Member News

The weekly Vulcan View for the 17th to the 22nd of June featuring analysis of the latest EU developments




‘Historic’ deal reached to end Greece’s eight-year bailout programme 
Eurozone finance ministers met in Luxembourg last night to approve a historic debt-relief package for Greece which will allow it to exit its third bailout scheme next August and bring to a conclusion the eight-year bailout programme. After six hours of last-minute talks, ministers from the Eurogroup thrashed out the final points of the package that will involve a 10-year debt maturity and debt repayment extensions on some €100 billions of bailout loans and a final €15 billion programme loan.
Describing last night’s agreement as an ‘’exceptional moment’’, the EU’s Economy commissioner, Pierre Moscovici, said that ‘’Greek crisis ends here tonight in Luxembourg’’. Although EU officials were quick to celebrate the significance of the deal, many Greeks will not forget the pain that they have endured over the past several years. Since the country’s first bailout in 2010, there has been a 25 per cent decline in its GDP and extensive cuts in the public service and social programmes.
Further reforms across a range of sectors are still necessary however, as Athens yesterday highlighted that it had already commenced the ‘’88 prior actions’’ that the final phase of the adjustment package is dependent on. Since 2010, Greece has received some €273 billion from various rescue funds and this latest deal was urgent given the little time that remained until the end of the country’s exit programme. With the turbulence that Greece had experienced over the past decade, EU officials were hopeful that the current Greek government under Prime Minister Alexis Tsipras remains committed to the remaining stiff fiscal targets.
May quashes Tory rebellion plan over Brexit bill
The British Prime Minister has, for the second time in two weeks, avoided a significant government loss over amendments to the EU withdrawal bill. The amendment in question, proposed by the pro-European conservative Dominic Grieve, would have given members of Parliament a “meaningful vote” in the final stages of Britain’s exit from the European Union, which would have allowed MPs to reject an unfavourable, or “no deal” exit.  The amendment was rejected in the Commons, last Tuesday, after Theresa May agreed to significant concessions on the proposed vote.
However, it was tabled again in the House of Lords on Monday, and returned to the Commons on Wednesday, as a result of Ms. May reneging on her promise to rebel Tory MPs. Despite concerns from the government that the amendment would be passed, the Prime Minister again secured enough support to defeat it after Mr. Grieve agreed to drop support for his own amendment. The leader of the Tory rebels stood down after receiving assurances that MPs would be given time for debate in Parliament in the event that no deal can be achieved with Brussels.
Brexit Secretary David Davis issued a ministerial statement to this effect, saying MPs would be given time to “table motions and debate matters of concern”, a significant climb-down from Mr. Grieve’s original proposal. Addressing the commons on the matter, the Brexit secretary said the amendment was unacceptable as “you can’t enter into a negotiation without a right to walk away”. The concessions on both sides reflect the will of both to put aside this issue, which has deeply divided the conservative party, and which has seen the rebel MPs receive death threats. Reflecting on the chaos that Brexit has inflicted on the UK political scene ever since the outcome was known, Mr. Grieve put forward that Brexit is destroying Britain’s “collective sanity”.
EU scrambles to solve growing migration crisis
Ahead of the looming European Council summit next week, EU leaders met at an unconventional mini-summit last Sunday in an effort to try and piece together some sort of solution to Europe’s mounting migration crisis which has been sowing seeds of division across the bloc. While differences still remain between member countries and even within some national governments, a piecemeal consensus was agreed upon and a statement drafted allowing the mini-summit to announce new measures intended to curb the movement of refugees within the EU.
The statement proposes initiatives to “expedite readmissions and transfers”, by ignoring time limits on the responsibility of “entry” states to take back asylum seekers who have moved elsewhere. In addition, tougher approaches to external border control have also been called for, such as the development of reception facilities outside the EU where migrants rescued at sea can be sent.  
The paper also outlined further measures to address the issue of “secondary movement”, including restricting asylum seekers’ ability to claim social benefits from the country where they enter the EU, as well as increased checks on travelers crossing internal EU borders. This provision on identity controls is particularly controversial as it could be considered as a restriction on the fundamental principal of free travel.
Although the measures will grant some sort of reprieve for Chancellor Angela Merkel in her internal power struggle with her Bavarian coalition partner Horst Seehofer, the proposals may not go far enough to meet some of the stringent demands from Rome’s new anti-immigration government. EU leaders have warned that the disputes over current asylum policy that have divided southern and eastern “frontline” states, and richer northern and western “destination” states, threaten the existence of the Schengen free travel area if left unresolved.
Merkel and Macron agree deal on eurozone budget 
The powerful and symbolic Franco-German EU engine was in full swing this week as Chancellor Angela Merkel finally met a longstanding demand of President Emmanuel Macron by agreeing to establish some sort of eurozone budget. Labelled as the Meseberg Declaration, the agreement incorporates a range of measures with the stand-out deals including a common budget for the single current union and a new role for the eurozone’s  bailout fund of the European Stability Mechanism (ESM).
Although the deal is highly symbolic, it does not match the high hopes that the French president has pushed for with eurozone reform. President Macron has repeatedly lobbied the German Chancellor and fellow EU leaders for closer integration among the bloc and believes that a large and cohesive common eurozone budget will help to deal with future crises and foster growth. However, he was forced to make large concessions on the budget’s ultimate size and governance in order to get Ms. Merkel on board.
The mandate of the ESM will be expanded in order for it to grant emergency loans to eurozone member states facing a downturn and the common budget will be funded with permanent tax resources and is hoped to be established separately from the EU budget as soon as 2021. Speaking at the joint declaration, the Chancellor said ‘’we are opening a new chapter in initiatives for the EU’’ before President Macron added that ‘’today there is nothing. Tomorrow we will have a budget for the eurozone’’.
Brussels opens talks for trade deal with Australia 
The European Union is continuing its efforts to lead global trade initiatives in spite of (or perhaps in response to) recent developments within the US, by formally launching talks with Australia for a broad free trade agreement. On Monday of this week, the EU trade commissioner Cecilia Malstrom travelled to Canberra to meet with her Australian counterpart Steven Ciobo and the country’s Prime Minister Malcom Turnbull to kick start the negotiation process that will inevitably take several years to complete.
It is hoped that it will not be a repeat of the Canadian free trade agreement which took seven years. The EU-Australia trade deal will be able to avoid some trickier issues that dogged the CETA deal however, such as the hotly disputed matter of investor-state dispute settlements due to a recent ruling by the European Court of Justice rules that facilitates the EU to treat this subject outside trade deals.
Despite this, several difficulties are expected. From Europe’s perspective, agriculture is likely to be a pressing concern since Australia is a leading exporter in areas such as beef and sugar which Brussels currently implements high tariffs on. From Canberra’s side, obstacles will be presented with regard to public procurement as state governments there strongly assert their right to spend money where they see fit.  Even with these challenges the opening up of trade negotiations is another sign that the EU is leading the way in championing the case for global free trade.

Dates ahead: Monday 25th June – Sunday 31st June
Tuesday 26th June: EU General Affairs Council (Art. 50)
Wednesday 27th June: ECB non-monetary policy committee meeting
Thursday 28th June: ECB General Council meeting
Thurs 28th & Fri 29th June: European Council Summit

And Beyond 
Mon 2nd – Thurs 5th July: European Parliament Plenary Session
Monday 2nd July: Beginning of Wimbledon Tennis Championship
Wednesday 4th July: USA 4th of July Independence Day celebrations
Thursday 5th July: EBA Meeting


Compliments of Vulcan Consulting, a member of the EACCNY