ECONOMY

Brussels under fire for moving too slowly on rule of law

Good morning and welcome to Europe Express.

The European parliament’s plenary session in Strasbourg will go back into hybrid mode this week, amid a spike in Covid-19 cases in France and with Belgium implementing a four-day teleworking week as of today.

Regardless of the format, European Commission president Ursula von der Leyen will have to field questions from MEPs tomorrow on the results of last month’s EU summit, which included a discussion on Poland over the rule of law. After the FT saw the letters sent on Friday to Warsaw and Budapest, we’ll unpack what they contain and ask why some MEPs are still unhappy with the commission.

Meanwhile, France’s clampdown on migrant camps earlier this month seems to have done little in the way of deterring people from trying to cross the Channel to the UK. We’ll explore the latest events from the weekend and look at their impact on Franco-British relations.

And with COP26 now behind us, we’ll look at how the task of translating Europe’s ambitious climate plan into concrete legislation is proving a task as complicated as agreeing on the bloc’s seven-year budget.

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Small step for rule of law

Brussels has made a first preliminary move in a process that could lead to financial sanctions for Hungary and Poland over fraud and corruption linked to EU money, but the incremental step has angered those who think the commission is simply buying itself time, writes Mehreen Khan in Brussels.

The FT has seen the two missives sent to Poland and Hungary’s envoys to the EU last week, which lay out questions for Warsaw and Budapest over potential judicial and procurement corruption that need to be answered within the next two months.

The letters, signed by the commission’s chief budgetary official, are a first step towards action under the bloc’s new rule of law mechanism, which can punish countries that misuse EU taxpayer money by freezing funds. At stake for Poland and Hungary is access to billions in EU budget cash that make up significant portions of their national GDP. (This mechanism was the reason why Warsaw and Budapest held up an agreement on post-EU recovery money for several months.)

Commission president Ursula von der Leyen has been under sustained pressure from the European parliament and within parts of her own college to deploy the mechanism because of Warsaw’s judicial reforms and Budapest’s respect for EU values and anti-corruption laws.

These letters do not formally trigger the mechanism, however. They are a precursor to taking the formal legal step if Poland and Hungary cannot muster adequate responses within the two month deadline.

For those who want Brussels to get tough after years of strained relations with Viktor Orban and Poland’s ultranationalist PiS, Friday’s step merely ensures that real pressure will not be exerted until the new year. “The letters would now mean that no further action will be taken and the process will be dragged out until at least mid-January,” said Daniel Freund, a Green MEP.

Looming over any rule of law conditionality tool is a pending judgment from the European Court of Justice, which has been asked to preside over the mechanism’s legality by Poland and Hungary. Commission officials have said they will await the Luxembourg ruling before formally going ahead with a trigger. An initial ECJ opinion on the mechanism is set for December 2 with the final judgment likely to be pushed into early 2022.

Frustrated MEPs have launched legal action against Brussels for the delays. The commission’s position, however, has the backing of member states that gave von der Leyen a vote of confidence in her approach at a leaders’ summit last month.

While critics argue that Poland and Hungary have won a reprieve, another pot of cash — recovery fund money for both capitals — is also unlikely to be approved by Brussels within the next two months. At best, the state of purgatory may act as a de facto financial punishment even if sanctions remain a long way away.

Chart du jour: UK indicators

A survey of UK business activity due tomorrow will provide a snapshot of how the economy has fared in recent weeks. Last month, the IHS Markit purchasing managers’ index showed improved growth momentum. While analysts expect a deceleration in November, a positive surprise might feed into expectations on whether the Bank of England will increase interest rates in December. (More here)

Back to the Channel

Hundreds of migrants continued their attempts to cross the Channel from northern France to southern England in small vessels over the weekend, despite last week’s closure by French police of what interior minister Gérald Darmanin called an illegal encampment near the port of Dunkirk, writes Victor Mallet in Paris.

On Friday night and through Saturday, French lifeboats and coastguard vessels rescued 243 migrants in difficulties in bad weather in the Channel, according to the maritime prefecture responsible for the Channel and the North Sea.

The flow of thousands of migrants, many from the Middle East and Afghanistan, through France and on to the UK has long been a source of contention between Paris and London, although the tone of the discussions has calmed down in recent days following the closure of the Dunkirk camp and a video meeting between Darmanin and his UK counterpart Priti Patel.

French president Emmanuel Macron said France should further increase collaboration with the British, even though they “swing between partnership and provocation”. 

He told local newspaper La Voix du Nord in an interview that he would seek to introduce reforms to the migration system when France holds the EU presidency in the first half of next year.

“If those [migrants] who want to go to Britain have family there, that’s about regrouping families,” Macron said. “But if they are victims of people traffickers, we must break that system.”

French officials say 31,500 migrants have left the north coast of France so far this year, and 7,800 have been rescued while seven have died or disappeared. Last week the French sports and clothing retailer Decathlon said it would no longer sell kayaks at its stores in Calais and Grande-Synthe near Dunkirk because they were being used for dangerous cross-Channel attempts by migrants.

Clandestine migration into France and other EU countries is a hot topic in the campaigning that has already begun for next year’s French presidential election, with extreme-right would-be candidate Éric Zemmour calling for migrants to be “sent home”.

Green Gordian knot

Brussels’ Green Deal legislative blitz has barely got off the ground but is already proving to be among the most complex interlocking packages of measures ever undertaken in the EU, writes Mehreen Khan.

Unlike most legislation proposed by the European Commission, the group of over a dozen green measures — dubbed “Fit for 55” — risks ending up descending into a bean-counting exercise about where best to cut emissions across countries and sectors.

“Nothing will be agreed until everything is agreed,” said one senior diplomat, echoing the mantra that marked the bloc’s Brexit negotiations.

The green package is a unique proposition for lawmakers in the council and the parliament. The 13 separate files, which range from renewable energy targets, transport regulation and new carbon taxes, have been intricately designed by the commission to add up to the magic figure of 55 per cent reduction in CO2 emission by 2030.

But as lawmakers start making progress on the low-hanging fruit in Fit For 55, some are realising that it may prove impossible to agree positions on laws when the future of others is up in the air. If the parliament or council decides to water down some measures, “the deficit will have to be made up by bolstering other parts”, warned a commission official.

The biggest sticking point in the entire package is a plan to extend the EU’s carbon pricing system to consumer-facing sectors like cars and buildings. The extension has support from Germany and the Netherlands, but has met resistance from France and southern EU countries for punishing poorer households that will have to bear higher costs.

If the Emissions Trading Scheme extension is scrapped, then the burden of emissions cuts will have to shift to other sectors.

One diplomat said the interlocking nature of the laws meant the negotiations over Fit For 55 would “end up like the EU budget” — a reference to the last-minute negotiating where countries haggle over their payments and obligations.

To help unblock talks, some countries have asked Brussels to provide its secret formula for adding up the emissions contributions of each piece of legislation. But as with budget talks, the commission is unwilling to disclose its calculations for fear of encouraging more horse-trading over a package of measures in which it says “balance” is key.

What to watch today

  1. European parliament (partly) returns to Strasbourg for its plenary session

  2. The parliament’s internal market committee votes on the draft Digital Markets Act

. . . and later this week

  1. EU affairs ministers meet in Brussels tomorrow

  2. EU and Asian leaders take part in the ASEM summit by video conference on Thursday and Friday

Notable, Quotable

  • EU-Belarus negotiations: Lithuanian prime minister Ingrida Simonyte said that talks between EU officials and Belarus representatives on how to improve the situation of migrants amassed at the EU’s borders “should be conducted in co-ordination with Latvia, Lithuania and Poland in order to prevent partial solutions that won’t lead to a substantial improvement of the situation”.

  • Covid riots: Dutch cities including Rotterdam and The Hague were gripped by violent anti-lockdown protests over the weekend — and even initially peaceful demonstrations in Brussels got out of hand yesterday, forcing police to deploy water cannons and tear gas.

  • Bulgarian president: Exit polls in Bulgaria indicate that incumbent Rumen Radev is the apparent winner in the country’s presidential runoff. Radev is seeking a second five-year term in the largely ceremonial post.

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Today’s Europe Express team: [email protected], [email protected], [email protected]. Follow us on Twitter: @MehreenKhn, @VJMallet, @valentinapop.



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