BRUSSELS

European politics saw countless campaign promises in 2019. A new European Parliament was elected in May and a new European Commission entered into office in December.

But despite alterations in the political landscape of EU institutions, divisions in key policy areas remained profound among the member states, and 2020 will test whether the EU can overcome these disagreements, unlock the stalled decision-making process and start delivering on long-awaited reforms. But the 2021-2027 multi-annual financial framework and ambitious European Green Deal could deepen those divisions. 

Migration

Reforming the EU’s migration and asylum policy is one of the most difficult tasks that the European Commission’s new President Ursula von der Leyen inherited from her predecessor. Jean-Claude Juncker’s Commission tried several times to fix the asylum system, which collapsed during 2015’s migration crisis, and proposed compromises on migration management. But he couldn’t find a solution that all EU member states would have accepted, so now Von der Leyen has to come up with a new concept.

1 - Borders and security: Defending the EU’s external borders against illegal migration and crime is one of the few topics that all EU leaders can subscribe to. The relatively easy part of migration reform might be to allocate further funds and to extend the mandate of EU agencies dealing with border management and internal security. But no matter how popular these arrangements are in the eyes of European voters, they won’t solve the core problem of migration.

2 - Relocation of asylum seekers: The current Dublin regulation determining which country is responsible for asylum application puts an unfair burden on the EU’s border countries. The cornerstone of the reform would be to redistribute the asylum seekers between member states based on their population and economic performance. But regardless of France and Germany’s diplomatic efforts, the idea has been unacceptable for many European governments, which perceive the relocation system as an invitation for illegal migration. The issue seems to remain a challenge in the new year.

3 - Rules on asylum procedure: Main standards of asylum procedures are harmonized in the European countries, but it is still the national authority that makes the final decision. In order to avoid the huge differences between the length and content of the procedure, a well-functioning EU asylum system would require a more unified and centralized approach. But the idea goes against national sovereignty concepts in numerous capitals.

4 - Cooperation with Turkey on migration: By the end of 2019, the EU fully mobilized its €6 billion ($6.65 billion) in financial aid for Syrian refugees hosted in Turkey. The budget was agreed by the 2016 EU-Turkey Statement, meant to stop the irregular flow of migrants heading to Europe via Turkey. Payments will continue for five more years, but recent tensions in EU-Turkey diplomatic relations made the renewal of the agreement politically difficult.

5 - Strengthening the EU’s global role: The draft for the next seven-year budget proposes considerably more funding for partner countries out of the EU in their political and economic transformations towards sustainable development, consolidation of democracy and the eradication of poverty. But it is highly disputed whether financial support for developing or war-torn countries would effectively stop people from taking the risky route to Europe in hope of a better a life. 

Rule of law, corruption

Rule of law was one of the most widely debated topics in EU politics last year. Aiming to enhance the respect of democratic rules and principles, the Article 7 procedure entered into a new phase for Hungary and Poland. Romania and Malta’s reputations were also torn by political scandals, while an investigative article by The New York Times revealed systematic corruption around payments of the Common Agricultural Policy in Eastern European member states. Many claim that this phenomenon undermines the unity and credibility of the entire bloc.

6 - Polexit: Political interference in the judicial system can eventually lead to Poland exiting the EU because its legal system won’t be compatible anymore with European standards, the Polish Supreme Court and the country’s ombudsman warned recently. In 2019, the European Court of Justice ruled in two cases against Polish judicial reform, while the Polish government had three hearings on the independence of the judiciary among their peers in the Council of the EU through the Article 7 procedure. Undeterred by the warnings, the lower house of the Polish parliament passed another controversial bill on their last workday in December. The new law penalizes judges questioning the legitimacy of the government’s legal reforms.

7 - Hungary: 12 aspects of democracy are under investigation by the Article 7 procedure, while Prime Minister Viktor Orban’s government is also likely to face criticism on systemic corruption and misuse of EU funds. The government categorically rejects the allegations and interprets the procedure as politically motivated revenge for Hungary’s opposing migration from non-EU countries. The rule of law procedure will continue in 2020, but it is highly unlikely that the parties will radically change their stance or find a compromise.

8 - Malta: The southern European island might be the next country under EU scrutiny because of the scandalous investigation of journalist Daphne Caruana Galizia’s murder. Prime Minister Joseph Muscat promised to resign in January, but the European Parliament has already adopted a resolution condemning the serious and persistent threat to democracy and the Maltese governing elites’ efforts to hide corruption and money laundering.

9 - Misuse of EU funds: The European Public Prosecutor’s Office is expected to start working in 2020. The independent EU body is tasked with prosecuting and bringing to judgment crimes against the EU budget such as fraud, corruption or serious cross-border VAT fraud. However, Ireland, Sweden, Hungary and Poland haven’t joined the cooperation. In the case of the latter two, serious allegations concerning misuse of agriculture subsidies have been recently revealed.

10 - Rule of law conditionality: EU funds may be suspended or completely withheld from member states that violate the rule of law, according to the Commission’s proposal for the 2021-2027 budget. The idea was proposed as an extra tool to pressure member states to respect EU values because the Article 7 procedure turned out to be ineffective. While the concept is very popular among Western European governments and citizens, who consider themselves main contributors to the EU budget, Eastern Europeans find it unacceptable. But unanimity is required for the final deal on the next multi-annual financial framework.

Brexit

It is now almost certain that the U.K. will leave the EU on Jan. 31 after Prime Minister Boris Johnson and the Conservative Party’s victory in December’s general elections. But the three-year-long saga of Brexit won’t end because the basis for further cooperation needs to be laid out by the end of 2020 - a date the transition period ends under the current agreement. The negotiation patterns from both sides might remain the same. The British would ask for special treatment and the EU would be reluctant to grant favors for fear of setting an example for further exits as well as causing disputes with other trading partners.

11 - Trade deal: Von der Leyen promised an “unprecedented partnership” to the U.K. after 2019’s last EU summit which will be based on zero tariffs, zero quotas and zero dumping. But the Commission’s president wasn’t precise about which sector of the economy she meant. Finding a compromise on industrial goods might be easy compared to the trade of services, which amounts to 80% of the U.K.’s economy. Johnson certainly won’t accept the Norway model that grants full market access without any right to decide on the rules for the reason that it would prove right the "remain" camp in Britain. Nor can he accept the Canada-like standard free trade agreement as this option barely covers services.

12 - Irish backstop: The final Brexit deal could avoid the hard border between Northern Ireland and the Republic of Ireland. But the new mechanism may end up unsustainably difficult in reality because even if Northern Ireland stays in the U.K.’s customs zone, different EU rules and tariffs will be applied on goods depending on their destination. Moreover, it’s only an interim regime that can only be realized by the Northern Irish assembly’s approval.

13 - EU nationals in the U.K.: EU nationals legally residing and working in the U.K. can continue living in the country until the end of 2020. They are only required to confirm their residence status. But after the transition period, new and so-far unknown rules on arrivals will enter into force that might be disadvantageous for European students willing to attend world-famous British universities. The new government under Boris Johnson have plans to introduce a point-based immigration system, which is still to be detailed.

14 - Scottish independence: Scottish Prime Minister Nicola Sturgeon is determined to hold a new referendum on Scotland’s independence after her pro-EU SNP party won 48 of Scotland’s 59 seats in December’s general elections. Scottish independence doesn’t only challenge British domestic politics. The EU also needs to actualize its position on a small separatist state willing to join the bloc, and the decision risks causing a domino effect in other European regions looking for independence.

15 - Losing a net contributor: Britain’s leave will result in an approximately €10 billion ($11 billion) net loss per year in the EU’s budget. If one strictly looks at the balance of contributions and received payments, the U.K. paid more to the common budget than it received from EU funds. The loss will logically harm the net beneficiaries of cohesion and agricultural funds, which are mostly Eastern and Southern European countries. The gap also makes the tense negotiations over the next seven-year budget even harder. 

European Green Deal

The first big announcement of the new Commission was to present a roadmap for a sustainable and just economic transition in order to make the continent climate-neutral by 2050. Sensing popular pressure and looking for a cause to strengthen her legitimacy, President von der Leyen came up with the European Green Deal, which is meant to boost the economy and create jobs while saving the planet. Von der Leyen called it “Europe’s man on the moon moment,” but she mentioned hardly any concrete details of the great turnover. 2020 must be the year when political slogans reveal their content.

16 - Industry reform: A comprehensive legal package will be proposed at the beginning of 2020 which will lay the basis for climate action in every economic sector, including transport, energy, agriculture, buildings and industries such as steel, cement, ICT, textiles and chemicals. The plan will also focus on minimizing waste production and foster a circular economy. The “European Climate Law” will certainly raise costs in every industry, so it might take years to finally adopt a bill that has such profound consequences. EU officials will also have to face campaigns from industry representatives and lobbyists.

17 - International competition: European industry has already been struggling competitively with innovations. European firms might completely fall behind international competitors if they need to incorporate climate action into their business. The cost could be compensated by some sort of climate tariff on imports. However, even plans seem to be extremely cautious because a climate fee might seriously affect international trade relations and cause tensions with trading partners like China and the U.S.

18 - East-West divide: The eastern European member states have already voiced concerns about the shifting priorities of the 2021-2027 EU budget, which significantly reduces cohesion and agricultural funds. The European Green Deal will eventually widen the gap between well-developed Western states, who already have been using climate-friendly technologies, and the Eastern countries, whose convergence is lagging behind. The European Green Deal may raise the already significant tension around the EU’s next multi-annual financial framework as well.

19 - Financing just transition: Despite the fact that Poland’s Prime Minister Mateusz Morawiecki agreed with the goal of climate neutrality by 2050, he couldn’t commit to the implementation of the European Green Deal at 2019’s last EU leaders summit. European heads of state and government will get back to the question in June 2020, hoping that Poland, whose economy is the most dependent on carbon-intensive activities, will change their mind. The Commission suggested a €100 billion ($110 billion) Just Transition Fund to support the transition of less-developed regions, but it’s still unclear if it will be fully covered by the EU’s own budget or will only give financial leverage to private investment.

20 - Delivering the promises: Von der Leyen’s Commission came to power amid deep divisions between member states and European institutions. The overambitious program on a green economic transition might look like a good instrument to unify the continent behind a noble and necessary cause. But the Commission needs to deliver the details of an extremely complicated and overarching reform with very short notice of its own “first 100 days” deadline and deal with all the other challenges at the same time.