. Including German chancellor Angela Merkel, whose opinion on the matter, as in everything else, is very important.

According to the Financial Times, she will back the Luxembourgian Jean-Claude Juncker as candidate of EPP. And this alone might distort the point behind the new electing system: encouraging interest and participation in the European elections.

According to the same article in the FT, Junker might not even run for the European Parliament. That, together with the fact that he will be elected as late as march, makes it hard to picture him leading one big campaign across Europe to mimic those in National elections.

Not surprisingly, the second biggest group in the European Parliament, the Socialists (PES), is much keener on the new electing system for the Commission. They elected their candidate, the current president of the European Parliament, Martin Schulz, in November. After all, he was the one to come up with the whole idea**.

Evil tongues say he is only after the Commission’s presidency, a much bigger prize than his current post and that the noble purpose of encouraging participation is nothing more than a pretext. It may be so, but there is not much else being done to stop the increasing indifference and mistrust of European citizens towards the European institutions.

In this context, participation will likely hit a new low and eurosceptics will be the only real winners of the contest, with practically everyone else losing voters. Perhaps is not the craziest idea to turn these European elections into a continent-wide contest.

But that undoubtedly requires of the most important European force, the EPP, to get into the game and organize one big European campaign rather than 28 little ones, just like the socialists, the liberals, the greens and the other European families are trying to do.

*The European Council, comprised of the heads of state or government of EU member states, proposes a President for the Commission, who is then elected by the European Parliament.

**If you want to know more about Schulz and the new appointing system for EU Commission presidency check this article in The Economist.