Christian Oliver

Cecilia Malmstrom, the EU trade commissioner, during a press conference last week

Meet the Miculas: two twin brothers, Ioan and Viorel, whose battle with EU law will be of interest to anyone following Europe’s fitful trade negotiations.

The duo’s battle to save their beer-to-biscuits food empire in northern Romania may not seem an obvious proxy for an increasingly bitter fight over the EU’s trade deals with the US and Canada. But it cuts to the heart of one of the most politically contentious issues surrounding both trade accords: the status of international investment tribunals.

The brothers, who also hold Swedish citizenship, have had a terrible start to the week.

On Monday, the EU said they would have to repay all the subsidies they received to build up their business in the poor northern Romanian county of Bihor, on the Hungarian border. Their factories, which produce brands such as Servus beer and Rony biscuits, depended on what Brussels ruled was illegal state aid. According to their lawyers, the pair had decided to invest in a region as impoverished as Bihor on the understanding that Romania would subsidise them. On that pledge hang some 9,000 jobs.

Their business model, which predated Romania’s accession to the EU, came unstuck when Bucharest decided to join the European club. Competition authorities no longer allowed this kind of state largesse. In 2005, Bucharest cut the funds to the brothers in Bihor. (Romania finally joined in 2007).

This is where things get interesting legally, and the trade aficionados will start to realise something is afoot.

As Swedish citizens, the Miculas took their case to an international tribunal and won. At the end of 2013, the International Centre for Settlement of Investment Disputes awarded a settlement of $250m from the Romanian government because of its suspension of the subsidies. It was one of the largest sums ever awarded by an international investment tribunal. To Brussels, the award of damages meant state aid was now effectively being paid “through the back door”. Read more

Peter Spiegel

Romania's centre-left prime minister, Victor Ponta

Just how should the EU react when a leader in a country like Romania threatens to undermine the democratic principles the entire European project stands for? Apparently it depends on what political party the accused underminer hails from.

Last year, when the Hungarian prime minister Viktor Orban – whose Fidesz party is a member of the EU’s centre-right political grouping, the European People’s Party – rammed through his parliament a controversial media law critics believed granted him overweening powers to mute press critics, the Socialists & Democrats – the EU’s centre-left group – were outraged.

“We cannot allow Hungary or any other government to drive a coach and horses through the fundamental values of the European Union,” insisted German MEP Martin Schultz, then the head of the S&D group in the European parliament.

Now, Romanian prime minister Victor Ponta – whose Social Democratic party is a member of the S&D group – has moved to impeach his political rival, centre-right president Traian Basescu; fired the country’s ombudsman; and curtailed the powers of the constitutional court. How has the S&D responded? Read more

Flowers are the traditional way to say “I love you”. But in European Union etiquette, they can just as well be the side-product of a political spat.

Romanian authorities this week-end blocked six trucks filled with flowers from the Netherlands, citing health concerns linked to unspecified “dangerous bacteria”.

The blockade came – perhaps coincidentally, but likely not – just one day after the Dutch government said it would veto the enlargement of the passport-free Schengen zone to Romania and Bulgaria.

The Dutch are not the only sceptics when it comes to expanding Europe’s borders to include the eastern duo, a decision that requires unanimity among current Schengen members.

At least a dozen other countries, including France and Germany, lined up against Schengen enlargement last year, worried that though Bulgaria and Romania had met the technical requirements laid out in the accession programme, the endemic corruption in both countries had to be addressed first. Read more

Peter Spiegel

In today’s paper, fellow Brussels Blogger Stanley Pignal has a nice scoop about a letter France and Germany sent to European Union officials announcing their formal objections to including Bulgaria and Romania in the Schengen area, the visa-free travel zone that most EU members are part of.

Traian Basescu, the Romanian president, has already responded this morning by calling the letter a “discriminatory act against Romania,” and vowing to fight the move.

Because the issue could get even hotter, especially since the incoming Hungarian presidency had made Bulgarian and Romanian Schengen membership such a priority, we thought we should post the letter here, with some annotations of our own. Read more

Tony Barber

Slovenia’s announcement last Friday that it is ready to lift its veto on Croatia’s European Union entry talks gave a welcome boost to the EU enlargement process.  Other than Iceland’s decision in July to apply for membership, enlargement has been running into one brick wall after another in the past couple of years.

This is partly because of petty arguments such as the Slovenian-Croatian maritime border dispute (still unresolved, in spite of last Friday’s breakthrough) which held up Croatia’s talks.  But it is also because of a certain fatigue and disillusion in many of the EU’s 27 member-states, especially in western Europe, about admitting new entrants. Read more