3rd Dec 2022


This WEEK in the European Union

  • Europe has only days left to save the single currency (Photo: pimousse3000)

Almost every week for months now has appeared to be a crunch week for the eurozone, but with lending between banks freezing up, contagion spreading to Germany, and even the circumspect EU economy chief Olli Rehn fretting that the area has days to prevent collapse - the coming week does appear to be the mother of all crunch weeks for the European Union.

While member states still appear divided, both Germany and the European Central Bank have hinted that a solution is in the offing, but what a quid pro quo: in return for the ECB intervening as lender of last resort and massively expanding its bond purchase programme, Frankfurt and Berlin are demanding a fiscal union grounded on strict rules carved into a new EU Treaty. The commission, with the endorsement of the Council, would in effect be dictating national budgets while violations and penalties would be decided by European Court of Justice judges.

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Details of what the Franco-German economic powerhouse duo want to see will be outlined on Monday in advance of a full EU summit from 8-9 December at the end of the week.

Ahead of the summit, the nigh-on omnipotent European People's Party - the conservative group that now holds the reins of government in all EU countries other than Denmark, Cyprus, Austria, and the UK (although in Austria there is a grand coalition with the centre-right and Britain is ruled by the anti-EU-federalist Tories) - will hold a congress in Marseilles.

A total of 17 EU leaders alongside the head of the European Commission, EU Council President Herman van Rompuy, Spain's Prime minister-elect Mariano Rajoy and Jadranka Kosor, the prime minister of the EU’s 28th member, Croatia, will be welcomed by French President Nicolas Sarkozy’s Union pour un Mouvement Populaire (UMP).

In a related development, the new Greek technocratic government is due to hold a budget vote in the parliament on Tuesday.

The country saw its seventh general strike this year on Wednesday timed to coincide with the UK public sector strike, although turn-out was substantially down on recent protests, suggesting the government is still enjoying something of a honeymoon period. After the budget is passed, it is an open question how long this will last. While an important step, the budget fundamentally does little to overcome the scale of the country’s debts and a number of economists argue that still deeper austerity will make the situation worse.

While EU leaders are scrambling to save what remains of the single currency project, the rest of the Union machine keeps whirring along.

EU ministers will on Monday decided whether Serbia has done enough to merit being awarded EU candidate status in the context of attempts to normalise relations with Kosovo.

EU foreign policy chief Catherine Ashton is due to attend a conference in Bonn on the 10th anniversary of the invasion of Afghanistan to discuss the state of the Western mission in the country.

Pakistan will stay away however, after a Nato strike killed dozens of its soldiers earlier this week in a case of mistaken identity on the Afghan border.

The UN international climate conference in Durban, South Africa will continue to trundle along, although most commentators do not expect any result as divisions between developing countries and the richer global north are for the most part as firm as they have been since the Copenhagen climate conference that ended in EU ignominy two years ago.

Over in the European Parliament, MEPs on Monday are to vote on funding for the ITER nuclear fusion project. If successful, nuclear fusion could provide an abundance of very cheap, clean energy - the wonder solution to all the world's climate change problems. However, the project has seen multiple cost overruns and the parliament and the Council have come to an agreement on a portion of the sums needed to be funded from the EU budget. Opponents of the plans say too much money has been spent already on the scheme.

MEPs in the Civil Liberties and Employment Committees will also vote on a deal struck with the Council on a single work permit for non-EU nationals giving them the same rights as EU citizens in terms of working conditions, social security and access to public services. If approved, the permit would allow workers access to work and residence rights through a single channel, reducing the bureaucratic hassle.

Eurodeputies will also look at making motorbikes greener, cross-border protection orders, how to solve the situation in the milk sector as the end of milk quotas in Europe is fast approaching while dairy farmers regularly protest in the EU quarter in Brussels.

And the European Commission will adopt a communication on the EU’s future strategy for value-added tax systems on Wednesday and unveil proposals on how to strengthen cross-border co-operation when dealing with extreme health threats such as bird flu, anthrax or even violent weather events on Thursday.

The weekend will also see Russia hold parliamentary elections - an event marred by Moscow's refusal to register the vast majority of opposition parties and by Vladimir Putin's refusal to let in the full complement of international monitors.

ECB chief hints at more robust action

ECB president Mario Draghi offered hints on Thursday that the Frankfurt institution is ready to expand its efforts to staunch the eurozone crisis, but only if eurozone economies commit to deeper integration rapidly under what he called a “fiscal compact”.

Merkel: eurozone crisis will take 'years' to solve

German Chancellor Angela Merkel has dismissed talk that next week's summit will bring about a definitive solution to the eurozone crisis, saying it will take years to overcome the single currency's problems.

Sarkozy pushes for 'two-speed' Europe

With France's borrowing costs on the up and with its prized triple-A rating under threat, French leader Nicolas Sarkozy is publicly advocating a fast-lane Europe for 'core' euro-countries.

This WEEK in the European Union

Last week's EU summit deal on creating a fiscal compact is set to be dissected in Brussels and beyond with markets already responding with scepticism. MEPs travel to Strasbourg for an end-of-the-Polish-presidency roundup.

EU's Hungary funds, China, energy, and Frontex This WEEK

In the European Parliament, MEPs will hear from ECB president Christina Lagarde, Kyiv's Vitali Klitschko, and from the three candidates proposed by the EU Commission to be the new boss of EU border agency Frontex.

Zooming in on energy and migration This WEEK

Two extraordinary meetings of ministers, on gas price caps and migration, are expected, while the European Parliament will keep the heat on Hungary and the EU Commission over rule of law.

Portugal was poised to scrap 'Golden Visas' - why didn't it?

Over the last 10 years, Portugal has given 1,470 golden visas to people originating from countries whose tax-transparency practices the EU finds problematic. But unlike common practice in other EU states with similar programmes, Portugal has not implemented "due diligence".

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