Vulcan View: The latest EU developments 17 June – 21 June

G7 Leaders reach agreement on Ukraine, Middle East and AI

The 50^th G7 Summit was held in Borgo Egnazia (Fasano) Apulia, it’s on 13-15 June 2024. Those in attendance included the Leaders of the seven member States, as well as the President of the European Council and the President of the European Commission representing the European Union.

Sharing a belief in democratic principles, universal human rights, social progress, respect for multilateralism and the rule of law, they met to reaffirm their unity and determination to meet global challenges.

The theme of this year’s summit was set as “rules-based international system”, with discussions focusing on defence, the Russia-Ukraine war, the conflict in the Middle East, food security and migration.

Ukraine

In terms of Ukraine, the key outcome was for $50 million USD to be made available to support Ukraine’s defence. Sanctions have been threatened against those who materially support the war.

Middle East

The leaders agreed to stand united in supporting an immediate ceasefire in Gaza, with the release of all hostages and a credible pathway that leads towards peace and a two-state system.

Economics and the International Trading System

Leaders reconfirmed their support for fostering strong and inclusive economic growth, strengthening the rules-based multilateral trading system and implementing a more stable and fairer international tax system fit for the 21^st century. Leader also warned on the possibility of taking action against what they perceive as China’s unfair business practices and overcapacity that undermine jobs and industries in the West.

Technology

Leaders also had an exchange of vies with Pope Francis on the opportunities and dangers of Artificial Intelligence (AI), with all participants agreeing on the need for deepening cooperation to harness the benefits and manage the risks of AI. They have also committed to developing an action plan on the use of AI in the world of work and the implementation of the International Code of Conduct for Organisations Developing Advanced AI Systems.

Africa

Leaders agreed on an increased engagement with African countries, in the spirit of equitable strategic partnerships, launching the ‘Energy for Growth in Africa Initiative.’ The initiative builds upon existing G7 efforts to promote energy and climate investment in Africa.

Sustainable Development

Leaders assured their focus on the Sustainable Development Goals (SDG’s), to reduce poverty and tackle global challenges. They reaffirmed their commitment to gender equality, reinforcing global food security, enhancing climate resilience, including the launch of the Apulia Food Systems Initiative.

Migration

On the initiative of Italian Prime Minister Meloni, G7 leaders for the first-time discussed migration as a topic, agreeing on a collective commitment and enhanced cooperation in regards to migration. A new G7 coalition has been launched to tackle the smuggling of migrants.

 

EU launches excessive deficit procedure against France and others

The European Commission said there may be disciplinary budget measures for France, Belgium, Italy, Hungary, Malta, Poland, and Slovakia due to excessive deficits in the country. The move to enforce budgetary measures for these countries could impact France’s upcoming elections on 30 June and create constraints on the incoming party.

President Emmanuel Macon’s move to host a snap election in France after poor results from his party in the EU’s parliamentary elections has had unintended consequences for the French economy, throwing the country into political turmoil. Due to the uncertainty prior to these upcoming snap elections, the cost of borrowing in France’s bond markets has increased, and voters are facing a time of political uncertainty.

In addition, France has been running a budget gap of 5.5% of its GDP in 2023, which is only expected to narrow to 5.3% this year. This leaves the country much higher than the EU’s deficit limit of 3% of GDP.

The other countries running budget deficits were primarily caused by aftershocks from the COVID-19 pandemic and the energy price crisis that followed Russia’s invasion of Ukraine in 2022. Italy has faced a national debt of roughly 138% of its GDP with a growth rate in the country of less than 1%. Politicians and leaders in Rome have addressed this concern and have attempted to reassure markets that the country would do the right thing regarding its economic policy actions.

The statement from the Commission marks the first time since the pandemic that the government has enforced budgetary rules for countries with excessive spending and budget deficits. In 2020, the EU Commission suspended its fiscal rules and allowed countries to borrow money needed to gain economic stability.

The Commission plans to implement the Excessive Budget Procedures (EDP) within these countries in the coming months. This procedure follows a detailed outline under Article 126 of the Treaty on the Functioning of the European Union. This process is outlined to allow the Commission time and resources for managing budget deficits as well as determining solutions for the proposed countries’ budget gaps.

Following the announcement of member states with budget deficits, the Commission will be responsible for coming up with solutions and measures to ensure the budget deficit in these countries declines or changes over the next year. This includes the deadlines to take effective action within the countries and resources to correct the excessive deficit within a designated timeline.

Within the outline to help countries manage their budget deficits, the Commission intends to propose recommendations alongside its Opinions on the Draft Budgetary Plans.

 

EU seeks Ukraine Peace Plan in Switzerland

More than ninety countries were represented at the Switzerland Peace Summit for Ukraine this week in Burgenstock, Switzerland, to garner support for negotiating peace accords with Russia. World leaders from across the world met on the Swiss mountainside to listen to Ukraine’s president, Volodymyr Zelensky, calling for international consensus against Russia’s invasion of Ukraine and a peace plan that is so widely accepted that Moscow will be forced to accept it.

The Swiss government developed this summit to “provide a forum where world leaders may discuss paths towards a just and lasting peace in Ukraine, based on international law and the UN Charter.” Within these accords, Zelensky’s 10-point peace plan outlined in late 2022 will be scrutinized and evaluated by world leaders to determine best practices in negotiating ceasefires for Russia’s full-scale invasion of Ukraine.

Zelensky’s 10-point peace plan includes a cessation of hostilities, the withdrawal of Russian troops from Ukraine, restoration of pre-war borders with Russia, and recognition of Ukraine’s territorial integrity.

However, this plan follows Russian leader Vladimir Putin’s conditional ceasefire terms released on Friday, June 14^th. Putin laid out a peace proposal that demanded the Ukrainian government surrender from four regions in the country currently occupied by Russia- Donetsk, Luhansk, Kherson, and Zaporizhzhia. In addition to relinquishing territory to Russia, Putin demands that peace talks will not begin until Ukraine gives up on joining NATO.

In his demands, the terms set out by Putin have been labeled by global leaders and the Ukrainian government as “a complete sham” and an “offense to common sense,” implying Russia’s intentions for potential peace negotiations will never be genuine.

In addition to discussions on Zelensky’s peace plan, the United States government has agreed to supply Kyiv with over $1.5 billion to help the country rebuild its infrastructure, address humanitarian needs, and further participate in the global economy.

Of the ninety-plus countries attending the peace summit, only eighty-four signed the final communique, which affirms Ukraine’s territorial integrity and the right not to be invaded by the wider international community. One global power missing from the discussion was China, which was involved in the development of the Summit but would not attend unless Russia was present.

Global summit leaders plan to incorporate what was discussed in Switzerland within future discussions with Russia to foster lasting peace between the two countries.

 

For more information, please contact the Vulcan team here.

 

 

Compliments of Vulcan Consulting – a member of the EACCNY.