The European elections- another episode of “House of Cards” or a symptom of shifting socio-political change?
Global elections are looming this year with inflation rates magically dropping in the anticipation of change of governments and institutions across European member states and the EU itself. Businesses with active engagement in European markets hardly every look at the European Union as one market and they make decision on individual member states opportunities and risks in light of EU regulation and legislation. Hence, looking at both individual member states and union elections in isolation would deprive us from paining a fuller picture of the opportunities and challenges businesses face and consider in light of the 2024 elections.
There are three key perspectives through which we can approach the European elections of this year. Firstly, we can analyse the European Union election held in June. Secondly, we can delve into the elections of individual member states. And finally, we can consider the broader context of the entire European continent.
At the outset of the year, there were 16 scheduled elections across the European continent. However, this number has since increased due to the announcement of snap elections in Bulgaria and Portugal. This trend underscores the prevailing sense of political unrest in Europe, a sentiment that predates the pandemic. While some attribute this upheaval to factors such as the Russia-Ukraine conflict and increasing prices or the Covid-19 crisis, it is essential to acknowledge the role of societal and political dynamics, including the prioritisation of individualism and nationalism over collaboration and diplomacy by both citizens and politicians.
What has that meant for business?
Large corporations have embarked on a journey of restructuring, marked by trimming investments and redundancies, all while generously rewarding shareholders with hefty bonuses. Conversely, smaller enterprises have found themselves on the side-lines, grappling with escalating costs and a cautious outlook on expansion. This landscape has dampened the spirit of entrepreneurial risk-taking, hindered by the shadows of political ambiguity, rising expenditures, and looming elections. Across the spectrum, companies brace themselves, awaiting the next tumult to navigate.
How does nationalism affect business decisions?
It is evident that we are witnessing a rise in nationalistic policies and governments across European nations, with protectionism occupying a central position on the political agenda. The significance of this shift becomes apparent when considering the role of technology, which has emerged as a crucial asset for states. While technology has the potential to unite and benefit the global community, it is increasingly being weaponised to gain competitive advantages or impede others from doing so. There are always losers and winners when human progress is concerned but the current tendency is towards weighing up the value of technology versus excluding citizens and the risks certain technologies pose to the sovereignty of governments and their services.
Businesses have been challenged to create a narrative of value beyond financial savings and increased efficiencies, tackling popular and political concerns about value to citizens, inclusion, sovereignty, and privacy. One can argue that the social upheaval on various issues such as job security, increasing cost-of-living and environmental concerns have trickled up to both decision makers and business leaders. We see this as an opportunity for business to finally step up across the board and demonstrate the real value add in various services, especially the technology add to our government managed services and ultimately to each individual.
The implications of a “country-fist” policy approach? Winners and losers
The upcoming European Union election will play a crucial role in mitigating this trend, particularly in restraining the unilateral actions of member states. For instance, we have observed instances where technological platforms have been restricted as part of sanctions against Russia following the Ukrainian conflict. Moreover, within the European Union, there is a growing tendency for countries to prioritise domestic platforms, thereby hindering multinational growth, slowing development and potentially compromising security in pursuit of a "country-first" policy.
The scrutiny faced by major technology companies has exacerbated this phenomenon, fostering an environment where international firms are viewed as adversaries to local providers. This atmosphere of mistrust extends to data sharing and protection, resulting in the segmentation of the digital space and heightened vulnerability to cyber-attacks, as evidenced by increased incidents in countries like Finland and disruptions such as GPS blocking in the Baltic region.
Disruption and competition are an essential part of business innovation, change and adaptation should be fully embraced. One of the implications of a “country-first” approach on individual member states level has witnessed a number of bigger companies working with and through local partners, driving local growth and delivering world-class essential services whilst mitigating some of the risks referred to above. In contrast, the defence and national security have not been left untouched by these trends. It is still the case that local companies cannot fully access European Union level critical projects and those companies need to be under the wing of global corporations. The security risks are simply too high, and this should be a priority for any member state under the umbrella of the European Union.
The shifts in power paradigm between smaller and bigger businesses is exciting although rather unsettling for some. There seems to be a place for all if politicians both on European Union level and member state level can recognise the value of collaboration and mixed-delivery approach.
Vacuum of engagement and decision making
The biggest challenges any business faces in light of elections across Europe on union and individual member state level is a vacuum of decision making and progressing with existing bids. Bigger businesses are better at navigating the limbo that follows a change of government and fundamental regulation affecting day-to-day activities. Smaller businesses simply do not have the budgets or the access to influence and wait out typically long periods of non-action and move quickly into the private space. That often brings innovation and collaboration referred to above down and is a missed opportunity for legislators to boost employment rates, GDP growth and resolve important socio-economic issues.
In light of any elections, politicians focus turns into campaigning to win elections and subsequently organise a new machinery of government which means limited engagement with business, citizens, and disruption to business pipelines. The implication are multifaceted including reduced investment, channelling to private markets, losing revenue and capabilities to non-European states and decreased collaboration.
Opportunities
Addressing these challenges necessitates greater collaboration. Geopolitics and elections are deeply intertwined, influencing critical cross-border issues such as immigration, defence, healthcare, and finance. Technology offers solutions to many of these issues, but its effective implementation hinges on collaboration. The trajectory of collaboration in the next five years will be heavily influenced by the prevailing nationalist trends. Without a concerted effort to promote transparency and engage stakeholders at the individual state level, technology companies may encounter mounting obstacles in operating across different jurisdictions.
In conclusion, a solely European Union-centric approach will not suffice to secure the future of burgeoning technology companies in the face of mounting nationalism. Collaborative efforts, both within and beyond the EU, are essential to navigate the complexities of the digital age and safeguard the interests of the broader global community. Politicians should be very mindful of the challenge pre and post election vacuums pose to businesses, large and small and the tangible losses that this causes to society and the economic stability on member state and EU level.
Authors
Vaska Vasilovska
