Member News

The weekly Vulcan View for the 15th to the 19th of January featuring analysis of the latest EU developments

By Vulcan Consulting

BREXIT
 
EU27 clarifies stance for Brexit transition period
EU member states have opted to support tougher conditions for the UK in any post-Brexit transition deal. The agreed updated directives for the EU’s chief negotiator Michel Barnier will demand London to meet stricter terms on immigration, fishing rights and external trade. Both sides are in favour of transition deal to smooth the Brexit process and the UK had agreed that it would be a ‘’stand still’’ process whereby the status quo would remain in place.
 
The original directives drawn up in December threw up some ambiguities surrounding the transition period but this latest revision has clarified matters including the extension of freedom of movement, granting a special status to all EU citizens arriving in the UK during the transition phase up to the end of 2020 and ensuring that Britain accepts the quotas set down by the old EU fisheries regime.
 
In addition to the UK having to comply with these tougher conditions, a change in stance from the Norwegian government has thrown up another hurdle for the UK to overcome in the upcoming trade talks.
 
Amid the rhetoric and ambitious demands being voiced by the British government that it hopes to secure a ‘’special’’ trade deal with Brussels, Norway has grown increasingly concerned that its own trade pact with the EU could be undermined and is threatening to renegotiate its own terms. Demands to either renegotiate or rip up the agreement entirely are growing in the Nordic country and one senior Brussels official admitted that Oslo is ‘’following this very closely to make sure that we are not giving the UK a much more favorable deal’’.
 
 
EUROPEAN UNION
 
Brussels publishes EU-wide plastics strategy
The European Commission this week launched its anti-plastics initiative with the aim of drastically reducing the amount of plastic consumed across Europe and making all plastic packaging reusable or recyclable by 2030. As part of broader circular economy strategy, Brussels will provide €100m in developing new technologies and propose legally binding proposals to member states in order to meet its 2030 deadline.
 
Although the idea of a plastics tax had been raised last week as a potential mechanism to reduce consumption and increase revenue, the Commission’s vice-president for jobs and growth, Jyrki Katainen, admitted that such a tax would be ‘’quite complicated’’ to implement. Europe currently produces 25m tonnes of plastic waste annually, of which two-thirds is used in packaging. 30 per cent of plastic packaging in the EU is recycled and Brussels hopes to increase this to 55 per cent by 2050.
 
After China recently banned the import of plastic waste, Commissioner Katainen admitted that the move by Beijing created ‘’an excellent opportunity to create a single market for secondary plastic and plastic waste’’. The initiative was warmly welcomed by environmental organizations but they warned that legally binding targets were urgently required.
 
Competition commissioner eyes second term
The European competition commissioner, Margrethe Vestager, has confirmed that she will seek another term in her current post, dismissing speculation that she will go for the top job as Commission president. Despite being a firm favourite for the role of president and receiving backing from the French President Emmanuel Macron, Ms. Vestager has confirmed that she would rather a second term as competition commissioner.
 
Speaking in an interview with Belgian papers, the former Danish minister suggested that ‘’with a second mandate, I feel like we can do some fantastic things’’. Addressing the reports of a potential run for president, the competition commissioner admitted that such speculation was a kind gesture and a sign that she was performing well in her current post.
 
Ms. Vestager is one of the most high-profile officials in Brussels and regularly in the news due to her landmark competition rulings against some of the largest companies in the world such as Apple and Amazon. While it is common for commissioners to continue for a second term in the EU executive, it is rare if ever that they retain their portfolio. However, given the popularity of the commissioner and the ongoing competition cases proceeding in Brussels, Ms. Vestager may very well remain in place if she wishes to do so.  Unless of course her arm can be twisted to run for the top job….
 

GERMANY

Coalition deal under threat from growing SPD mutiny
The long-awaited preliminary coalition pact between the Conservative CDU-CSU bloc and the centre-left Social Democrats (SPD) that was agreed upon last week is at risk of collapse as SPD party rebels grow increasingly sceptical of the deal. The draft agreement will be put to a vote to party delegates this Sunday when the rank and file meet for an extraordinary party conference.
 
Berlin has been left without a functioning government for months since last September’s general election and optimism grew last week across Europe when it appeared that the SPD and CDU/CSU had finally come to an agreement on a potential coalition deal. However, the draft pact left large parts of the SPD youth wing and ardent left-wingers furious as they believe that important demands set down by the party leading up to the talks had not been met.
 
Ahead of this Sunday’s critical vote, the SPD leader Martin Schulz and fellow members of the party top brass have attempted to quell any party discontent. The omens leading up the vote have been bad as party conferences in the Berlin and Saxony-Anhalt region have already rejected the draft agreement. If the SPD do reject the deal, it will leave the acting Chancellor Angela Merkel with the option of either attempting to rule a minority government or pushing for a repeat election.
 
 
SPAIN
 
Catalonia parliament reopens with Independence parties in control
The Catalan parliament reconvened this week nearly three months after being dissolved by the federal government in Madrid following a failed independence referendum held in October. After last month’s regional elections which saw pro-independence parties securing a majority, the parliament resumed with the immediate election of a pro-secessionist speaker, Roger Torrent, to the house, indicating that it has no reservations about continuing its pursuit for independence.
 
Tensions between Madrid and Catalonia are still running high, largely due to the imprisonment of three pro-independence politicians and the continued self-exile of a further five, including the ousted regional president Carles Puigdemont. Yellow ribbons were placed in the seats of the absent politicians and substitute votes to elect Mr. Torrent and other parliamentary officials were made on behalf of the three imprisoned politicians.
 
The votes occurred, despite the unionist Ciudadanos and Popular Party (PP) both filing unsuccessful complaints against the move. Secessionist parties now control four of the seven seats on the Catalan parliament’s presiding council, a crucial outcome as the council controls debates and sets the chamber’s agenda. Although pro-independence parties hold control over the parliament, it’s future status remains uncertain given the absence of Mr. Puigdemont. If the Catalan president does goes ahead with his intention to address the chamber via video link from Brussels then Madrid has confirmed that it will respond by extending the use of direct rule and appeal against the process in the constitutional courts.

 
Dates ahead: Monday 22nd January – Sunday 28th January
 
Mon 22nd – Thurs 25th January: European Parliament Committee meetings
Monday 22nd January : Eurogroup meeting
Tuesday 23rd January: ECOFIN Meeting
Thursday 25th January: ECB Monetary Policy Meeting
 
AND BEYOND
January 30th & 31st: US Federal Reserve Open Market Committee meeting

Compliments of Vulcan Consulting, a member of the EACCNY