Frictions in Granada
But also — New commissioners, Chinese subsidies, Telecoms, Hungary
Hi! This is Tuesday, 10 October 2023, and here’s the EU news you need this week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and Linkedin.
The Briefing
The EU-27 met on October 6 for an "informal" European Council meeting in Granada, Spain. The third meeting of the European Political Community was held the day before, also in Granada. Immigration, armed conflicts and EU enlargement were at the top of the agenda for these two marathon days.
EUROPEAN POLITICAL COMMUNITY • On October 5 (Thursday), the third meeting of the European Political Community (EPC) was marked by a series of diplomatic setbacks. The EPC, created a year ago at the instigation of Emmanuel Macron in response to the war in Ukraine, brings together 47 states — including Azerbaijan, the UK, Ukraine and the 27 EU member states.
The summit was seen as an occasion to advance discussions on the conflicts affecting the Caucasus (Nagorno-Karabakh) and the Western Balkans (Kosovo/Serbia). But the President of Azerbaijan cancelled his planned visit to Grenada. He was due to hold talks with his Armenian counterpart under the patronage of Charles Michel, Emmanuel Macron and Olaf Scholz. Recep Tayyip Erdoğan, who supports Azerbaijan — and, along with Hungary, is preventing Sweden from joining NATO — was also absent, apparently because of a cold.
The UK and Italy joined forces to organise a side-meeting on illegal immigration, attended by France, the Netherlands, Albania and the European Commission. Rishi Sunak, whose country will take over the rotating presidency of the EPC from Spain, wants to strengthen information sharing between the Frontex network and the EU's neighbours.
This meeting — which was not on the summit's official agenda — annoyed Spain, which wanted to reserve discussions on migration for the informal European Council meeting held the following day. The final press conference was cancelled at the last minute by the Spanish presidency.
COUNCIL • On October 6 (Friday), the EU-27 met for an informal meeting of the European Council. The Granada Declaration, released at the end of the summit, states that the EU will support Ukraine "for as long as necessary". The Ukrainian president had attended the European Political Community summit the previous day.
The declaration also contains an entire paragraph on EU enlargement. It notes the work needed by the EU institutions to prepare for the accession of new countries, and reminds that applicants must make efforts in the field of the rule of law if they are to have any hope of joining the bloc. No countries are mentioned in the declaration.
According to internal EU Council estimates leaked to the Financial Times, the accession of nine new member states to the EU would lead to a drop of around 20% in agricultural subsidies for current Member States.
Ukraine would become the single biggest beneficiary of the Common Agricultural Policy, while six current member states would no longer be eligible for cohesion funds at all. Many "net beneficiaries" of the EU budget would become “net contributors” overnight.
MIGRATION & ASYLUM PACT • There was no mention of migration in the final declaration adopted by the EU-27 in Granada, after Hungary and Poland vetoed the proposed wording. The vetoes, which concern an unanimously-agreed declaration, come after a major breakthrough on the asylum and migration pact which was voted at the qualified majority.
Last Wednesday, EU Member states finally reached a major political agreement on the reform of the European Pact on Migration and Asylum, despite opposition from Poland and Hungary. Until then, the main sticking point had been the proposed regulation establishing a crisis mechanism.
The proposed regulation has provoked sharp tensions between Italy and Germany. The two Member States are accused by Meloni’s government of supporting NGOs involved in rescuing migrants from the Mediterranean Sea, while refusing to accept financial aid for frontline countries. Rome gave its support to the proposal after Berlin agreed to withdraw passages favouring support for humanitarian NGOs, despite pressure from the German Greens.
Faced with a massive increase in migration flows from the Mediterranean, many Schengen countries have introduced border controls. Most recently, Austria has imposed controls at its border with Slovakia, which concentrates arrivals on the route leading from the Balkans into Central Europe. The issue is eminently political after Robert Fico's recent victory at the polls in Slovakia, the German ruling coalition’s poor score in regional elections in Bavaria and Hessen, and shortly before elections in Poland.
This agreement on the Migration and Asylum Pact formally marks the start of legislative negotiations between the Parliament and the Council, which should result in the first reform of European asylum and immigration rules in a decade.
In Case You Missed It
COMMISSIONERS • New faces at the Commission! The nomination of Wopke Hoekstra and Maroš Šefčovič has been approved by the European Parliament. The two new Commissioners will take over Frans Timmermans’ portfolio — Frans Timmermans has decided to leave the Commission to run in the Dutch parliamentary elections (to be held at the end of November).
Wopke Hoekstra (Dutch) was a candidate to become Commissioner for Climate Action. In the European Parliament, Hoekstra's nomination had been heavily criticized by the Greens, the Social Democrats (S&D) and the Left, who saw his previous experiences at Shell and McKinsey as a major issue.
Seeing the climate action portfolio pass from the hands of Timmermans, an S&D member, to those of Hoekstra, who is close to the right-wing European People's Party (EPP), was also a significant blow for the S&D.
Nevertheless, Hoekstra’s hearing revealed a solid knowledge of climate issues and a strong determination to do as much as possible between now and the European elections next year. His performance even led the Greens and S&D to vote in his favour.
To everyone's surprise, it was the audition of Maroš Šefčovič (Slovak) that proved the more perilous of the two. The latter — already Commission Vice-President in charge of inter-institutional relations — will take over Timmermans' role as Commission Executive Vice-President for the Green Deal.
Šefčovič's vague answers and lack of clarity on certain agriculture-related issues were disappointed many MEPs. Like Hoekstra, his appointment was nonetheless approved in plenary.
SUBSIDIES • Acting EU Competition Commissioner Didier Reynders mentioned on Friday the possibility of an anti-subsidy investigation targeting the Chinese wind industry.
This would be the second anti-subsidy procedure opened by the Commission, following the one targeting electric vehicles in September.
In both cases, the investigation targets the granting by the Chinese state of preferential-rate credits, partial or total tax exemptions, and tax rebates, all to the benefit of national companies.
This investigation could lead to countervailing customs duties — which Beijing will surely call protectionist — aimed at correcting competitive distortions caused by Beijing’s hidden subsidies.
The announcement of this potential anti-subsidy investigation fits into a wider legislative drive to strengthen European instruments for filtering foreign investment (FDI Regulation), controlling anti-competitive subsidies (Foreign Subsidies Regulation) and coercive business practices (Anti-Coercion Instrument) emanating from third countries.
TELCOS • Several European telecommunication companies (BT, Orange, Deutsche Telekom, among others) are taking on Big Tech (Facebook, Google, Amazon, among others) in an open letter sent to the European Commission and Parliament on October 2. They demand a "fair" contribution from Big Tech for the use of telecommunication networks.
European telcos consider that Big Tech benefit the most from telecommunication infrastructures, and that they alone increase traffic growth by an average of 20-30% each year.
In addition, telcos companies face a wall of investment (of at least 200 billion euros according to the Commission) to cover the entire European territory with 5G and fiber optics by 2030, in line with regulatory requirements.
For their part, Big Tech point out that they are already investing in infrastructure by financing undersea cables and data centers within the EU. In addition, they consider that the creative content and services that they produce is precisely what allows telcos to grow.
The results of a consultation launched by the Commission in February on this subject are expected shortly.
HUNGARY • The European Commission could unfreeze cohesion funds allocated to Hungary. These funds were blocked since last December following repeated violations of the rule of law by the Hungarian government.
Created in 1994, the Cohesion Fund supports Member States whose gross national income per capita is less than 90% of the EU average.
The release of these funds should not be interpreted as a sign of goodwill on behalf of the Commission, but rather as a direct result of a cost-benefit calculation. It comes in the context of the vote on the new EU budget, whose increase is intended to provide substantial financial support for the Ukrainian war effort.
The payment of these funds to Hungary would represent a victory for Viktor Orbán, who has promised not to accept any increase in the EU budget until Hungary is able to access these funds.
The Commission has proposed a €66 billion increase in the common EU budget to cover rising costs, including €50 billion for Kiev to cover its expenses for the next four years. However, not all the EU-27 are in line with this increase in the common budget.
What we’ve been reading
A policy brief by Lucian Cernat for the ECIPE explores the importance of "mini-deals" for European trade policy.
The CER's Zach Meyers criticizes the Commission's and the ECB's attempts to develop European solutions to Visa and MasterCard.
In the FT, Henry Foy, Leila Abboud and Guy Chazan take a close look at the current challenges of Franco-German relations.
This week’s newsletter is brought to you by Kimia Vaye, Marwen Ben Moussa, Guillaume Renée, Maxence de La Rochère and Augustin Bourleaud.