B&K Newsletter: Bull(ish) market

From a massive fine to the G7’s group of bullies. This is what the continent has been talking about this week.

In today’s special supplement, we start covering the next European Parliament election: the night of the long knives is fast approaching.

Faceboom

Ouch… On Monday, the Irish Privacy Authority imposed a record EUR 1.2 billion fine on Meta for violating European privacy law. According to the European privacy watchdog, Meta violated European data protection rules (GDPR) with its social network Facebook.

Meta, which intends to appeal, has been convicted of ‘continuing to transfer personal data’ of users from the European Economic Area (EEA) to the US in violation of European data protection rules, the Irish Data Protection Commission (DPC) stated in its decision. Meta must also ‘suspend any transfer of personal data to the US within five months’ of being notified of the decision and comply with the GDPR within six months, the notice further states.

The fine, the highest imposed by a European data protection regulator, resulted from an investigation launched in 2020. Meta calls the fine “unjustified and unnecessary” and will take legal action to suspend it; the social media giant reacted immediately in a statement. “Thousands of companies and organisations rely on the ability to transfer data between the EU and the US”, and “there is a fundamental rights conflict between US government rules on data access and European privacy rights,” the Californian giant explained.

The game of roles is on, but the king is naked: the recent imposition of a massive fine on Meta signifies a win for those who strongly advocate for the General Data Protection Regulation (GDPR), the European Union’s prominent privacy law. However, upon closer examination, this decision also highlights significant deficiencies in enforcing GDPR over the past five years. The ruling faced delays and encountered substantial resistance from the Irish Data Protection Commission, revealing the ongoing struggle among regulatory bodies to assert authority over how major tech companies manage the data of European citizens.

Moreover, the fine creates additional pressure and imposes a strict deadline on the Biden administration to address a significant disparity between data regulations in the United States and Europe. For the European Union to enter a new data transfer agreement with the U.S., Washington must establish protective measures to safeguard EU citizens against surveillance. This agreement would enable companies to transmit private data across the Atlantic.

Failure to meet these requirements could result in the blocking of transatlantic data transfers by October. Additionally, companies like Meta may be compelled to remove all EU data stored on U.S. servers, as per the Standard Contractual Clauses, which Meta utilised in the absence of the data flows agreement. These clauses were the focal point of the GDPR decision and fine announced on Monday, and the removal of EU data would need to be completed by November.

A friend in need is a friend indeed.

Bull(ish) market

The G7 summit in Hiroshima was supposed to be the summit to contract China’s imperialist aspirations. And in the end, it was. The G7 leaders pressed the detonator button by agreeing to the harshest statement ever against Beijing and pledged to cooperate through a new platform to respond to China’s economic threats. There were two statements in which the leaders criticised Xi Jinping’s regime on everything: from the militarisation of the South China Sea to economic coercion to Uyghurs’ exploitation. Commission President Ursula von der Leyen claimed a victory on the latter issue. The US has agreed to give up ‘decoupling’ in favour of a ‘de-risking’ strategy. China is ‘the greatest challenge of our era’ to global security and prosperity, said the British Prime Minister, Rishi Sunak, pointing to ‘growing authoritarianism at home and abroad’.

The surprise of the G7 is that it turned into a G8 on Saturday, when the Ukrainian President, Volodymyr Zelensky, landed on a French plane in Hiroshima. It allowed the G7 to reiterate its support for Ukraine until victory.

Hiroshima also served to flesh out the jet coalition to supply F-16s to Ukraine. After months of demands from Zelensky and several weeks of pressure from the UK and the Netherlands, even Joe Biden was convinced. On Friday, the US president informed the other G7 leaders that the US would support efforts to train Ukrainian pilots on F-16s.

Busting Putin’s and Xi’s balls in one shot.

Diplo focus: the next European Parliament election

Mark the date: European voters will be called to the polls from 6 to 9 June 2024 to renew the European Parliament. After some difficulties due to long weekends and public holidays that risk damaging turnout in some countries, the decision was taken by the ambassadors of the twenty-seven member states on Wednesday, 17 May and formalised this week.

The countdown has begun. The next twelve months in Brussels will be election campaigning, even if the national ones have not officially started. The first signs are already visible in the debates and votes in the European Parliament. What will the next majority be like? What will the next legislature be like? Who will be the President of the Commission? We need a short guide to survive a year of political-electoral speculation. This week, we start with the myth of the ‘new majority’ between conservatives and sovereigntists in the European Parliament.

The main mistake people will likely make during the next twelve months is to look at European politics through the glasses of national politics. Every time you hear a political leader say – or read a newspaper write – that he is about to change the majority in the EU with an alliance between centre-right and sovereigntists, take out a calculator and do the maths. According to all the polls and projections ahead of the European elections, there will not be the numbers in the European Parliament for an all-right majority. A coalition between the European People’s Party (EPP), the sovereigntists of the European Conservatives (ECR) and the far-right Identity and Democracy (ID) could obtain between 300 and 320 MEPs out of 705 seats in the European Parliament. To reach the magic threshold of 353 seats, it would also be necessary to enlarge the majority to the liberals of Renew. Except that, French President Emmanuel Macron has no intention of legitimising the friends of his main domestic rival, Marine Le Pen. And even within the EPP, there would be an internal revolt at the prospect of having to govern with sovereigntists, anti-Europeans and (some) still tacitly pro-Putin.

Why does the myth of the sovereigntist majority persist despite the strength of numbers? The answer must first be sought in the national narrative. The mistake in Italy was already made in 2019 when Matteo Salvini’s League in the polls had the wind in its sails, and people wanted to think that Italian politics mirrored European politics. It was not only in Italy. Even in France, where Marine Le Pen was leading in the polls, the far right fuelled the narrative of a new majority. A helping hand had also come from the Anglo-Saxon newspapers who, still under the shock of Brexit, were looking for a way not to feel too alone. On the night of 26 May 2019, the maths got the better of the narrative: not only did the sovereigntists and the far right not gain ground compared to 2014, but liberals and greens were the real winners regarding extra seats.

However, an all-European reason fuels the narrative about a new sovereigntist majority: the manoeuvres of the European People’s Party and its leader, Manfred Weber, to maintain a dominant position in the next legislature. Since 1999 the EPP has been the leading political force in the European Parliament and the EU. Since 2004, the EPP has chosen the president of the Commission. Since the beginning of the new millennium, the EPP has had the majority inside the Council and the Commission. For twenty-five years, the EPP has chosen the presidents of the European Parliament (even if they are expressions of other groups), secretaries-general of the leading institutions, and dozens of cabinet members of the commissioners. Even today, in the collective imagination, the EU is still marked by the EPP. Yet the numbers tell a different story. If in the 1999 European elections, the EPP had obtained 37% of the seats (a result confirmed in 2004 and 2009), today its share of MEPs has plummeted below 25%. And projections for 2024 indicate a further decline.

The EPP will still be the leading group but much weaker. And therein lies the trick for preserving the dominant position of the EPP: threatening to ally with sovereigntists and the extreme right before 9 June 2024 to gain more concessions from the socialists and liberals from 10 June 2024.

In recent months, Weber has aligned the EPP with the ECR and ID on issues such as migrants or specific Green Deal measures. Each time progressive majorities rejected it. But the Socialists & Democrats (S&D) group is easily scared off and will be less combative when faced with the threat (real or not) of ending up in opposition.

The key word in the 2024 European elections will not be ‘sovereigntist majority’. The keyword will be ‘fragmentation’. The next European Parliament will be different from the current one, weakening the two main groups. A broader majority will likely be needed to push the Commission’s political agenda forward.

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