Brussels Playbook: Lifeline for Hungary — Tirana bound — Vestager’s battles – POLITICO

DRIVING THE DAY: RULE OF LAW       

LIFELINE FOR HUNGARY: EU finance and economic system ministers meet in Brussels immediately and Hungary’s rule-of-law row with the European Commission over EU funds will loom massive — however don’t anticipate any breakthroughs. Originally, ministers have been immediately imagined to vote on the Commission’s proposal to freeze €7.5 billion in common EU funds for Hungary.

But France and Germany are main a push to decrease that quantity, arguing that Hungary has made some reforms within the meantime.

“Progress has been made by the Hungarian authorities, it should be noted,” a French treasury official stated. “A certain number of reforms have been undertaken.”

Eastern nations not satisfied: A bunch of Central and Eastern EU nations are at present not in favor of the Commission’s proposal to freeze the €7.5 billion, three diplomats advised Playbook. Two stated there was a danger of failing to satisfy the required “qualified majority” within the Council in favor of freezing the funds, as Italy was additionally calling for a brand new evaluation of Hungary’s newest reform guarantees.

One senior EU diplomat stated it might be “a complete disaster” if there was no certified majority to make use of the conditionality mechanism for the primary time, as it might mark a failure within the EU’s newest try and deal with democratic backsliding.

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Time is urgent: If no choice is taken by December 19, the conditionality mechanism will merely elapse with no funds frozen.

Hostage-taking diplomacy: Four recordsdata stay on the desk for EU finance ministers: the €18 billion assist bundle for Ukraine and the worldwide minimal tax for multinationals (each of which initiatives Viktor Orbán’s Budapest authorities has been blocking), in addition to the Commission proposal to freeze €7.5 billion in common EU funds, and lastly, the Hungarian restoration plan (which has a carrot of €5.8 billion in grants).

If Orbán overplays his hand, he faces the danger that EU nations might merely not again his authorities’s restoration plan — which might value him dearly. Hungary will lose 70 % of the restoration funds if the restoration plan shouldn’t be voted by within the Council by yr’s finish.

Package deal: That’s why a bundle cope with Orbán to decrease the effective and unblock different recordsdata is now seemingly — a dialogue that will properly find yourself being held with Orbán himself.

IN SHORT: Fearing a scarcity of assist for the Commission’s proposal to freeze the €7.5 billion (notably amongst Eastern EU nations), France and Germany are main a push to ask Ursula von der Leyen and her crew to reassess that sum. The argument is that the Commission must also have in mind latest reforms made or introduced by Budapest, which might result in a decrease quantity of funds being frozen.

Gearing up for EUCO showdown: All indicators now level to a bundle deal that might see EU nations decreasing the effective for Orbán in alternate for Hungary dropping its vetoes on Ukraine assist and the minimal tax. Given the stakes, a number of diplomats stated they’d not be shocked if that negotiation ended up being executed by heads of presidency and state themselves at their summit on December 15.

Historic second: In an open letter, Transparency International urged EU leaders to vote in favor of the Commission’s proposal to freeze the Hungarian funds. “Your government now carries the responsibility to uphold the Commission’s assessment and enforce for the first time the conditionality mechanism for the protection of the EU budget,” TI warned. “The evidence of Hungary’s rule-of-law decline has been exposed for years.”

The European Parliament — which has known as on the EU to behave to freeze funds over Hungary’s democratic backsliding — may also be watching carefully.

Read extra from Paola Tamma right here.

WESTERN BALKANS SUMMIT       

TIRANA BOUND: The EU flags and bunting could also be up across the streets of Tirana immediately as town prepares to welcome EU leaders for immediately’s summit. But as Suzanne Lynch reviews from the Albanian capital, there can be little concrete progress on the accession hopes of the six Western Balkan members who’ve been ready within the wings for years to hitch the EU. 

New dynamism: Nonetheless, there are constructive vibes coming from Brussels, with officers highlighting the symbolism of holding the Western Balkans summit within the area for the primary time. It “represents a new dynamism in our relations,” stated a senior EU official. 

Managing expectations: Anything can be an enchancment from the final Western Balkans summit in Brussels in June, when Serbia’s President Aleksandar Vučić, Albanian Prime Minister Edi Rama, and North Macedonia’s Dimitar Kovačevski voiced their frustration at a tense press convention within the European Council constructing, accusing the EU of “wasting precious time.”

Fight for affect: One actuality that’s focusing minds is the menace posed by Russia and China. As Suzanne reviews, Moscow’s invasion of Ukraine has solid consideration on the EU’s personal yard, amid fears that Russia, and China, will transfer to fill the vacuum. 

What to anticipate immediately: Fighting disinformation can be a significant subject, as Europe tries to win the PR battle within the Western Balkans towards Kremlin-aligned media. Leaders may also signal an settlement on roaming costs, whereas signaling additional assistance on vitality measures to assist cushion the blow from Russia’s conflict.   

Quid professional quo: It’s about give and take, nevertheless. EU leaders — who little doubt will spotlight the EU’s €30 billion Economic and Investment Plan comprising loans, grants and ensures for the area — are looking for reassurances from Serbia specifically that it’s aligning its visa-free insurance policies with these of the EU following a surge in migration by the Western Balkans route this yr. Read Suzanne’s full story right here.

EU-US SUBSIDY SPAT       

EU ‘SLIGHTLY MORE OPTIMISTIC’ THAT US WILL RESOLVE ELECTRIC CAR SPAT: At the EU-U.S. Trade and Technology Council on Monday, Commission officers pushed President Joe Biden’s administration to indicate “political courage” by utilizing a broad interpretation of keys components of his controversial Inflation Reduction Act (IRA).

Background: Brussels needs electrical automobiles manufactured throughout the EU to qualify for a $7,500 U.S. tax credit score — simply as U.S.-made electrical automobiles qualify for related subsidies within the EU. The IRA requires automobiles to be produced in America to qualify for the credit score, however EU officers fear this might value the bloc jobs and funding, and provides U.S. firms a aggressive benefit.

“We’re leaving this meeting slightly more optimistic,” Commission commerce boss Valdis Dombrovskis advised reporters on the conclusion of the assembly in Washington.

Brussels’ competitors chief Margrethe Vestager additionally put a constructive spin on the difficulty, saying an important factor is that the United States, below the Biden administration, is now totally engaged in preventing local weather change.

More for POLITICO Pro subscribers from our colleague Doug Palmer right here and right here.

VESTAGER’S UPHILL BATTLES: Meanwhile, Vestager is going through criticism from throughout the Commission and the Council after quite a few setbacks at EU courts and amid mounting political stress to permit ever extra subsidies.

Vestager was as soon as thought-about among the many EU’s most outstanding commissioners, however now “her star is waning,” one senior EU diplomat advised Playbook.

Court setbacks: Her competitors division DG COMP is meant to be the a part of the Commission that makes cash for the EU funds, not loses it. Not anymore: Since 2021, an EU courtroom ruling has allowed firms to say a statutory high-interest charge on cash held by the Commission pending an enchantment. Dozens of firms are suing for thousands and thousands of euros in curiosity, our Technology and Competition Editor Aoife White writes in.

Ultimately this places governments on the hook to pay into the funds to cowl DG COMP’s losses.

Some officers within the Commission are additionally beginning to query Vestager’s monitor file and are compiling a listing of competitors instances the Commission misplaced on the Court of Justice of the EU since 2019, arguing the misplaced instances contain sums amounting to greater than €15 billion. However, the most important quantity on the listing, seen by Playbook, comes from the well-known Apple tax case — the place the Commission ordered Ireland to claw again €13 billion in taxes from the corporate, and which remains to be being litigated.

Fact-checking: It is true that DG COMP has misplaced landmark state assist instances (the case over Fiat on the prime courtroom, whereas instances on assist for Apple, Amazon and Starbucks have been all misplaced on the decrease courtroom and are in enchantment).

On antitrust, DG COMP additionally misplaced courtroom appeals with Qualcomm and Intel (at €1 billion fines every) over careless Commission note-keeping throughout investigations (however, to be honest, the Intel case wasn’t launched by Vestager).

But Vestager gained on the 2 necessary antitrust instances she took — Google Shopping and Google Android.

Losing a battle, profitable the conflict? Other officers level out that whereas the Commission has misplaced instances the place it tried to go after sweetheart tax offers, it has nonetheless succeeded in altering these practices and forcing the difficulty of tax avoidance to the highest of the worldwide political agenda.

Subsidies galore: Where Vestager appears to be shedding the conflict, nevertheless, is on subsidies. Arguably probably the most worrying improvement for anybody who truly believes in state assist management and limiting the position of the state is the pattern towards ever extra subsidies, be it for banks (an exemption from 2013 that principally permits financial institution rescues at any level remains to be in power) or through the coronavirus pandemic, or now as a result of conflict in Ukraine and the vitality disaster.

As China, the U.S. and now the EU transfer nearer to a state-directed economic system, with large subsidies for chosen industrial provide chains, Vestager (or any competitors regulator, for that matter) is between a rock and a tough place.

But it’s not all gloom: Vestager’s most likely strongest on mergers the place she will be able to nonetheless cease horrible offers. She can nonetheless rein in Big Tech and she or he does attempt to display the worst sorts of subsidies and steer governments towards the least-worst choices.

THE END OF FREE TRADE? The EU, one of many final massive believers in open and free commerce, is making ready to throw within the towel, Barbara Moens and Hans von der Burchard write.

With even Commission boss von der Leyen now calling for extra subsidies to counter Washington’s Inflation Reduction Act, Brussels is more and more asking itself: Should we actually hold the ethical excessive floor vis-à-vis China and the United States on the expense of shedding our business?

More to return: EU leaders will maintain a “strategic discussion on transatlantic relations” at their assembly on December 15, in accordance to draft conclusions of the European Council summit, dated December 5 and obtained by our colleague Jacopo Barigazzi. POLITICO Pro subscribers can learn extra right here.

**On December 7, POLITICO will unveil the POLITICO 28 listing throughout its annual gala dinner. Our award-winning occasion and publication will acknowledge the 28 strongest gamers driving change and fixing issues in European politics, coverage and enterprise for the yr 2023. The occasion may also characteristic three unique interviews with European Parliament President, Roberta Metsola, U.S. Ambassador to NATO, Julianne Smith and European Commissioner for inner market, Thierry Breton. Register right here.**  

IN OTHER NEWS       

MEPs BACK DUTCH CANDIDATE AS FRONTEX CHIEF: The European Parliament’s Committee on Civil Liberties, Justice and Home Affairs on Monday issued a advice in favor of the Netherlands’ Hans Leijtens changing into the brand new government director of Frontex, the EU’s border company. The closing choice lies with the company’s board.

UKRAINE’S LOST ART: The destruction of Ukraine’s cultural heritage since late February has been on a scale to match Russia’s brutal assault towards individuals, Lily Hyde reviews: More than 200 historic websites, buildings and monuments have been broken, in accordance with UNESCO’s verification — whereas Ukraine places the determine at as much as 800, with 1000’s of artifacts eliminated or destroyed. Read her gripping account right here of Ukrainian efforts to protect their artwork and historical past amid conflict.

WAR LATEST: Meanwhile, the governor of Russia’s Kursk area bordering Ukraine immediately stated a drone assault set fireplace to an oil storage tank there, after Russia earlier accused Ukraine of drone assaults on two army airfields deep inside its territory, Reuters reviews.

MEDIA REPORTS SAY FOOTAGE SHOWS REFUGEE BEING SHOT AT EU BORDER: A younger Syrian man was shot with reside ammunition as he tried to cross the border between Turkey and Bulgaria, in accordance with an investigation by Lighthouse reviews, The Times, Le Monde, German public broadcaster ARD and others. The man was a part of a group that tried to cross the border into Bulgaria final October. Footage reveals a few of them throwing stones on the Bulgarian border.

Details: The reviews say that is the first-ever footage of a refugee being shot at an EU border.

The man, recognized as 19-year-old Abdullah Mohammed from Syria, obtained accidents to his chest and arm because the bullet struck near his coronary heart, in accordance with a medical report.

Bulgaria says its border guards have been on the scene however denied firing the bullet, however the media investigation alleges the shot got here “from the exact spot where Bulgarian guards were standing.”

**What does the way forward for transatlantic information transfers maintain? You’re in luck! POLITICO Live is internet hosting a debate on December 12 to debate what this new decree means for privateness rights and firms on the bottom. Tune in to our occasion “EU-U.S. data flows deal: game changer or more legal uncertainty?” and register now!**

BRUSSELS CORNER       

POWER LISTED: It’s that point of yr once more when politicians round Europe wait anxiously, refreshing the POLITICO web site each 30 seconds to search out out if they’ve made the annual POLITICO 28 energy listing. Well, perhaps … they’re presumably extra fearful about an economy-shredding conflict on Europe’s doorstep and local weather change and stuff — however who doesn’t love a controversial listing you possibly can argue about with pals within the pub?

Amuse-bouche: The massive reveal of the individuals topping the three classes (Doers, Dreamers and Disrupters) plus the viewers alternative and our decide for probably the most highly effective particular person in Europe occurs on Wednesday night. But within the meantime, we’re whetting your urge for food with the nominees within the Doers class (together with French National Rally chief Marine Le Pen, Turkish President Recep Tayyip Erdoğan and European Central Bank chief Christine Lagarde.) 

This shouldn’t be a prize: As all the time, inclusion on this listing shouldn’t be an accolade, however a mirrored image of affect, as judged by POLITICO’s journalists and the consultants and energy gamers they communicate to. Check the web page once more at midday immediately for the Disrupters class. You may also join there for the net unveiling occasion on Wednesday, which incorporates interviews with European Parliament President Roberta Metsola and Internal Market Commissioner Thierry Breton.

TEREZÍN GHETTO PHOTOGRAPHS: The Czech Council of the EU presidency and European Parliament will immediately exhibit newly found pictures from the WWII Theresienstadt Ghetto — during which the SS imprisoned tens of 1000’s of Jews earlier than transporting most to extermination camps. The assortment of 41 pictures taken between 1942–1944 was discovered within the property of journalist Milan Weiner, a survivor of each Terezín and Auschwitz, who died in 1969. The album contains stylized portraits of the ghetto’s residents and secretly shot photographs of life in Terezín. Place: European Parliament Brussels. Time: 6 p.m.

CZECH PRESIDENCY EVENING: The annual Schuman Lights Up competition will this night host a Czech cultural program. Starting at 5 p.m., the Czech Council presidency has ready an occasion that includes Christmas decorations and mulled wine, accompanied by musical performances beginning at 6 p.m., together with the Zemlinski Quartet at 8 p.m. 

BIRTHDAYS: Sylvie Goulard, deputy governor of the Bank of France; POLITICO’s Jamie Dettmer; Inspiiro’s Chloé Féré; BEUC’s and TACD’s Oriana Henry; FT’s Sara Germano; Former MEPs Ramona Mănescu and Alberto Cirio. Finland’s Independence Day.

THANKS to Aoife White, Paola Tamma, Suzanne Lynch, Barbara Moens, Doug Palmer, editor Emma Anderson and producer Grace Stranger.

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based mostly on website supplies www.politico.eu

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