Brussels Playbook
from POLITICO
By JAKOB HANKE VELA
with ZOYA SHEFTALOVICH
PRESENTED BY
Amazon
SCOOP: EUROPE’S ECONOMIC SECURITY DOCTRINE
TODAY’S TOP ATTRACTION: Commission President Ursula von der Leyen will today present the EU’s first economic security doctrine — outlining plans to intervene more in how European companies invest and trade with countries around the world. The strategy paper comes just in time for EU heads of government and state to discuss the doctrine at their June 29-30 summit.
The aim: “We cannot afford to maintain critical dependencies that could become a weapon against our interests,” Internal Market Commissioner Thierry Breton said last week.
What’s in it: Playbook has obtained a 14-page draft of the document and will walk you through the most important bits.
Say China without saying China: The document avoids any specific mention of China — but it’s clear who it’s targeting, besides Russia, when it talks of the risk of “overreliance on a single country, especially one with systemically divergent values, models and interests.” The document also follows themes from last month’s G7 meeting where “de-risking” from China was a major point of discussion.
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Toughening EU controls in 3 sectors:
— Inbound investment screening (controlling when foreign companies buy up critical companies or infrastructure in Europe).
— Export controls (meaning when EU companies sell things such as weapons or espionage software to hostile countries).
— Outbound investment screening (more on this below).
A BAN ON OUTSOURCING KEY TECH: The biggest news is Brussels’ plan to make a new law to stop companies from outsourcing “advanced technologies” to autocracies.
End of globalization as we know it: The document confirms Playbook’s earlier reporting on Brussels’ plans to create new powers to control outsourcing. The idea, officials say, is that companies may be putting European intellectual property and national security at risk by outsourcing too much of their supply chains to countries such as China. With the new law, the EU could prohibit those outbound investments when it sees security risks. Effectively, it would be the end of unchecked globalization of supply chains that drove economic internationalization over the past decades.
What they say: The EU should prevent “outbound investment in a narrow set of advanced technologies that could enhance military and intelligence capacities of actors who may use these capabilities to threaten international peace and security; and the secure treatment of sensitive information.”
What they mean: Car factories can be outsourced; password-cracking supercomputers, not so much. The most advanced tech should no longer be outsourced to autocracies, the new doctrine stresses.
In the banned list: The document specifically mentions “quantum computing” (which could be used to crack the most secure communications), “artificial intelligence,” and “advanced semiconductors.”
AND SPEAKING OF EU-CHINA TRADE: When it comes to fighting off China’s electric vehicle invasion, Europe’s carmaking superpowers are split straight along the Rhine, report my Mobility colleagues Joshua Posaner and Wilhelmine Preussen. Germany is far more exposed than France to counter-attacks by Beijing in the Chinese market, they write.
Now read this: Activists are accusing Volkswagen of giving moral cover to Beijing’s repression of Uyghurs, report Stuart Lau, Josh Posaner and Hans von der Burchard.
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EU BUDGET INCREASE, IN NUMBERS: The Commission will also today ask EU member countries to contribute tens of billions of euros more to top up the Union’s budget for 2024-2027.
Who gets more money: As Playbook reported Monday, the extra money will be for Ukraine, migration and competitiveness. Brussels wants €50 billion in financial support for Ukraine, €15 billion in funding for migration and neighborhood policy (essentially to pay non-EU countries to keep or take back migrants) and another €10 billion for a new “Strategic Technologies for Europe Platform,” to subsidize industries and technologies that the EU considers key to become less dependent on China. Higher debt-servicing costs, and an inflation-fueled rise in the costs of paying EU staff, will also get a top up.
Let the games begin: Of all the above, the only priority that net contributors such as Germany and the Netherlands say they are prepared to cough up money for is Ukraine. But of course, that’s how every negotiation begins. What’s clear is that it will be a hard bargain, given all 27 EU countries need to agree unanimously to the budget update.
More on that cash for Ukraine: The €50 billion for Kyiv — dubbed the Ukraine Facility — is meant to help balance the country’s budget, but also to kickstart its reconstruction as soon as possible and to offer guarantees to private investors, according to a draft seen by POLITICO.
Loans: The payout will mostly be in the form of loans as well as some grants, and each tranche will be linked to reforms aimed to prepare Ukraine’s accession to the EU. Paola Tamma has more.
Further reading on Ukraine’s EU accession: Enlargement’s back on the political agenda, writes Nathalie Tocci, the director of the Istituto Affari Internazionali.
THE LONG-TERM GOAL: EU TAXES. Commissioners on the podium today will also present a new proposal on new EU levies or “own resources” — which we told you about earlier this month.
Money directly to the executive: Essentially, the idea is to make the EU budget a bit more independent from countries’ contributions, by creating taxes that are paid directly to the EU. The first proposals are for a levy on imported carbon emissions and a new levy based on how much money an EU country’s companies make. Lawmakers have also agreed that part of the revenue from globally agreed tax reforms would go straight into the EU budget.
Just don’t call them taxes! Countries have to agree unanimously on tax changes — they can’t pass with just a qualified majority — which means Brussels has had to become creative in its efforts to introduce new … charges. For example, the EU’s emissions trading system is officially not a tax but a market regulation. Similarly, the EU’s tax on the carbon content of imported goods is legally not a tax, even though economically it very much is.
It’s a ‘mechanism!’ The Commission wants to use part of the income from a new levy (see what we did there?) on the carbon emissions of imported steel and cement (known as the Carbon Border Adjustment Mechanism).
Corporate income levy: Brussels also wants to introduce a new levy based on national aggregate corporate income — the idea is to balance the effects of CBAM, which will hit Baltics harder than others, with the new corporate levy that will be more progressive (in financial terms) and hit countries such as Germany and France harder.
We said long term: EU countries, as you can imagine, are not exactly psyched about these new taxes ideas … several senior diplomats and government officials told Playbook there won’t be much progress on these proposals before next year’s European election.
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UKRAINE LATEST: Russia launched a barrage of missiles at Ukraine overnight, aiming as far west as Lviv (just 70 kilometers from the Polish border), as Kyiv continues clawing back its territory from Moscow’s forces. U.S. President Joe Biden on Monday said the threat of Russian President Vladimir Putin using tactical nuclear weapons is “real,” according to Reuters.
Ukraine remains defiant: In an update posted to Telegram overnight, Ukraine’s Deputy Defense Minister Hanna Maliar said battles were heating up in the east and south, but struck a fierce tone about Kyiv’s counteroffensive, saying “the biggest blow is yet to come.”
Hungary complaint: Kyiv’s relations with Viktor Orbán’s Hungarian government appear further strained. Reuters reports that Kyiv has complained that Budapest refuses to give Ukrainian diplomats access to prisoners of war transferred from Russia to Hungary earlier this month.
KOSOVO LATEST: Kosovo’s Prime Minister Albin Kurti has achieved the impossible in American politics, writes Matt Karnitschnig: he’s found consensus among Democrats and Republicans. Unfortunately for Kurti (and his country), the point of agreement is that Kosovo’s leader is a stubborn, and at times, reckless politician who has undermined the joint U.S.-European effort to achieve a lasting solution for peace between Kosovo and Serbia. Here’s Matt’s on-the-ground report.
ON WORLD REFUGEE DAY, EU PRIVACY CHIEF ISSUES WARNING: The European Union’s in-house privacy watchdog today sent a strongly worded reminder to EU border and migration agencies and national governments, calling on them to uphold fundamental EU rights, including those to privacy.
Politicized: “Migration has become instrumentalized; hostage to political interests,” European Data Protection Supervisor Wojciech Wiewiórowski said in a blog post. “Border management differs across the EU: there are better and worse borders in the EU, with different standards, where the EU’s role differs, with different readings of the law.”
Grim backdrop: Wiewiórowski’s warning follows the deadly shipwreck off the Greek coast, amid reports that Greek authorities stood idly by as they observed a boat with hundreds of migrants on board drifting for hours and then sinking. At least 81 people have died and hundreds are missing.
After opening an investigation into Frontex for oversharing troves of data of migrants in detention centers with Europol earlier this month, Wiewiórowski said he has seen “fertile ground for legal misinterpretations” of the bloc’s laws by EU agencies and countries. He called for clearer responsibilities, especially as the bloc ramps up its use of central databases to process migrants’ data and moves forward with its new migration laws.
TWITTER WILL COMPLY WITH EU LAWS, SAYS MUSK: “If a law is enacted, Twitter commits to comply with it,” the billionaire told star presenter Anne-Sophie Lapix in a pre-recorded, sit-down interview broadcast in dubbed French on France 2 Monday evening. Laura Kayali has the details.
HOW OPENAI GOT THE EU TO WATER DOWN LEGISLATION: OpenAI managed to water down key elements of the EU’s AI Act, claims a new Time investigation published this morning. The changes reduced the regulatory burden on the company, Time reports, citing documents about OpenAI’s engagement with EU officials obtained from the European Commission via freedom of information requests.
HUNGARY’S MÉNAGE: Despite the European Parliament seeking to prevent Hungary from taking over the presidency of the Council of the EU in the second half of next year, preparations for its turn in the hot seat are well underway.
Three’s a crowd: Spain, Belgium and Hungary — who together form a presidency “trio” — have prepared a joint draft program, dated June 19 and seen by my colleague Barbara Moens.
Notable events: Their presidencies will take in the EU parliamentary election, scheduled from June 6 to June 9, 2024 — and the start of the new Commission.
The program is fairly general, with the three countries pushing to reinforce the EU’s global competitiveness and strengthen international partnerships in the wake of Russia’s war against Ukraine. All three countries are in favor of more EU free trade agreements and want to help finalize the EU’s negotiations with countries in Latin America and Asia.
Hey look, an elephant: The program also name-checks the rule of law — which Budapest has been undermining. “The rule of law, with its crucial role in all our democracies … must be fully respected by all Member States and the EU,” the draft reads.
Preparing for Ukraine: The three countries want to consider how to integrate new members into the EU in a way that “strengthens key European policies,” according to the draft.
What’s next: This week, EU ambassadors (on Wednesday) and EU affairs ministers (on Thursday) will discuss the trio’s program.
MELONI IN PARIS: Italian Prime Minister Giorgia Meloni visits Paris today, hoping to boost Rome’s bid to host the 2030 World Expo. (France has previously said it will back Riyadh’s bid.) Meloni will meet French President Emmanuel Macron (who may be nursing a hangover).
Rome is fighting the battle in Brussels too. The Italian government has proposed raising Rome’s bid for Expo 2030 at a meeting of European environment ministers today as a way to put pressure on Paris. “With the support of all EU member states, the choice of Rome would be a success for the European Union as a whole,” reads a document circulated among diplomats from the 27 EU countries and obtained by my colleague Jacopo Barigazzi.
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— Environment Council meeting in Luxembourg at 10 a.m. Arrivals from 8.30 a.m. Press conference timing tbc. Watch.
— Weekly European Commission College meeting at 10:30 a.m., followed by readout and press conference by Competition Commissioner Margrethe Vestager and EU High Representative Josep Borrell on the European Economic Security Strategy.
— Press conference by Commissioner Johannes Hahn on the reinforcement of the long-term EU budget at 2.30 p.m. Watch.
— Jutta Urpilainen, commissioner for international partnerships, speaks at a conference in Lusaka, Zambia.
— Commissioner Ylva Johansson is in Stockholm, Sweden and will participate an EU-U.S. ministerial meeting on justice and home affairs.
— European Council President Charles Michel receives the Deputy Prime Minister of Bulgaria Mariya Gabriel at noon.
— Parliament President Roberta Metsola is in Zagreb. Joint press point with Gordan Jandroković, speaker of the Croatian parliament, at 9:45 a.m. Watch. Addresses Croatian parliament at 10:30 a.m. Watch.
— German Chancellor Olaf Scholz and Chinese Premier Li Qiang meet as part of German-China Intergovernmental Consultations. Later they will meet business representatives, along with Vice Chancellor Robert Habeck and Chinese Minister for Reform and Development Zheng Shanjie, as well as Chinese Minister of Commerce Wang Wentao, and speak at the closing of the German-China forum on economic and technological cooperation.
— NATO Secretary-General Jens Stoltenberg holds press conference with German Defense Minister Boris Pistorius at Schleswig-Holstein air base.
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QATARGATE UPDATE: Michel Claise, the Belgian judge leading the European Parliament corruption probe, announced Monday he will step down from the ongoing corruption investigation known as Qatargate amid allegations of a conflict of interest, the Belgian prosecutor’s office confirmed Monday. More here.
BRUSSELS CELEBRATES ‘HARD-WON’ VICTORY: Champagne bottles popped and flutes clinked at a cheerful Berlaymont celebration on June 19. The reason? The EU is next week set to sign an international treaty to fight violence against women — the Istanbul Convention. “With this final step, the EU sends a clear political message that violence against women is a crime and that the EU stands squarely on the side of women,” said European Commissioner for Equality Helena Dalli.
After 7 years of negotiations between the bloc’s 27 governments, Sweden clinched a deal this month despite opposition from Poland, Hungary, Slovakia and Bulgaria. “This is the final position, the result of a long series of negotiations, diplomatic efforts, advocacy and litigation. It is a hard-won victory,” said Sweden’s Minister for Gender Equality Paulina Brandberg. The Council of Europe text will only apply to areas where the EU has exclusive competence like asylum and criminal cooperation.
Culture wars: Commission Vice President Věra Jourová warned it’s not enough to have gathered a majority of EU countries to support the international framework to prevent violence, punish offenders and support victims. “We have some other member states where the discussion is ongoing, and I’m afraid that the Istanbul Convention also became one of the symbols of the culture war and we have to continue our efforts to convince a big part of our society that the Istanbul Convention is here to deliver real progress,” she said. Hungary, Slovakia and Bulgaria have not ratified the international treaty, claiming it would chip away at their ideas of “family values.”
BIRTHDAYS: Polish PM Mateusz Morawiecki; MEP Roberts Zīle; Former Mayor of Lyon Gérard Collomb; POLITICO’s Jeanette Minns; Google’s Elena Tosheva; EU Representation of Occitanie in Brussels’ Jordane Salducci; Benjamin Oppermann from the EPP group. World Refugee Day.
Celebrated Monday: POLITICO’s Max Leroy.
THANKS to Paola Tamma, Barbara Moens, Louise Guillot, Elisa Braun, Eddy Wax, Pieter Haeck, Clothilde Goujard and editor Joe Stanley-Smith and producer Dato Parulava.
This newsletter was updated to confirm that Meloni will meet with Macron in Paris.
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