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There are 20 European ministers in Vienna today for one of the most extraordinary meetings of the migration crisis – and there have been some pretty extraordinary meetings.
Austria has convened nine countries along the so-called western Balkans migration route. That sounds reasonable enough. Foreign and interior ministers will be present from Albania, Bosnia, Bulgaria, Kosovo, Croatia, Macedonia, Montenegro, Serbia and Slovenia. Missing from the guestlist, though, is the main migrant entry-point (Greece) and the main destination-point (Germany). That is either a rather big oversight – or an act of mutiny.
It caps a week where the dominoes have begun to fall in south-eastern Europe. Austria’s renegade policy – imposing asylum caps while waving through Germany-bound migrants – has triggered other national responses down the line. Vienna is even considering deploying troops to the Macedonia border. It is shaping facts on the ground that are fast eclipsing the prospects for a “European solution”, if ever it were possible. Read more
Welcome to Monday’s edition of our new Brussels Briefing. To receive it every morning in your email in-box, sign up here.
“Let me tell you where I’ve got to, which is, um, I am, um….I’ve made up my mind.”
With these words, Boris Johnson bounded into the Brexit camp on Sunday, jolting Britain’s EU referendum campaign into life. A summit-weary David Cameron had barely caught up on his sleep on Saturday morning when the Mayor of London emailed to let his old pal know he would take the opposite side. There was no reply. Less than 10 minutes before going public, Mr Johnson sent the British prime minister a ‘courtesy’ text. The two men enjoy one of the most cut-throat, competitive personal rivalries in British politics (they have literally wrestled on the floor of Downing Street). That rivalry is now set to engross Britain’s June 23 referendum on EU membership. Nick Clegg, the former deputy prime minister, tweeted “the country’s future had been reduced to uni chums arguing”. “Blond Bombshell” cried The Sun’s frontpage; “Boris Goes In for the Kill” said the Daily Mail; and “Out for Himself” declared the Independent.
Old Brussels hands know what it is to be trolled by Boris Johnson. Read more
We’ve got our hands on the final pre-summit draft of the UK’s “new settlement” deal, sent to member states by Donald Tusk, the summit’s host, in the early hours of this morning.
There are not many changes from Tusk’s first version, published two weeks ago. A lot of the political issues have been left to the summit of EU leaders this evening. We’ve annotated a version of the main text, which you can view here. We’ve also run through the decision setting up an emergency brake for non-euro countries, which is here. I’m afraid Tusk provided no track marks in these drafts, making it difficult to see where the changes were made, but we hopefully spotted all the main issues and revisions. There are two particularly interesting tweaks:
1. City of London safeguards go to the summit:
This was not the plan. The officials negotiating this text wanted to sort the section on economic governance — basically outlining principles for coexistence between euro and non-euro countries — so that leaders weren’t subjected to a deep dive on financial regulation. But they failed to agree a key part that marked out turf on financial stability issues between national, eurozone and EU authorities. Pity the leaders — this is complex stuff. More details in the annotations.
2. The European parliament trigger for the benefits “emergency brake”? (SEE UPDATE)
This change is arcane but politically quite important for Britain and the European parliament. The text is revised to suggest the European parliament may have a say on the decision to trigger the “emergency brake” allowing the UK to restrict benefits to EU migrant workers. (In the earlier draft, MEPs had power over the legislation that would create the brake, but the ability to trigger the brake was left to EU member states.) This is super important for the bigwigs of the parliament — and very tricky for London.
UPDATE: A diplomat called to set us straight on the EP role in the emergency brake. A reference to a Council implementing act — basically bypassing the parliament — was removed. The language is a red rag to the parliament so it is a qualified win for them. But a reference to Council authorisation for the emergency brake remains, which we missed on first reading. That suggests the trigger is still in the hands of member states. One caveat: this area of law is incredibly complex and MEPs are a creative bunch when it comes to their powers and prerogatives. They could, of course, insist that the emergency brake trigger involves their sign-off as a condition for passing the law. Read more
This is Friday’s edition of our new Brussels Briefing. To receive it every morning in your email in-box, sign up here.
Bar the shouting (and there will surely be some) the Brexit deal is almost done. We’re nearing the moment where the sherpas fade into the background, leaving their leaders to reach the summit when they gather in Brussels on Thursday. An agreement is pretty certain, clearing the way for a June EU referendum. But there are some Brussels beartraps still to avoid — and they’re not all obvious. One issue in particular could be a killer. Read more
This is Thursday’s edition of our new Brussels Briefing. To receive it every morning in your email in-box, sign up here.
One side-effect of “crisis Europe” has been a surplus of bombastic political rhetoric. In a crowded field Mark Rutte, the Dutch premier, stood out when likening the EU to the fall of the Roman Empire. Hungary’s Viktor Orban touched a nerve with his “no road back from a multicultural Europe” speech, which in turn built on his warning over the bloc “staggering towards moonstruck ruin”. And of course Fico is Fico. Read more
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© Getty Images
There are three existential issues stalking the EU: the eurozone financial crisis, the migration crisis and a (potential) Brexit crisis after the UK’s EU referendum. Each one poses potentially acute but largely distinct challenges. But is there a risk of a “perfect storm” bringing these crises together?
Greece is facing the brunt of two traumas. While the threat of Grexit from the eurozone has receded, hard fiscal decisions remain, especially over pensions. The political consensus in Greece is extremely fragile. And the potential for a nasty backlash will increase if worst-case scenarios on Schengen and migration play out. In the event that northern Europe panics and closes Macedonia’s border (hardly an improbable scenario), the social and political burden on Greece will be immense. Read more
This is Monday’s edition of our new Brussels Briefing. To receive it every morning in your email in-box, sign up here.
Once more to the breach, dear friends. Angela Merkel will be back in Turkey today for her second visit in five months. To put this in perspective, the German chancellor had been twice in five years before the migration crisis hit. And it is only five days since she last met Ahmet Davutoglu, the Turkish premier. This is urgent business.
Turkey is the lynchpin of Ms Merkel’s migration strategy and it is floundering. Even with rough seas, arrivals to Greek islands are still running at roughly 2,000 a day. With spring (and German state elections) approaching, there are just weeks left to avert a migration surge that forces Ms Merkel’s hand. That would leave November’s EU deal with Turkey – including bold promises of visa liberalisation and €3bn in funding – all but stillborn.
It took a while, but the penny has dropped in Ankara. Read more
Britain's David Cameron addresses the press on his way into the EU summit on Thursday evening
David Cameron is in a hole. His flagship policy to curb EU migration – a four-year ban on benefits for migrant workers – looks doomed. When it was announced more than a year ago, Cameron was told it violated a fundamental EU principle of non-discrimination. If the EU stands for anything, it is ensuring EU workers don’t pay a higher effective tax rate on the basis of their passport.
This was flagged up by British officials at the time. Cameron nevertheless ploughed on. While Downing Street were drafting the Conservative party election manifesto, aides suggested leaving out the four-year idea. He ploughed on. When Mr Cameron preparing a letter to other EU leaders on his reform demands, he was told by Whitehall and Brussels the four-year ban was all but impossible and should be dropped. He ploughed on.
The final reckoning may come this evening. Cameron makes a make-or-break pitch for the idea. Having spent far too long trying to understand how the problem will be fixed, it may also be my last opportunity to inflict a benefit reform listicle on Brussels Blog readers.
So while there is still time: behold the nine ways Cameron’s four-year benefits saga may end.
Britain’s €2.1bn EU budget surcharge is a subject of mystifying, mind-bending complexity. Not even the people who are supposed to understand seem to understand. After days trying to solve the budget puzzle, the Brussels Blog is going to attempt to explain the numbers. Right or wrong, it should at least help to confuse matters further.
First the claims. Last week, George Osborne boldly said he halved the UK bill and achieved a “real win for British taxpayers”. EU officials say the British payments are rescheduled but benefit from no additional discount.
The truth, as we understand it, is even more bewildering:
– Britain is down to make a gross surcharge payment well in excess of €2.1bn, but at a different time than originally demanded.
– Britain will receive most of the money back by the end of 2015, but it doesn’t know precisely when, and it will only be thanks to two automatic rebates.
– Osborne requested a bigger discount and was denied, but he may get an EU Christmas present nonetheless.
Now for the details: Read more
Beppe Grillo’s Five Star troops are on side with a vengeance. The Lithuanian stunt pilot is pledging loyalty. The Calvinist isn’t taking calls from British Tories bearing gifts. Even given the faltering efforts to woo the Irish cannabis campaigner, things are looking up for Nigel Farage in the wacky world of the European parliament group building. Read more
David Cameron and his wife Samantha after voting in last week's EU parliament elections
David Cameron’s anti-federalist group in the European parliament entered these elections looking a bit shaky. While anti-establishment parties were faring well, the polls for the ECR group were worrying. Cameron took a huge gamble when leaving the centre-right European People’s Party to form a eurosceptic bloc. Some ECR folk feared the group could unravel in the wake of the election.
Daniel Hannan, one of the ECR’s best known MEPs, dismissed the doom laden predictions from “half-clever commentators” (this correspondent included). He was correct; the speculation proved only half-right. The ECR have emerged in a solid position from the vote. It survived and its feathers are well preened for a beauty contest for the leadership of Europe’s eurosceptics. But the dynamics of the group are changing — and it poses some serious political dilemmas for Cameron.
1) The ECR is here to stay….
If it makes no new allies and loses no group members, the ECR will live on. The election results show it has cleared the rather arbitrary seven country official threshold to form a group (there are MEPs from at least 8 member states). At present though, their numbers are down. The ECR is projected to reach 45, a loss of 11 seats. The Tories and the Czech members both suffered at the hands of the electorate.
2) ….with reduced Tory influence
Perhaps as significant is the changing balance of power within the party. Read more
It is safe to assume that there are parts of the UK Treasury already in a tremendous froth over this leaked opinion from the legal advisers to EU finance ministers.
Remember the only thing that would make George Osborne, the UK chancellor, hate the Financial Transaction Tax idea more than he already does would be its extension to currency exchange transactions. Even the European Commission didn’t go that far.
For that reason this opinion from the EU Council legal service will cause a stir, at least in Brussels. It contradicts the Commission’s own legal service (they are making a habit of this on the FTT) and says that there is no law in principle preventing a joint levy on foreign exchange. This effectively reopens a debate that makes London very nervous. Read more
German finance miniser Wolfgang Schäuble with Finland's Jutta Urpilainen at Monday's eurogroup
The German finance ministry is on the brink of an extraordinary achievement. Like many power shifts within the EU, it is happily hidden behind the most fiendish jargon. But if all goes to plan, Berlin is securing something rare and coveted in Brussels: the effective power to block future EU banking regulation.
Put another way, it is quietly resetting the ground rules of the single market in financial services without the need for treaty change or a referendum or a big speech. Take note David Cameron.
How has Berlin managed it? It is all concealed in the thicket of legal arguments over establishing Europe’s €55bn bank rescue fund via an intergovernmental agreement, rather than through the EU’s normal “community method”, where majority (or at least qualified majority) rules.
To translate: at German behest, the rules for pooling banking union rescue funds are laid out in a side-deal between governments, rather than under legislation agreed between EU member states and European parliament. Such intergovernmental pacts are allowed; remember the fiscal compact? But they are not supposed to change or impact the EU’s common rulebook, outlined in the EU treaties. Read more
Does David Cameron now need a reopening of the EU's treaties more than Angela Merkel does?
We have hardly heard a peep from Britain on the latest leg of Europe’s banking union. It is natural enough given the UK will be outside the proposed system for shuttering shaky banks, which is primarily for eurozone countries. But do not imagine it is unimportant for London. Strictly in terms of David Cameron’s plans to renegotiate Britain’s place in the EU, there has perhaps been no more worrying a development in Brussels all year.
Why? Cameron’s renegotiation strategy is partly based on this assumption: the eurozone will need a banking union to survive, and a fully-fledged banking union will need a re-write of EU treaties before 2017. That necessity opens the door for Cameron to press demands to repatriate powers.
The trouble is that this week’s banking union negotiation is showing that Germany and the eurozone will go to great lengths to avoid giving Cameron the leverage he craves. In one senior EU official’s words: “Nobody wants to give the keys to the UK”. Read more
ECB chief Mario Draghi, left, with eurogroup chair Jeroen Dijsselbloem at last night's meeting
Whenever it comes to eurozone backstops, it usually pays to be beware of fine print and Germans bearing gifts.
Eurozone finance ministers reached a tentative agreement in the early hours of this morning that is significant in this sense: it paves the way for a final deal on a common resolution system for the banking union.
In terms of substance, the big breakthrough is a commitment to establish a common backstop — by 2025 at the latest — that will provide taxpayer support to the bank resolution system, should its resources be overwhelmed in a crisis.
Germany was staunchly opposed so it represents an important concession to Italy, France and the European Commission. What it does not do, however, is detail what form that backstop should take — that is left open. And they have a decade to fight over what the commitment actually entails. Read more
Are the Dutch attempting to lead a mutiny on bank reform? It is hard to tell whether the objections are serious enough to unravel the deal last week on the EU rules for handling a bank crisis. But something mildly rebellious is certainly afoot. And it could end in another golden-gloves showdown between Jeroen Dijsselbloem, the Dutch finance minister, and his Swedish sparring partner Anders Borg.
At issue is the draft deal on the bank recovery and resolution directive (BRRD), which was agreed between negotiators for the European parliament and EU member states on Wednesday, brining to a close months of difficult talks. The reforms give all EU countries a rulebook at national level to handle a bank in trouble and, if necessary, bail-in creditors to help foot the bill.
The Dutch, however, are unimpressed. They think the draft agreement offers too much freedom to governments wanting bailout banks with public money, rather than impose losses on bondholders. And it looks like they have a significant number of allies. Read more
So this is it. Google’s revised offer to settle the European Commission probe into its search business has been described extensively in the press. But the actual text and screenshots of how new Google searches will look under the proposal were not published, much to the annoyance of the complainants asked for confidential feedback. One of the parties has decided to revolt and set the documents free. We’re publishing them here in full.
Before the legal text, a screenshot: this is what Google proposes its EU sites will look like for a restaurant search. Note the three “Almunia links” — what negotiators are calling the forced search results that display competitors’ offerings — that appear under the paid-for “sponsored” Google search results. Under the revised offer, they are spruced up with bigger fonts, icons and two lines of text.
And here is what a search for an iPod would look like. It’s important to note that the Almunia links (to rival price comparison sites Supaprice, Kelkoo and Shopzilla) are still paid for through an auction, but the minimum offer price has been reduced. More on the objections to that at the bottom of the post.
The three-year Brussels probe into Google’s search business seems to be meandering towards a thundering anticlimax. With every legal twist, revised settlement offer and procedural shuffle, the case is losing the zip that made it a cause célèbre in the antitrust world. The opposing camps, meanwhile, appear ever more entrenched and polarised. Nobody is satisfied.
For now Joaquín Almunia, the EU competition chief, is still ploughing towards a settlement, rather than issuing formal charges. But it has been a bumpy ride. The protracted process will have many more months or years to run, especially with legal appeals. There could still be surprises, even perhaps a charge-sheet, the so-called “statement of objections”. The anti-Google camp are far from surrendering. The details still matter.
The latest inch-forward came on Monday with Almunia seeking feedback on Google’s second settlement bid. The terms of the latest package will not be published, for various reasons that are hard fathom. Even so, all the complainants and most journalists covering the case now have a copy of the offer or have been talked through it. Below is a medley of insights on what is on the table and what to expect next: Read more
Backstops? A safety net for banks in difficulty? Why the fuss? We have one already! That is the rough conclusion from finance ministers meeting in Luxembourg on Monday and Tuesday.
To provide some context, the apple of discord is whether Europe should pool more public funds to stand behind its banking system. Looming on the horizon is a stress test of banks next year that is supposed to restore faith in the financial system. It may uncover horrors that can’t be covered by contributions from private investors. If a bailout is needed, the open question is whether the bank’s sovereign will be able to fund it by borrowing from the market or from eurozone bailout funds without rekindling the sovereign debt crisis.
So what is the plan? Well there is no sign of new money. For the more optimistic finance ministers the ultimate, ultimate backstop — only to be used in exceptional circumstances — is apparently a “direct recapitalisation” from the European Stability Mechanism, the eurozone’s E500bn bailout fund.
The trouble is that there are a legion of hurdles to clear before using this instrument in practice — especially if it is to be used to cover any shortfall exposed next year. The rough rules on the use of the instrument were published in June. Many senior officials think it is so encumbered with conditions as to be almost pointless. If direct recap is the backstop, some finance ministers will be worriedly looking over their shoulder.
TEN OBSTACLES TO A DIRECT RECAPITALISATION
1. German veto: Any ESM decision to take a direct stake in a bank is subject to a German veto. Berlin is determined to ensure that even if this tool is theoretically “available”, it remains unused. Wolfgang Schäuble, Germany’s finance minister, even said on Tuesday that German law would need to be changed to use the direct recap instrument.
2. German veto: the Bundestag would have to vote through any direct recap. Germany’s centre-left Social Democratic Party, the most likely coalition partner for Chancellor Angela Merkel, is dead-set against direct recapitalisation of banks. It thinks the financial sector, not taxpayers, should foot the bill for bank failure. Read more