By Vera Songwe
The European Parliament met yesterday [3rd June] to discuss the implications of the European Union elections and begin selecting new leaders for the parliament. African countries, like the rest of the world, will be closely watching the repercussions of the latest EU “earthquake” (in the words of French President Francois Hollande) on their economies and citizens. These election results are once again the consequence of the 2008 financial crisis, only now—six years later—the crisis’ impact has moved beyond the initial effects on the financial sector and global trade to the socio-economic and political fabric of societies across the globe.
On May 25, 2014, Europe experienced an unprecedented political pivot to the far right, as European Union countries elected their leaders for the next five years. Seven countries of the EU (what I will call the EU7) voted to send far-right parties to Brussels. In France, these parties received 25 percent of the national vote; Denmark, 23 percent; the U.K., 20 percent; Austria, 20 percent; Hungary, 15 percent; Finland, 13 percent; and Greece, 12 percent.Thus, the far right collectively will hold over 30 percent of the seats in the new EU parliament.
Lack of growth in Europe has dimmed the enthusiasm of integration and openness that formed the hallmark of the EU. The economics of the EU have changed: It started with 15 countries at the end of 2003 and growth rates of 3.9 percent on average, to 28 countries and an average growth rate of -0.4 percent in 2012. Of the seven countries that voted to shift to the far right, growth has plummeted from 4.2 percent in 2000 to -1.2 percent in 2012. Unemployment rose from 7.3 percent in 2000 to 10.3 percent in 2012 in these countries over the same period. Worse still, many of these countries have gone through five years of no growth. As a consequence, a sense of economic despair is growing among the middle and lower classes. This difficult economic situation will be the backdrop of the meetings on Tuesday.
As they convene, the new members of the European parliament will not only begin to address the challenges of governing Europe and growing its economy; they will also examine their relationship with Africa. A number of issues pertaining to the EU’s relationship with Africa—including trade, openness and the Economic Partnership Agreement, immigration, development assistance and peacekeeping—will be under scrutiny. African leaders and their populations are watching to see how these important issues are addressed.
Trade and the Anti-Globalization Movement
Unlike the EU7, Africa is experiencing unprecedented growth: It is expected to grow at 5.5 percent in 2014. Trade with the rest of the world is fuelling this growth, and trade with the EU is an important component. Exports from Africa to the whole of the EU have increased from $95 billion in 2000 to $209 billion in 2013. Even if the overall share has been decreasing, this trade remains significant. The largest exporters to Africa from the EU in 2013 were France (18 percent of all EU exports), Germany (14 percent), Italy (13 percent) and Spain (11 percent). Spain (17 percent of all EU imports), Italy (16 percent), France (16 percent), the United Kingdom (13 percent) and Germany (12 percent) were the largest importers. Manufactured goods accounted for 70 percent of all EU exports to Africa in 2013, while energy made up 64 percent of imports. The major trading partners with the EU are South Africa, Nigeria, Algeria and Libya.
To deepen trade relations, Africa and Europe have been negotiating regional economic partnership agreements expected to increase access of African countries to European markets—the most advanced of these discussions being the Economic Partnership Agreement (EPA) with the members of the Economic Community of West African States (ECOWAS), the largest regional trading block in sub-Saharan Africa. Negotiations on these agreements are set to conclude this year.
The negotiation of EPAs thus focuses on narrow market access considerations. African countries keep their preferential access to the EU market, with some minor improvements in the rules of origin, in return for opening up their markets to the EU over a defined transitional period. The EPAs, like many trade agreements under discussion, have become increasingly controversial for African countries, especially in the larger countries with industrial policies that seek to develop domestic industry by protecting local firms using trade barriers as a tool. To date no African countries have signed a full EPA, and only 14 of 45 countries have agreed to an interim one.
The questions for policymakers and those involved in the discussions are: What impact will the new parliament have on the direction of the negotiations and will the parameters of the negotiations change to reflect the new political leanings in Brussels? How will African countries react to this new landscape?
Nationalism and Immigration
Nationalism is on the rise in all of the EU7 countries. For example, 17 percent of the French electorate reported that immigration is the most important issue facing France and Europe, ahead of their concerns for jobs, growth and macro-economic stability. The tension here is that, despite the rapid growth witnessed in Africa, migration from Africa to Europe continues to increase. In 2010, the stock of African migrants in France, the U.K. and Denmark—the top three right-wing countries of the new EU parliament—was 2.8 million, 1.2 million and 38,000, respectively. A significant share of migrants to France is from Algeria, Morocco and Tunisia, countries where economic growth has stalled due to, among other things, prolonged political crisis. However, the migrants to the U.K. from Africa originate from Nigeria, Ghana and South Africa, where growth—driven mainly by the natural resource sectors—has on average been high but not inclusive.
The new EU parliament may embrace the idea of the French far right Front National party to reduce the number of migrants admitted into Europe by over 80 percent. The policy of deportation may also be accelerated. This would have important implications for Africa. In an environment of high unemployment in Africa, a repatriation policy for even 1 percent of the nearly 3 million migrants in France today will only fuel social unrest on both sides with unwanted social and political consequences. Will the EU7 be ready for this?
In addition, many African countries are taking on the issue of immigration as a human rights issue and demanding better treatment of their citizens in Europe. More countries are increasingly demanding that European countries sign conventions on the treatment of migrants. If providing better living conditions for African migrants is seen as costly by European countries, it could provide a justification for tighter policies towards migrants and encourage repatriations. How will African countries react to this new environment?
In the meantime, might the EU vote for an African pivot towards emerging market countries like China, India, Turkey and Brazil? During the crisis, Africa benefitted from increased trade with emerging market countries like China and India to maintain its high growth levels. Greater trade openness with emerging market economies helped African countries diversify their trade relations. While slow growth in Europe has led to a drop in exports from Africa to the EU, exports to China have increased. In addition, bilateral relations with China have gone from strength to strength, and, despite some setbacks, African countries are keen to take advantage of the increased resources from China. Could the recent EU also serve to deepen South-South collaboration? What further impact will the EU vote have on increased South-South trade?
Development Assistance and Peacekeeping
Development assistance from Europe remains high even as official aid allocations from the EU to Africa have fallen since 2011. Despite them economic crisis, many countries tried to protect development assistance, but now these efforts may be under threat. In 2012, only the U.K., Denmark, Luxembourg, the Netherlands, Norway and Sweden met the United Nation’s pledge to provide more than 0.7 percent of their GNI in development assistance. Today, the U.K. is the second-largest donor to Africa after the United States, France is the fourth largest, and Denmark is the eleventh. While FDI has grown significantly, development assistance remains an important source of resources for many countries, especially the fragile and conflict-affected countries with no access to other sources of funds.
In addition to development assistance, Africa relies heavily on the EU for peacekeeping. Currently there are over four EU peacekeeping missions on the continent in the Central African Republic (CAR), Mali, South Sudan and the Democratic Republic of Congo. In Libya and Egypt, some support is also being provided. In addition, the French took the lead in organizing the international community to restore stability during the recent crises in the CAR, Mali and Libya. With a new EU parliament likely to focus on internal issues, there are now legitimate concerns among African leaders that this assistance could decrease.
African leaders will have to wait to see what the new members of the European Parliament hold for the future of collaboration with Africa. In the meantime, a number of lessons from regional integration in Europe are evident and could help to bolster efforts at regional integration throughout Africa.
 The other big surprise of the election came from Italy—where the new Prime Minister Matteo Renzi’s Democratic party won a historic 40 percent of the vote. The largest country in the union, Germany, had no big surprises as the main conservative parties, the Christian Democratic Union (CDU) and the Christian Social Union (CSU), together won 35 percent of the vote.
Vera Songwe is a nonresident senior fellow with the Africa Growth Initiative and lead economist at the World Bank. Most recently, she was the adviser to managing director Dr. Ngozi Okonjo-Iweala, who oversaw the World Bank Operations in the Africa, Europe and Central Asia and South Asia regions, as well as human resources.
The views expressed here are those of the author and may not represent those of ECDPM
Photo courtesy of The Council of the European Union
Photo courtesy of The Council of the European Union
This article originally appeared on Brookings 'Africa in Focus' blog