European elections at a crossroads

By Ioannis Tilkides

This European election is very different from the last one five years ago. The starting conditions are different, the challenges are different. The priorities have also changed.

The COVID-19 pandemic created a public health emergency that prompted all member states to take strong policy responses and unprecedented fiscal stimulus to protect businesses and jobs. The outbreak of the war in Ukraine in February 2022 led to severe sanctions against Russia, massive material and financial support to Ukraine, and an almost complete decoupling from Russia.

Rising inflation prompted central banks in developed countries to raise interest rates quickly and sharply. Economic performance was mixed, with weak growth across Europe in 2023. The first quarter of 2024 also got off to a slow start, and the growth outlook remains subdued, with uncertainty growing as the war in Ukraine escalates. Meanwhile, priorities have shifted. While climate change was the top priority in 2019, the focus is now shifting to security and defense, the economy and competitiveness, the budget and common debt.

The new European Parliament and Commission will face tougher challenges, in some ways existential ones. If the Parliament becomes weaker, more divided and more fragmented, it will need more leadership at national and European Council level. We discuss these and other related issues in this article.

Political geography

But first, we need to understand the political geography of the European Parliament. There are seven political groups in the European Parliament, which can be distinguished based on political ideology. The largest of these is the European People’s Party (EPP), which is center-right and belongs to the European Christian Democratic tradition. The second largest party is the Socialists and Democrats (S&D), which belongs to the center-left. The “Renewal Europe” party, which includes France’s Ennahda (formerly known as En Marche), is centrist liberal. Together, these three groups form the backbone of the European Parliament, forming the so-called Grand Coalition, which effectively dominated proceedings in the last parliament. Then there are the Greens/European Free Alliance, which is the left and the far right. There are two groups on the far right, the Identity and Democrats (ID) and the European Conservatives and Reforms (ECR). The Identity and Democrats is a more radical, nationalist and Eurosceptic party, which includes the French National Rally (RN), the German Alternative for Germany (AfD) and the Italian League. The European Republican Revolutionary Party is a more moderate Eurosceptic party, more conservative than the Independence Party, and includes Poland’s Law and Justice and Italy’s Brothers of Italy.

Political party affiliation and vote transfers in Cyprus

All Cypriot political parties are members of these groups. DISY is affiliated to the European People’s Party; AKEL is affiliated to the Party of the Left; DIKO and EDEK are affiliated to the Socialists and Democrats; DIPA is affiliated to Renew Europe; Our Greens are affiliated to the Greens/European Free Alliance; ELAM is affiliated to Identity and Democracy.

In Cyprus, the far-right party ELAM ranks third in the polls and is seriously vying for a seat in the European Parliament. It is not yet clear whether the two main parties, DISY and AKEL, will

Successfully retained the two seats that Cyprus has held since joining the European Parliament.

This is perhaps a rare moment in the Cypriot political system where the election results are so unpredictable, with four of the six seats being contested and even an independent non-party candidate having the potential to win one of them. In addition, the newly formed Volt Cyprus party, which is affiliated to Volt Europa and has a strong unification agenda, is polling relatively well.

These developments are not surprising and are part of the growing instability of Cypriot politics. This is at least partly a result of the past decade, when opposition was rare and all parties, from centrist, center-left to center-right, with the exception of the left-wing Aker Party and to a lesser extent the Greens, were more or less indistinguishable in terms of their political and policy priorities. The dividing line between centrist and center-right parties became blurred, so absences and dissent increased.

What will the election result be like…

Opinion polls show that far-right parties will make significant gains in many EU countries, while center-left parties, especially the European Renewal Party and the Green Party, will suffer. But the mainstay of the European Parliament – the European People’s Party, the Socialists and Democrats and the European Renewal Party – will most likely retain their majority. But the margin will be smaller, which will have an impact. Whether they can be re-elected to the current European Commission is uncertain.

…and its impact

Coalitions in the European Parliament vary by issue, and there are more partisan divisions in the European Parliament than in national parliaments. Therefore, greater representation of far-right parties and smaller majorities of grand coalition parties will allow the far right to exert more influence than its numbers would warrant, especially on controversial issues such as climate change, immigration and various aspects of the economy. This could transform a largely liberal, progressive, and pro-integration European Parliament into one that is more critical of Brussels and more disruptive, ultimately resulting in a more conservative Commission.

A strong electoral performance by far-right parties would in turn provide more momentum to these parties at the national level. For example, a resounding victory for Marine Le Pen in the French election would further help normalize her party, the National Rally, ahead of the 2027 French presidential election and increase its chances of winning.

These complications highlight the possibility that the European Parliament will be more divided and contentious, with consensus requiring more effort and negotiation. The dynamics of the new parliament are likely to reflect a wider range of political ideologies, creating a more complex environment for grand coalitions.

A more centrist European Parliament would support integration and stand for continuity. A more nationalist and Eurosceptic European Parliament would be more destructive; it would prefer national sovereignty over integration; restrictive immigration policies; and oppose the allocation of resources for common policy goals. Likewise, a more nationalist and Eurosceptic Parliament would lower climate targets and undermine the EU’s energy transition goals. It would be less protectionist towards China and more supportive of reengaging with Russia.

People always talk about diversification and reducing reliance on China, but there are limits. Reducing risk and keeping investment open are not the same thing.

in conclusion

The sharp shift in priorities and attitudes is mainly related to the geopolitical situation, with the rise of the far right the overwhelming story of this election. Yet mainstream parties will still have a majority in the European Parliament. It will become more difficult to pass legislation, but this does not necessarily mean a reversal of momentum in key policy areas and in European integration. It is important that mainstream parties have a vision for the future, what Europe will look like in ten or twenty years, and how to get there. People are increasingly frustrated. Incomes are not growing in real terms and jobs are insecure. The economic transition is imposing higher costs on families. We need a more inclusive approach and a new social contract. Both are dangerously missing.

Ioannis Tirkides is Manager of Economic Research at the Bank of Cyprus and President of the Cyprus Economic Association. This article is my own. This article was also published on Cyprus Economic Association Blog.