Peter Spiegel

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Mr Renzi, left, during his visit last week with Germany's Angela Merkel in Berlin

Sometimes it seems not a day goes by without Matteo Renzi, the Italian prime minister, picking a fight with Brussels. For a while, it was his angry denunciation of its slow response to the refugee crisis. Then he accused the EU of a “double standard” on Russian gas pipelines. More recently, he held up a €3bn EU aid package to Turkey. And he’s been blaming new EU rules for his country’s mounting banking crisis. But the most critical fight he’s been waging was on full display yesterday: his attempt to get more wiggle room for Italy’s 2016 budget.

Pierre Moscovici, the European Commission’s economic chief, was the man in the firing line this time, since yesterday was his semi-regular appearance to unveil the EU’s latest economic forecasts. In the run-up to Mr Moscovici’s announcement, Pier Carlo Padoan, the Italian finance minister, laid down his marker: he wanted a decision quickly that would allow Rome more flexibility to spend a bit more than EU rules normally allow. But Mr Moscovici was having none of it. Mr Padoan would have to wait until May for a decision, along with every other eurozone minister.

In what appeared a fit of mild Gallic pique, Mr Moscovici also noted that “Italy is the only country in the EU” that had already been given special dispensation under new budget flexibility guidelines – it is able to miss its structural deficit target by 0.4 per cent in order to implement Brussels-approved economic reforms – and it was now coming back repeatedly for more. Read more

Peter Spiegel

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Mr Kenny with Irish president Michael Higgins after formally dissolving parliament Wednesday

To date, no eurozone leader who has guided his country through a bailout has emerged politically unscathed on the other side. Portugal’s Pedro Passos Coelho was deposed as prime minister in November after inconclusive general elections. Earlier last year, Greece’s Antonis Samaras suffered a similar fate at the hands of leftist Alexis Tsipras. And Spain’s Mariano Rajoy is looking increasingly unlikely to win back the premiership in Madrid after informing King Felipe VI this week that his coalition-building efforts were going nowhere. Can Enda Kenny end the losing streak?

The Irish prime minister asked for parliament to be dissolved yesterday, setting the stage for a three-week sprint to election day on February 26. Mr Kenny is already touting his economic record, and to any outsider, that would seem to be enough to put him over the top. Ireland is expected to be the fastest-growing economy in the EU in 2016, which would be the third year running. Its unemployment rate of 8.6 per cent, while still high, is lower than the eurozone average and well below the 14.7 per cent rate when Mr Kenny assumed office in 2011.

Despite that record, opinion polls have stubbornly shown his Fine Gael party unable to get much above 30 per cent, a good-sized decline from the 36 per cent they took in the last general election. More troublingly for Mr Kenny is the demise of his coalition Labour party, which has seen its support cut in half. Without Labour, it’s unclear who Fine Gael would go into coalition with – which could produce a similar result to that faced by Mr Rajoy and Mr Passos Coelho, who emerged from their elections atop the largest party, but one too small to cobble together parliamentary majorities. Read more

Peter Spiegel

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Donald Tusk, left, arrives at Downing Street for dinner with David Cameron on Sunday

There is a time in every EU policy debate when the technical becomes the political. That’s what happened yesterday when, after months of painstaking work by some of London and Brussels’ most seasoned mandarins, European Council president Donald Tusk published a 16-page “New Settlement for the United Kingdom within the European Union”. The EU’s political leaders now have two weeks to decide whether they will sign onto the deal before a high-stakes summit where the agreement is to be finalised.

For those following the debate closely, there were few surprises. Critically, Mr Tusk’s proposal includes an “emergency brake” that will allow David Cameron, the British prime minister, a four-year limit on benefits to newly-arriving EU migrant workers – at least for a while, since how long he can keep that brake engaged remains to be negotiated. Also left unclear is the efficacy of a second “emergency brake” that would allow London to force eurozone decisions onto the agenda of an EU summit. How and when that brake can be pulled is a sticking point with France, which wants to make sure Britain cannot veto further eurozone integration efforts.

But by in large, the substantive fight is over and things now move into the realm of the political, both inside Westminster and in other EU capitals – most of which got their first look at Mr Tusk’s draft at the same time as the rest of the world. In London, the political hothouse that always develops over Europe heated up quickly. Even within Mr Cameron’s own cabinet, there were grimaces – and open challenges – among known euroceptics like Chris Grayling, leader of the House of Commons, and Iain Duncan Smith, the work and pensions secretary. Avowed Brexiteers were less constrained. Steve Baker, leader of the Conservatives For Britain group, accused Mr Cameron’s Europe minister of being “reduced to polishing poo”. The reviews were about as kind in Britain’s popular press. The cover of the best-selling Sun tabloid shouts this morning: “Who do EU think you are kidding Mr Cameron?” The equally influential Daily Mail calls the renegotiation deal “The Great Delusion!” on its cover. Read more

Peter Spiegel

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For most of Europe, the sharp decline in oil prices since the summer has been an economic boon, lowering costs for everyone from energy-intensive manufacturers to run-of-the-mill consumers. But the one place in Europe where the free-fall has been no boon at all has been the Kremlin treasury, where oil and gas sales account for more than half of revenues. Already, Russian officials have announced a 10 per cent cut in spending for this year’s budget, and have toyed with the possibility of aggressively hedging against future losses. Now comes word that President Vladimir Putin may be putting pressure on seven of Russia’s largest state-owned companies – including energy giant Rosneft and airline Aeroflot – to at least partially privatise as a way to raise funds. Read more

Peter Spiegel

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Mr Cameron and Mr Juncker at the prime minister's official country residence last year

David Cameron, the British prime minister, is due in Brussels today for a meeting with Jean-Claude Juncker – a session so important that he cancelled a trip to Denmark and Sweden in order to sit down with the European Commission president in person. The two men have a famously difficult relationship – Mr Cameron actively opposed Mr Juncker’s election as president, and was one of only two leaders to vote against him at a 2014 summit. But it’s less than three weeks before a high-stakes EU summit where Mr Cameron hopes to get a renegotiation deal that changes the UK’s relationship with Europe. So Mohammed must go to the mountain.

For months, the main sticking point in the British renegotiation talks – which have taken Mr Cameron on a grand European tour from Berlin to Bucharest – has been benefits for EU workers in the UK. Mr Cameron wants to prevent EU migrants from receiving in-work benefits for four years, something that would appear to run directly counter to EU treaties’ non-discrimination requirement.

The latest option under consideration is actually one that has been debated for several months – an “emergency brake”. The original idea would have allowed Britain (and other countries) to limit immigration from other EU members if it can prove government services like healthcare or schools were becoming overwhelmed by the strain. As our Brexit watcher Alex Barker reports, the new twist is that the “emergency break” would allow countries to limit work benefits, rather than immigration. In the past, Downing Street has been lukewarm to the “emergency brake” idea, especially since it would likely need vetting from Brussels before the brake can be pulled. But with time running out, and alternate “Plan B” options limited, Mr Cameron may be warming to the idea. Read more

Peter Spiegel

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The other shoe has finally dropped. After months of subtle and not subtle warnings, Brussels has taken its first step towards green-lighting border checks across Europe for up to two years – and pushing Greece towards a de facto suspension from Schengen. The European Commission’s report into Greece’s borders found “serious deficiencies” in how Athens manages its external frontier. Those two words – “serious deficiencies” – are key, since they are explicitly used in the code governing the EU’s passport-free Schengen travel zone if Brussels wants to dictate new border measures aimed at restoring “overall functioning” of the bloc. As with all EU rules and regulations, the process of moving from what happened yesterday to border checks is complicated and filled with further rounds of back-and-forth between Brussels and Athens. But the Schengen code also makes clear that such a report is the first step. Read more

Peter Spiegel

Portugal's new finance minister, Mario Centeno

The complicated procedure and baffling code words that are part of the European Commission’s annual evaluation of eurozone budgets can sometimes make it seem like Brussels is intentionally obfuscating their views on national budgets.

But under the EU’s crisis-era rules, all spending plans must be submitted for approval by the commission’s economics directorate before they can be sent to national parliaments for consideration – one of the most powerful levers Brussels now had in its battle to get debt and deficits in the eurozone back under control.

That’s why the letter sent to the Portuguese finance ministry this week, filled with jargon and confusing benchmarks, is worth taking a look at. We got our hands on the letter and have posted it here.

Under EU rules, eurozone governments are supposed to submit their budget for review by mid-October. But that happened to coincide with last year’s Portuguese parliamentary elections, held October 6, which delayed Lisbon’s submission for months – nearly four months, to be exact. Its 2016 budget was only sent to Brussels last Friday. Read more

Peter Spiegel

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Apple's campus in the Irish town of Cork

For the first time since the so-called LuxLeaks scandal broke more than a year ago – where documents leaked showing hundreds of multinationals had received extremely favourable tax treatment in Luxembourg – the issue of corporate tax avoidance has suddenly moved back into the spotlight thanks to actions taken by both London and Brussels to begin clawing back millions in allegedly underpaid taxes.

Tomorrow, Pierre Moscovici, the former French finance minister who now oversees tax issues for the European Commission, is due to unveil the latest in a series of measures aimed at cracking down on “sweetheart” tax deals. Mr Moscovici’s task today will be as much political as financial, since his boss Jean-Claude Juncker was Luxembourg prime minister when the LuxLeaks deals were struck and has suffered some political damage as a result.

Alex Barker, who long covered corporate tax issues for the FT Brussels bureau, has tallied up the windfall for treasuries thus far and asks whether the headline numbers, which seem big, are actually that big at all:

The long suffering European taxman is looking for redress. Over the past three months alone roughly €1.25bn has been clawed back from multinationals across the EU, led by the European Commission’s series of cases brought against companies in Belgium, Luxembourg and the Netherlands, which Mr Moscovici will no doubt tout today. It all sounds impressive. But scratch the surface and an enduring truth becomes clear: tax collectors are usually more hampered by European politics than helped.

 Read more

Peter Spiegel

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Migrants attempt to enter Macedonia from the Greek side of the border on their way north

In many ways, it is a threat that has more bark than bite. Although Greece has been part of Europe’s Schengen bloc since 2000, it has the almost unique status of sharing no land border with another member of the passport-free travel zone (Iceland doesn’t, either). For that reason, suspending Greece from Schengen would probably have no direct effect on the unrelenting influx of refugees from Turkey’s shores into Germany and points north. Although the noise surrounding such a suspension has risen in recent days, only those who fly from Athens into the rest of Europe would find their travel disrupted, and there are not many migrants who have been lining up at the Aegean Airlines ticket desk to book an aisle seat to Munich. (The price of a plane ticket may actually be cheaper, but this video explains why refugees can’t fly commercial.)

That’s why newfound support for EU aid to Macedonia so it can beef up its border defences with Greece has suddenly become the hot topic within many interior ministries and the European Commission. It would achieve what governments up north have long wanted – to keep refugees inside Greece, where they can be processed and, if they qualify, relocated across the EU – while not broaching the politically toxic topic of Schengen expulsion.

In a letter sent yesterday, Jean-Claude Juncker, the European Commission president, gave his full-throated support to the Macedonia plan: “I welcome your suggestion,” Mr Juncker wrote to Miro Cerar, the Slovenian prime minister who has been driving the concept. Although legally, Brussels itself cannot currently send such aid to a non-EU member, Mr Juncker said individual member states should “support controls on the border with Greece through the secondment of police/law enforcement officers, and the provision of equipment.” Read more

Peter Spiegel

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Spain's King Felipe VI, left, receives Mariano Rajoy on Friday amidst coalition talks

At the height of the eurozone crisis, it almost seemed on Brussels summit days that the EU gathering itself was not the most important meeting in town. Many focused instead on the pre-summit gathering of Europe’s centre-right political family, known as the European People’s party (EPP).

For a time, that assembly included not only the leaders of the Franco-German power axis (Angela Merkel and Nicolas Sarkozy), but also of the eurozone’s two other large economies (Spain’s Mariano Rajoy and Italy’s Silvio Berlusconi, and then Mario Monti). Almost every country under siege was there, too, including Portugal (Pedro Passos Coelho), Ireland (Enda Kenny), Cyprus (Nicos Anastasiades) and of course Greece (Antonis Samaras). For good measure, two of the most important non-eurozone countries were also represented (Poland’s Donald Tusk and Sweden’s Fredrik Reinfeldt).

But after another weekend of fast-moving developments in Spain, when Mr Rajoy essentially gave up on his efforts to retain the premiership, that lineup could easily be reduced to Ms Merkel and a handful of leaders viewed either as quasi-pariahs (Hungary’s Viktor Orban) or far from the EU’s main power centres (Mr Anastasiades, Mr Kenny and Bulgaria’s Boyko Borisov). Read more

Peter Spiegel

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Amid the doom and gloom surrounding the eurozone’s continued inability to shake off the funk that set in after the sovereign debt crisis started six years ago, policymakers have recently been able to latch on to a bit of sunshine that Brussels has dubbed “temporary tailwinds”. These “tailwinds” are not the kind of good news normally associated with a strong economic recovery, such as companies expanding or workers’ wages increasing. Instead, they’re called “tailwinds” because they make it easier for those things to start happening – a little wind at the back of those thinking about investing in a new plant or hiring more people.

For the eurozone, these tailwinds take three forms: lower oil prices, which fatten the wallets of consumers and energy-intensive industries; a weak euro, which makes European products cheaper to sell overseas; and “accommodative” monetary policy, which lowers interest rates and makes it cheaper for investors to borrow money and build things.

There’s nothing much EU policymakers can do to affect the price of oil, though lifting Iranian sanctions has contributed to the perception the world is now awash with supplies. But yesterday Mario Draghi, the European Central Bank president, did a whole lot for the other two “tailwinds” with just a few sentences of central-bank-ese. First, he described “heightened uncertainty about emerging market economies’ growth prospects, volatility in financial and commodity markets, and geopolitical risks” – by which he mostly meant recent market upheaval in China. He also noted that eurozone inflation, which is supposed to be running at about 2 per cent each year, remained “weaker than expected”. Then he unleashed the sentence that got everyone really excited: “It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March.” Which means that his already-accommodative monetary policy is likely to get even more accommodative in just a few weeks. Read more

Peter Spiegel

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Austria's Faymann, left, with Merkel and Turkish prime minister Ahmet Davutoglu in November

Germany has received the most attention and Hungary the most denunciation, but in many ways it has been the country in between that has served as the bellwether of Europe’s ongoing refugee crisis. Back in September, Austria became one of the first countries along the “Western Balkan route” to find itself awash in migrants after Germany unexpectedly announced it was re-imposing checks on its southern border. A month later, it became the first country inside the EU’s passport-free Schengen zone to reconstruct fences at the border with another Schengen member, neighbouring Slovenia. Then last week it started turning away asylum seekers – though only those who admitted they were trying to get to Scandinavia.

But yesterday, the Austrian government may have taken its most significant step yet by announcing it would cap the number of asylum claims it will accept. Werner Faymann, the Austrian chancellor, said the country would only allow 37,500 to be admitted this year, down from 90,000 who applied for asylum status in 2015. Over the next four years, the limit will be 127,500. “We cannot in Austria take in all asylum seekers,” Mr Faymann said in Vienna. Frankfurter Allegemeine Zeitung has this excellent analysis piece that points out Mr Faymann long resisted such a cap, but was forced into the announcement by mounting pressure from within his own government.

The move raises serious legal questions, since the Geneva Convention on refugees – of which Austria is a founding signatory – prevents countries from expelling asylum seekers without a hearing, unless they can find a reason on national security grounds. Asked if the European Commission had come to a legal opinion on such quotas, a spokeswoman said it hadn’t – though only because up to now no country had sought such caps. But she hinted Geneva, which is incorporated into EU law, could present a roadblock. “We don’t practice pushbacks, we do not turn away people without first assessing their asylum applications on an individual basis, and this is the process that’s carried out across the EU,” said Natasha Bertaud, the commission’s spokeswoman on refugee issues. Read more

Peter Spiegel

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Davos chief Klaus Schwab

At the height of the eurozone crisis, EU leaders would frequently express annoyance that they were the focus of almost every major international conclave, from Group of 20 summits to annual International Monetary Fund meetings. Resentment would become particularly piqued when leaders from the developing world – like Brazil or Mexico – lectured their European counterparts on getting their economies in order.

That crisis may be in remission, but another European one – of refugees – is due to be among the main topics of conversation at the annual talkfest for global elites at the World Economic Forum in Davos, which starts today. According to the forum’s formal schedule, there are no fewer than five officially-sanctioned events on the topic, including a one-on-one session between host Klaus Schwab and Joachim Gauck, the German president; a panel discussion featuring Germany’s vice-chancellor Sigmar Gabriel and Swedish prime minister Stefan Löfven; and a press conference with the head of the International Organisation for Migration.

In a pre-Davos interview with the Associated Press, Mr Schwab said Europe was at a “crossing point”, and it needed to find a balance between the humanitarian instinct to help struggling refugees with the reality of limited capabilities to do so. “My concern is that Europe, at the moment, is in a phase of disintegration,” Mr Schwab told the AP. “Europe would be completely marginalized if we break up into different nation-states again.” Read more

Peter Spiegel

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The reformers: economy minister Emmanuel Macron, left, with prime minister Manuel Valls

Le Monde called it François Hollande’s “last-chance plan”. Struggling with an unemployment rate that stubbornly remains above 10 per cent, and saddled with a promise not to seek re-election in 2017 unless joblessness falls, the French president on Monday unveiled a €2bn scheme aimed at reversing an “economic emergency” facing his country.

The measures themselves are mostly targeted at the young: a €2,000 subsidy for each young worker hired by small companies; creating 500,000 vocational training schemes; and a programme to boost apprenticeships. The price-tag may be high, but taken together the initiatives appear less ambitious than the so-called “Loi Macron”, an economic reform plan passed a year ago under the aegis of Mr Hollande’s youthful economic minister. That plan has failed to produce any signs that unemployment is dropping, raising questions over whether the new programme will provide much help.

As with the Loi Macron, Mr Hollande’s new plan seemed to please nobody. Reformers like Mr Macron and Manuel Valls, the prime minister, are viewed with suspicion from within the ruling Socialists because of their “liberal” views. But the measures backed by the two men never seem to go far enough to please business interests, either.

The French business daily Les Echos has a useful summary of reactions from business and labour leaders, with Medef, the main French employers’ association, offering a rather tepid endorsement by calling it a step “in the right direction.” The head Medef’s sister organisation for small and medium-sized businesses was similarly lukewarm, saying he was doubtful it would have any long-term effects. Predictably, the Républicains, as party boss Nicolas Sarkozy has re-branded the French centre-right, were withering in their criticism. The conservative Le Figaro quotes party spokesman William Larrivé calling the plan “an insult” to France’s unemployedRead more

Peter Spiegel

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A bus of Syrian immigrants was sent to the chancellery in Berlin by Bavarian officials

The knives have been out for Angela Merkel almost since the outset of the refugee crisis. But the rebellion from within the German chancellor’s own ranks appeared to have subsided ahead of the Christmas holidays. Gone were pointed asides by Wolfgang Schäuble, who in November warned of an “avalanche” of refugees because of “careless” government actions. Many read that as an unofficial signal that the powerful finance minister – who has long coveted the chancellery – was prepared to step in should Ms Merkel fall.

But in recent days, the German press has been filled with renewed accounts of plotting within the centre-right coalition – her own Christian Democratic Union and its more conservative Bavarian sister party, the Christian Social Union. The scheming was linked to anger surrounding the New Year’s Eve attacks by men of “north African and Arab” appearance on scores of women in Cologne. Ms Merkel even cancelled her annual trip to Davos to handle the political troubles at home, though Berlin later denied the cancellation had anything to do with Cologne.

The conservative Frankfurter Allgemeine Zeitung has reported that a confidence vote is likely to come before the end of the month, a measure backed by “several dozen deputies” within the CDU/CSU. Süddeutsche Zeitung notes that even the CDU general secretary, Peter Tauber, has got in on the act, demanding the deportation of 1,000 refugees denied asylum every day. Süddeutsche argues that the rather unchristian stance from Christian Democrats is just another reflection of pressures within the party, where voices are rising to shut the borders and set caps on the number of refugees accepted – a policy explicitly backed by Horst Seehofer, the seemingly mutinous head of the CSU. Read more

Peter Spiegel

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Greek finance minister Euclid Tsakalotos (left) and eurogroup chief Jeroen Dijsselbloem

Eurozone finance ministers gather in Brussels today for their first eurogroup meeting of the year, and Greece is at the top of the agenda. Not too long ago, that very fact would have sent financial markets into paroxysms. But 2016 isn’t 2015, and thus far Athens’ new €86bn bailout programme has been chugging along comparatively smoothly. But could that change? Eurozone officials have always viewed the first quarter of this year as a crunch point when three elements must come together: completing the new programme’s first review; hashing out a deal on debt relief; and convincing the International Monetary Fund to join in for a third rescue.

At today’s eurogroup meeting, ministers will focus on the first of those tasks, and much of the discussion will be where it was during the far-more-contentious negotiations six months ago: pension reform. Under the new bailout, Athens must find €1.8bn in annual savings, and they’re not quite there yet.

In a memo the Syriza-led government has circulated in Brussels, officials note last year’s agreement talks of €1.8bn in “savings” not “cuts”, and they are proposing to close the gap by increasing employer payments into the system rather than slashing benefits. The European Commission appears willing to work with that, but the IMF remains sceptical – increased payments will raise labour costs and hit competitiveness. There are also concerns that Syriza is protecting middle-class pensioners, giving them incentives to retire early, rather than just the working poor.

Still, people briefed on the talks say Brussels believes it’s a blueprint they can work with. One senior EU official called the proposal “very ambitious”, particularly its consolidation of Greece’s mish-mash of pension funds into a master fund for all.

But a more difficult problem may be lying around the corner. One key pillar of the programme is Athens’ promise to get to a primary surplus – revenues minus spending when interest on debt isn’t counted – of 3.5 per cent of economic output by 2018. As it stands, Greece is about 1 per cent short of that goal, and measures to get to the 2018 target must be included in the 2016 budget. That will take a lot of heavy lifting. Read more

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Flag-waving protesters demonstrate against Poland's new media law in Warsaw last week

“I regarded your letter as an attempt to exert pressure upon the democratically elected parliament and government of the sovereign Republic of Poland.” Not a phrase you’d normally expect in official governmental communications between two ministerial-level politicians in the EU. But it was part of an invective-filled response to Frans Timmermans, the European Commission’s first vice-president, from Polish justice minister Zbigniew Ziobro sent Monday night ahead of today’s highly-anticipated European Commission debate on two new laws that many critics believe undermine rule of law in Warsaw.

Despite the tendentious tone of the letter in response to questions on legal changes that will make it difficult for the country’s constitutional court to overturn legislation – and a similarly direct letter from senior diplomat Aleksander Stepkowski in response to concerns about a new Polish media law – officials tell us that Brussels is likely to keep its powder dry at today’s meeting, at least for now. Read more

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It wasn’t so much what she said, it was how she said it. On Monday, Margrethe Vestager, the European Commission’s feared competition chief, announced her latest in a series of cases cracking down on sweetheart tax deals offered to multinationals by ordering Belgium to claw back €700m in illegal tax breaks to at least 35 companies.

The decision itself had been flagged up a month ago by Belgium’s finance minister, Johan Van Overtveldt, so it wasn’t really a surprise. But in announcing the decision, Ms Vestager went out of her way to highlight a common trait of those able to avoid taxes through the Belgian scheme (about €500m of the €700m). “Most of the companies benefiting are European; it is also European companies that avoided the majority of the taxes under the scheme, which they now have to pay,” she said at a midday news conference.

The statement stood out because it comes after American officials have privately raised concerns over the fact that three of the four initial cases in her corporate tax crackdown targeted US companies: Apple, Amazon and Starbucks. Last month, she expanded the list to include McDonald’s. The private grumbling became public in September when Robert Stack, the US Treasury’s man in charge of international tax policy, broke cover to complain about how the investigation would affect American corporate tax revenues, and Ms Vestager acknowledged that she had flagged up European companies in the Belgian scheme to emphasise her services’ impartiality. Read more

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Mr Mas congratulates Mr Puigdemont after Sunday night's election in Barcelona

It’s been three weeks since Spain’s inconclusive national elections left the country in an uncharacteristic political stalemate. As one of the last remaining EU countries dominated by two centrist parties – and a two-party system where leaders have some of the strongest tools anywhere to impose strict discipline on backbenchers – it has normally been clear on election day whether the centre-right Popular party or centre-left Socialists had a majority in the 350 congress of deputies. But for the first time since it returned to democracy, neither of the country’s two largest parties secured more than 30 per cent of the vote in the December 20 contest, and the second-place Socialists (who polled 22 per cent) have repeatedly refused to join a grand coalition with the Popular party (28.7 per cent) of Prime Minister Mariano Rajoy.

That might all change this week because of some fast-moving developments in Catalonia which, until now, looked headed towards a re-run of regional elections in March. First, Catalonian independence leader Artur Mas, whose Junts pel Si coalition won the regional elections in September, unexpectedly stepped down as leader on Saturday, a week after the far-left pro-independence CUP party vowed not to join in a coalition with Mr Mas to govern the region. Mr Mas’ resignation cleared the way for his less controversial ally Carles Puigdemont to take over Junts pel Si, and on Sunday Mr Puigdemont was voted leader of Catalonia in a special session of the regional parliament.

That decision could set off two more unprecedented moves that are likely to dominate Spanish political debate this week: the Socialists may now think again about joining Mr Rajoy – if not in a grand coalition at least in support of a Rajoy-led minority government – as a way to create an anti-independence united front in Madrid. And the Catalonian government is likely to move more quickly towards creating all the trappings of independence, including a central bank and tax authority. Last night, Mr Rajoy warned darkly that he had “given instructions” to prevent any illegal act from going into law in Catalonia. “I am going to defend democracy in all of Spain,” he said. Read more

Peter Spiegel

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Even at the time the EU signed its “joint action plan” with Turkey at a high-profile summit in November aimed at stemming the flow of refugees into Europe, Turkish leaders were cautious. “Nobody can guarantee anything,” Ahmet Davutoglu, the Turkish prime minister, said even before the ink on the deal was dry. “I wish I could say the number will decline but I cannot because we do not know what will happen in Syria.” Read more