RPP Impact of US Elections on Europe

Overview

Here at RPP few people would have predicted Donald Trump's shock victory in the Presidential Election, and I'm sure like most readers of this newsletter, none would have wanted. But like Brexit, we are now in the situation we are in, and have to react to it as best we can and understand its potential implications for European politics, Brexit, Healthcare and the Life Science Sector.

The impact on Brexit will be difficult to know for some time, but initial analysis suggests that his victory could give Theresa May unexpected leverage in the coming Brexit talks. With the President-Elect casting doubt on the US's commitment to NATO, Britain's military strength, with the second largest defence budget in NATO, as well as its intelligence capabilities may now be in greater demand from EU countries worried about terrorism and Russian aggression. The potential for a UK-US trade deal is also improved, and the chances of TTIP being successful decreased, but this has to be viewed through the context of Trump's protectionist statements. If the US turns its back on free trade that will be terrible for the global economy, and have a hugely destabilising effect, which could exacerbate the challenges associated with Brexit and plunge the UK into recession.

Highlights

  • The quickest politicians to react to Donald Trump's victory were Marine Le Pen, who was one of the first to congratulate his victory, and Nigel Farage who quickly jumped on a plane to become the first foreign political leader to meet the President-Elect. Farage, who campaigned for Trump, as well as others within UKIP are clearly close with some members of Trump's team through the "alternative right" movement, but the British Government has poured cold water on the idea that Farage could have an official role in dealing with the new President and his team. For further information on Europe's reaction to Trump's victory and future upcoming European elections that could follow similar patterns, please see two articles below.
    There was quite a lot of discussion in the UK on the fact that Theresa May was only the tenth world leader that Donald Trump spoke with, questioning the UK's and US's special relationship. However, this has been explained as inexperience from Trump's team. During their phone call the President Elect said to the Prime Minister that "the UK is a very very special place for me", with Theresa May responding that she wanted to strengthen bilateral trade with America as Britain leaves the EU. Mike Pence, the Vice-President-Elect, did however follow protocol and ensured that the British Foreign Minister, Boris Johnson was his first phone call with a foreign politician.
  • On the 9th November Theresa May welcomed Hungarian PM Viktor Orban to No 10 to discuss a post-Brexit deal. The two leaders agreed to maintain strong bilateral relations as the UK prepares to leave the EU, however this visit will certainly cause concern with some other European leaders, as Mr Orban is viewed as a controversial figure due to his hard-line positions on refugees and migration.
  • Also on the 9th November a delegation of senior Labour backbenchers travelled to Brussels to argue that the party should begin to “shape the debate” on Brexit in the wake of the article 50 court case. The group of 17 Labour MPs were led by Emma Reynolds, formerly the shadow Europe minister, who used a lecture to outline the party’s response to what she said was a disastrous government approach to exiting the EU. Reynolds said last week's High Court ruling that parliament must approve the enactment of article 50 meant MPs suddenly had a far greater role to play in the Brexit process, and it was important for Labour to outline its position.
  • Despite the UK's vote to leave the EU, the UK has for time being opted into the Europol scheme. Brandon Lewis, the minister for policing, said he had notified Parliament of the Government’s intention. He added: “The UK is leaving the EU but the reality of cross-border crime remains. "Europol provides a valuable service to the UK and opting in would enable us to maintain our current access to that agency, until we leave the EU, helping keep the people of Britain safe".
  • Finally, from an economic news perspective, the American Presidential result saw the £ recover some of its recent losses against the $ and the €. For the first time in five weeks sterling was worth $1.26, having sunk as low as $1.21 a month ago. That is a rise of about 4%, although it has now fallen back slightly to $1.24. Against the euro, the pound has risen by more than 6%, up from €1.09 to €1.16. The UK inflation figure for October also fell slightly to 0.9%, which slightly allays fears that the fall in the £ over recent months will result in rampant inflation. More time is however probably needed for the true inflationary and economic impacts of the £'s devaluation to be felt.


Written by RPP Head of London Office, Andrew Brown

US President-Elect Trump: Europe Reacts to Shock Result

The recent US Election result has implications not just for the US but for Europe too and this could not have been clearer after an evaluation of President-Elect Donald Trump’s domestic and foreign policies and the possible effects they may have on European Union (EU) Member States and beyond.

To the surprise of many, the first foreign politician to have met with Trump and his team was the current leader of the United Kingdom Independence Party (UKIP), Nigel Farage, a MEP in the European Parliament. This suggests that Trump, who compared his campaign with Brexit, is more accommodating of the UK leaving the EU than the current President, Barack Obama. This alone will help shape the negotiations that the UK is due to begin with the EU in the coming months. This is one of the likely consequences of a Trump Presidency.

In regards to developments with the EU Institutions themselves, EU Commission President, Jean-Claude Juncker, and European Council President, Donald Tusk, have congratulated Trump in a Joint Letter, by highlighting the values US and Europe have in common. Both have also invited Trump ‘to visit Europe for an EU-US Summit at your earliest convenience’. Despite these diplomatic statements from some of Europe’s leaders, the messages coming out of Brussels have not been overly positive towards the Republican’s victory. A hastily organised meeting of Europe’s foreign ministers to discuss Trump’s victory, does not give the impression that Europe is happy about the result. UK Foreign Minister, Boris Johnson who will not be attending the meeting has urged his European colleagues to end their “collective winge-o-rama” about Trump’s election.

Given that the US and Europe are currently negotiating the Transatlantic Trade and Investment Partnership (TTIP) treaty, such a Summit would be a top priority for the Commission. Trump’s protectionist views on free trade agreements including the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP) will certainly make TTIP a more challenging negotiation, especially without the UK championing ‘free trade’ within the EU. As we saw with the difficulties in securing the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU, European scepticism combined with Trump’s protectionism may make TTIP an impossibility.

Indeed, trade and a possible UK Trade Continuity Treaty would be a priority for a post-Brexit UK. Both the UK and the rest of the EU would want conversations that would allow for them to chart the course of their relations with the US for the next four years. As both the UK Prime Minister, Theresa May MP, and the German Chancellor, Angela Merkel, have said following the election result, such partnerships are rooted in shared values of freedom, human rights, democracy and a belief in the market economy. ‘Over the years, the EU and the US have worked together to ensure peace and prosperity for their citizens and for people around the world’, Jean-Claude Juncker and Donald Tusk remarked in their Joint Statement.

German Chancellor, Angela Merkel, extended her congratulations to President-Elect Trump. She underlined that there is no other country outside the EU with which Europe has such close ties and emphasised the high degree of responsibility a new US President has. Interestingly, Russian President Vladimir Putin has said that Russia is ready and willing to restore full-fledged diplomatic relations with the US, but acknowledged that it will not be easy. ‘We are aware that it is a difficult path, in view of the unfortunate degradation of relations between the Russian Federation and the United States’, said Putin, adding that the poor state-of-affairs was ‘not our fault’.

Turkey’s Justice Minister, Bekiz Bozdag, has said that a change of Presidents in the US will not make a big difference to the ‘deep-rooted’ relations between the two countries. ‘I saw an intense campaign for Hillary Clinton’s victory. Artists, sportsmen, all personalities worked for Clinton’s victory. But in elections, it is important to embrace the people’, Bozdag mentioned, ‘no one has won elections through newspaper headlines, opinion polls or television (campaigns)’. French President Francois Hollande has said the election of Donald Trump ‘opens a period of uncertainty. It must be faced with lucidity and clarity’. In brief remarks after the weekly Cabinet meeting, Hollande congratulated Trump ‘as is natural between two Heads of State’. He has shown little enthusiasm for working with Trump so far though. This is because Hollande had openly endorsed Hillary Clinton in the past and said on Wednesday that he was thinking of her. Hollande said, ‘certain positions taken by Donald Trump during the American campaign must be confronted with the values and interests which we share with the US and he continued that ‘what is at stake is peace, the fight against terrorism, the situation in the Middle East. It is economic relations and the preservation of the planet’.

Meanwhile, the British Prime Minister, Theresa May, has said, ‘I would like to congratulate Donald Trump on being elected the next President of the United States, following a hard-fought campaign. Britain and the United States have an enduring and special relationship based on the values of freedom, democracy and enterprise. We are, and will remain, strong and close partners on trade, security and defence’.

For many European decision-makers, parallels can be drawn between the result of the Presidential election and the result of the UK referendum. Most people thought that, even with a small margin, the Remain camp would win back in June. The US election caused similar thinking; even if the majority might be marginal, Hilary Clinton, as an experienced former office holder and representative of the political elite in the US, was predicted to be the winning candidate.

So far, we do not know much about the course of the Trump Administration’s foreign policy. His presidential campaign has caused concern for US allies as he has questioned whether he will continue the commitment of NATO members to come to the aid of other NATO countries when under attack. He has also questioned during the campaign all pillars which have been the basis for US foreign policy in the past; not only from a foreign policy perspective, but domestic also. There are opportunities for both the UK and the rest of the EU in a Trump Presidency, but potential dangers also. The coming weeks will show what kind of President Trump is set to become.



Written by RPP Senior Director Advocacy and Policy, Thomas Krings and RPP Director of Advocacy and Policy UK, Mark Walker

Upcoming European Election, where are other potential shocks?

Very few people predicted that the Donald Trump would win the Presidential election, just as very few predicted a Brexit vote in the UK in June. Whilst comparisons between the two elections may be overblown, there are certainly similarities with "populist", "anti-establishment" feelings both in the USA and the UK.

The world is now holding its breath to see whether Donald Trump will be the President we fear he will be, and try to enact some of the outrageous policies discussed during the campaign, with the equally dangerous rhetoric that he used, or whether he will be a more restrained, considered version of himself that he has been portraying since the result was announced.

But from a European perspective, what lessons can be learnt from these surprising results, and where do we need to be on the look out for potential electoral shocks that could destabilise the EU further and also impact on the Brexit process?

Italy
4th December 2016 - Referendum on constitutional reform:
Italians will vote on the Prime Minister Matteo Renzi’s Democratic Party plan to cut the number of senators by two-thirds which would remove the upper chamber’s power to undermine governments. The PM has said he will resign if the vote goes against him. If the PM loses the vote it could give power to the anti-establishment, Eurosceptic Five Star Movement, who have pledged to have a referendum on Italy's membership of the Euro.

Austria
4th December 2016 – Presidential Election Re-run:
The original election was held earlier this year but annulled by Austria's constitutional court. The re-run was due to take place on 2nd October, however the election was postponed after the seals on postal votes were found to have come unstuck. They have now been without a president since 8th July when Heinz Fischer stood down. The key candidates are Norbert Hofer, from the populist, anti-immigration right-wing Freedom Party (FPO) and Alexander Van der Bellen former head of the Green Party. The polls show that the presidential candidates are neck-and-neck.

Netherlands
15th March 2017: Parliamentary election:
Being closely monitored because of the increase in popularity for Geert Wilders and the Dutch Freedom Party (PVV), a far-right and Eurosceptic political party. The party currently sits in second place in the polls behind the PM’s People’s Part for Freedom and Democracy. A shock victory for the PVV could see Holland call for a referendum to leave the EU.

France
April-May 2017: Presidential election:
Current president Francois Hollande, is the most unpopular president in history and polls show no other leftist candidate is popular. This has caused concern that the far-right leader of the National Front, Marine Le Pen may be more successful than expected in the election, especially since the election of Donald Trump. Whilst Le Pen is highly likely to get to the final two, the big question is will the moderate left and right in France unite around a candidate to stop her? A Le Pen victory would almost certainly be as big a shock to European politics as Brexit.

Germany
May 2017: Regional election Schleswig-Holstein and North-Rhine Westphalia
September 2017:
Parliamentary Elections September 2017: It is currently unknow if Angela Merkel will run for a fourth term, it is predicted that it will depend on how well her party, the Christian Democrat Party do in the May regional election. How the right wing, Alternative für Deutschland (AfD) performs will be closely monitored and a barometer of how "populist", "anti-immigrant" politics is developing in Europe.

UK
May 2017: Local elections

Whilst arguably less important than the higher profile national elections referred to in this article, from a Brexit perspective, next May's local elections will be a big test of whether parties opposing Brexit, such as the Liberal Democrats, can make big electoral gains, demonstrating that the British public is uncertain of Brexit. This could put pressure on the UK Government to water down its Brexit plans and opt for a "softer" Brexit during the negotiations.

Czech Republic
October 2017: General Election

The current Czech Prime Minister Bohuslav Sobotka's Social Democrat Party is currently trailing behind their "populist" coalition partners, the ANO a protest movement headed by Andrej Babis, a billionaire businessman and now finance minister, who has capitalised on voters' distrust in traditional parties.

All these elections, as well as others in 2018 and beyond, could potentially create unexpected outcomes that may or may not impact on the Brexit process. The only thing now certain in European politics is the uncertainty.


Written by RPP Head of London Office, Andrew Brown and RPP Policy Researcher, Lucy Kerr

Scotland and Northern Ireland React to Article 50 High Court Decision

As we discussed in last week’s newsletter, on the 3rd November, the High Court ruled that the UK government did not have the power to trigger Article 50, starting the formal process of exiting the Europe Union, without the approval of Parliament. The government have chosen to appeal this judgement to the Supreme Court and the hearing is set to take place on the 5th December.

Following this, the Scottish government have announced that they will be intervening in the Supreme Court case. First Minister of Scotland, Nicola Sturgeon has announced that Scotland’s Lord Advocate James Wolfe will formally apply to the Supreme Court to participate in the case. In a press conference, she explained her government’s reasons to oppose the UK government’s decision to appeal:

“Triggering article 50 will inevitably deprive Scottish people and Scottish businesses of rights and freedoms which they currently enjoy. It simply cannot be right that those rights can be removed by the UK government on the say-so of a prime minister without parliamentary debate, scrutiny or consent.”

The original case, which was led by Gina Miller, focused on the UK as a whole, rather than the devolved nations, it is likely that if Scotland participates in the case, it will be a lot more focused on the extent of devolved powers. Although not clear yet, it seems that the Lord Advocate will argue that Article 50 will also need to be approved by the legislatures in the devolved nations.

Northern Ireland’s deputy leader, Martin McGuiness, has been equally critical of the UK Government’s approach to Brexit, and like Nicola Sturgeon’s party SNP, his party Sinn Fein strongly opposed Brexit. Sinn Fein are an unusual party because although they hold five parliamentary seats, they abstain from participating in Westminster politics, including voting on parliamentary bills. This is because they are against the jurisdiction of the UK parliament in Northern Ireland, and they refuse to recognise the sovereignty of the Queen.

Following the High Court’s judgement, Martin McGuinness refused to rule out a change in Sinn Fein’s abstention policy to vote against the triggering of article 50. When asked at a press conference he said:

“Who knows where all of this is going to end up? But one thing is for sure and that is I have no faith in the British Parliament supporting the democratically expressed wishes of the people of the North to remain in Europe.”

If this occurred, Sinn Fein wouldn’t be able to block Article 50 but it would be an extremely strong statement to express Sinn Fein’s pro-EU position. However, an official from the party has issued a statement stating that Sinn Fein MPs will not be taking their seats at Westminster. Sinn Fein's principle focus of the reunification of Ireland, is undoubtedly the context with which they view Brexit, and hope that the UK leaving the EU creates an opportunity for them to achieve that goal.

The picture in Northern Ireland is however much less clear than in Scotland. Firstly, the vote in Ulster was closer than in Scotland, with 55.8% and 62.0% respectively voting to Remain. Secondly, the power sharing agreement in Northern Ireland sees the Democratic Unionist Party, led by Arlene Foster MLA, strongly support Brexit, as well as the Union with the rest of the UK.

The fact however, that Scotland and Northern Ireland voted against Brexit is a challenge for Britain’s process of exiting the EU. Clearly the government have recognised that a disunited Britain will not be in a strong starting position for the EU negotiations. The Prime Minister and the Secretary of State for Exiting the European Union David Davis have made a clear effort to demonstrate they are involving the leaders of the devolved nations in the negotiating process.


Written by RPP Policy Researcher, Lucy Kerr