News of Europe | 3/2023

Dear Federalists friends,

We meet again for the third edition of "News of Europe", the UEF's news brief. This week's main issue: EU budget talks. 
Thank you to all the respondents to our short survey. Tell us how we can improve this format. Thank you for your time.
The opinions reflected in this brief are its author's (and the people quoted) only and do not reflect the position of the UEF. And now, your newsletter.

Coup in Russia. Vladimir Putin promised the Russian people grandeur, stability, safety and to avenge the perceived humiliation following the collapse of the USSR. He gave them war, bigotry, and now political instability, without getting closer to building his fantasised greater-Russia empire. Wagner leader Yevgeny Prigozhin showed the world how fragile Putin's regime is and opened an unexpectedly volatile political era in Russia.
Although the attempted coup had little impact on the Ukrainian battlefield, it is likely that the power challenge that we witnessed this weekend in Russia will have lasting consequences for the remainder of the conflict, until the final prevailing of the Ukrainian people.

Elections in Greece. As Greeks returned to the polls this weekend, the right-wing comforted its majority at the country's parliament, with the far right also gaining seats. According to Politico: "New Democracy got 40.5 percent of the vote and 108 seats, plus a bonus 50 seats under a new Greek system that boosts the largest party. Left-wing Syriza struggled with only 17.8 percent and 47 seats, according to official results. The socialist PASOK party had 11.9 percent and 32 seats [...]."

France and Germany said they are ready to align on key points to advance partial reform of the EU by the end of 2023. Broader use of qualified majority voting at the Council. French EU minister Laurence Boone said that "passerelle clauses and QMV would be "an important step towards more integration and efficiency." This harmonized position between the two countries comes as the EU is about to enlarge to the East and the Western Balkans in the coming years. To assess the strength of their arguments, both countries launched a “Group of Friends on Qualified Majority Voting.”

Pedro Sanchez, the current (and quite possibly not for long) Prime minister of Spain presented the country's priorities for its upcoming Presidency of the Council of the European Union. Spain will focus its efforts on the reindustrialisation of Europe and pursuing Europe's strategic autonomy, ecological transition and adaptation, consolidating the EU's social pillar, and European unity. You can read the full report on the Presidency's website. On the recent rise of eurosceptics parties in Spain, Pedro Sanchez commented that "Europe has been stronger than all of them, has overcome crises and has emerged stronger from all of them".

With the increasing number of competencies that the European Union faces, and its engagement towards Ukraine and the reconstruction of the country, the European Commission has little choice but to ask member states for additional funding. A plea that has little chance of success, as said member states' finances were further shaken by the Covid-19 and energy crisis.

In this context of financial tightening, MEP Valérie Hayer, rapporteur on EU budget and own resources files, regretted that the European Commission's funding for the "STEP" platform (Strategic Technologies for Europe Platform, formerly the European Sovereignty Fund), is too small. This funding platform is supposed to answer to the US Inflation Reduction Act, which offers €370 billion to companies in tax credits and subsidies to finance the American green transition. The UE, however, plans for €10 billion (that's less than 3 percent of the US equivalent) coming from member states' pockets.

A Parliamentary report adopted in May, co-authored by Valérie Hayer, proposed a few ideas for the EU to raise additional financial resources, once again an idea pioneered by the UEF.

On Tuesday, however, the European Commission presented a proposal to introduce an additional resource to its budget, from corporate profits. In addition to revenues based on the emissions trading scheme (ETS) and the carbon border adjustment mechanism (CBAM), both systems forcing companies to pay a "carbon price" for their polluting and energy-intensive activities, the Commission wants to tax private profits by 0.5%. This would amount to €16 billion annually. In total, the package of own resources could reach €36 billion per year.

Last week, the European Commission gave out its assessment of Ukraine's and Moldova's reforms towards EU membership. In short: both countries already made substantial progress, although more has to be done on the rule of law and corruption. Georgia however, whose candidacy was presented together with Ukraine's and Moldova's last year, still has a long way to go.

Since this week's edition is (mostly) about money, let's talk about Russia's frozen assets. Following the aggression of Ukraine, financial assets of Russian origin (think oligarchs), were seized by the EU as part of its sanctions against the Kremlin and its allies. Mast week, European Commission President Ursula von der Leyen proposed to use the profits of said assets to rebuild Ukraine. This idea is not a done deal, however, as legal questions remain unanswered, notably regarding the ownership of the investments and their profits.

News on the European seat reshuffle: Brussels-based newspaper Euractiv reported that the European Parliament’s proposal—put forward by UEF President Sandro Gozi—to increase the number of seats will likely be rejected by the Council, with some member states asking for more seats and others even considering reducing the number of policymakers. Since this file requires unanimity, commentators expect the status quo: the European Parliament keeping its current 705 seats. Unless the other proposal—this time by UEF Vice-President Domènec Ruiz Devesa—to add transnational lists to the 2024 European elections makes a breakthrough...

Finally, further readings. The UEF's Political Commission on Foreign Affairs & Security issued its June newsletter. You can access it here. It covers the situation in Ukraine, the state of European defence, and other security news. The Movimento Federalista Europeo issued a statement after the tragic boat accident in the Mediterranean which cost the lives of about a hundred migrants. You can read it here.

Erratum. Last week, I wrote that the city of Valencia was to be ruled by a coalition between the PP and Vox. Except it should have said "the region of Comunidad Valenciana".

Thank you for reading. Until next week,

Alexandre Météreau
on behalf of the UEF Secretariat