Member News

The weekly Vulcan View for the 2nd to the 6th of July featuring analysis of the latest EU developments


Merkel seeks to reassure coalition partners over proposed migrant deal 
Fresh doubts have been raised over the viability of German Chancellor Angela Merkel’s migrant plan after her coalition partners the Social Democratic Party (SPD) claimed that they would not support a deal that would lead to closed migrant camps. The migrant plan, which Ms. Merkel struck earlier this week with her party’s junior alliance partner, the CSU, in a bid to avert the collapse of her coalition government, would see the establishment of transit centres on the German-Austrian border for asylum seekers who have already been registered in other EU countries.
The agreement reached between the Chancellor and Horst Seehofer, the county’s interior minister and leader of the CSU, appeared to have brought their bitter dispute over migration policy to an end. But that resolution is now in doubt as the SPD question the deal which they believe would curtail the legal process for asylum seekers. Promising that ‘’with us there will be no closed camps’’, SPD leader Andrea Nahles condemned the migration plan in a heated Bundestag debate on Wednesday.
The resistance from the SPD now leaves the Chancellor in a difficult position as she attempts to reconcile the starkly differing views on migration policy between her coalition partners on either side. Seeking to bring the SPD over the line, Ms. Merkel insisted that the migrant transit centres would not be prison-like ‘’closed camps’’ and that asylum seekers would only be held there for up to two days. The migration issue has left the Chancellor politically bruised and although her migrant deal with the CSU has bought her coalition time, unless she can convince the SPD of the plan, it could spell the end of Europe’s leading figure.

Another ‘last chance’ for Theresa May at decisive cabinet Chequers meeting 
British Prime Minister Theresa May’s cabinet will descend on Chequers today for yet another crunch Brexit meeting that aims to produce a long-awaited white paper on the government’s position on the UK’s relationship with the EU after Brexit. With nine months to go until the UK departs the EU, Ms. May’s government must finally provide definitive answers to the crucial Brexit questions. The Prime Minister, along with the chancellor Phillip Hammond, will be backing a softer Brexit but will face resistance from hardline eurosceptics within her party, such as Brexit minister David Davis and foreign secretary Boris Johnson, who insist the public mandate is for a hard exit, where the UK would be unaligned with Brussels.
This past week has seen the Prime Minister bombarded with calls from both sides lobbying their cause. Fearing that she may indeed push for a soft exit from the EU, hard-line Tory Brexiters from the European Research Group wrote to Ms. May making their case for a hard Brexit. The divisiveness of the Brexit issue for the Tory party was illuminated further when another letter was written to Ms. May, this time issued by some 46 Tory MPs, including 11 former cabinet ministers, who urged her to listen to the concerns raised by businesses and deliver a soft Brexit.
While reports this week indicate that Ms. May will pursue a soft Brexit, the question remains whether Theresa May has the diplomatic clout to secure the concessions necessary for a Brexit proposal that will not be immediately rejected by the EU. Currently her proposals on maximum facilitation and a new customs partnership both involve “cherry picking” parts of the single market, which the EU will not accept. As a result, it is critical that Theresa May’s government produce a paper that the EU can at least engage with, so that productive negotiations between the EU and the UK can continue over the next nine months.
Brussels issues warning to Washington of tariff threat 
The European Commission has submitted a written warning to the US Department of Commerce highlighting the potential self-harm that could arise if it follows through on its threat to impose tariffs on European cars. In a paper delivered to the US government and leaked to the media, it described a decision to impose tariffs would be ‘’harmful first and foremost for the US economy’’.
The Commission’s sharp and absolute cautionary message is the latest sign of the EU’s continued exasperation with President Trump’s provocative trade policy. According to the EU’s internal analysis from the paper, European carmakers produced 26 percent of cars made in the US last year and if the White House applied an import tariff on 25 percent on automobiles and automotive parts, then it ‘’would in the first instance have a negative impact on U.S. GDP in the order of $13-14 billion, and the current account balance of the U.S. would not be affected positively’’.   
The delivery of the paper comes only days after global automakers warned that tariffs could lead to the prices of imported vehicles rising by as much as $6,000 per car and in addition raise the price of locally made cars. Regardless of how many warnings are sounded, few in Brussels expect President Trump to listen to the rational arguments made and climb down from his threats, particularly after he commented last Sunday in an interview that ‘’the European Union is possibly as bad as China, only smaller’’.
Deputy Prime Minister calls for European alliance of populist parties 
Matteo Salvini, the leader of the far-right Northern League and Italy’s deputy prime minister, has called for the establishment of an ‘’international alliance of populists’’ ahead of the European Parliament’s 2019 elections. Addressing a crowd in the small northern Italian town of Pontida in the region of Lombardy, the heartland of the Northern League’s base, Mr. Salvini identified Europe as the next political challenge in order to overthrow the ‘’Europe of the elites’’.
The outspoken deputy prime minister, who also acts as the country’s interior minister, may be still relatively new to his position but has been at the centre of recent controversial issues, including blocking rescue ships with migrants docking in Italian ports and vowing to expel thousands of Roma from Italy. While such remarks have riled his European neighbours, it has brought increased popularity for his party which has now leapfrogged ahead of their coalition partners, the Five Star Movement, to become the most popular party in Italy.
Mr. Salvini has already made links with a collection of far-right parties across Europe, such as France’s National Rally and the rising Alternative for Germany (AfD), but has looked beyond the EU by forging close ties with Russian President Vladimir Putin’s United Russia party. Describing next year’s decisive European Parliament Elections as a ‘’referendum between the Europe of elites, of banks, of finance, of immigration and precarious work; and the Europe of
people and labour’’, Mr. Savlini will not be short of confidence in causing a major upset with his ‘’international alliance of populists’’.
Poland faces backlash over supreme court ‘’purge’’ law
The Polish government’s controversial overhaul of its judicial system came into effect this Wednesday, when a new law passed by the ruling far-right Eurosceptic Law and Justice (PiS) party, lowered the retirement age for supreme court judges from 70 to 65, thereby forcing the retirement of some 40% of the country’s judges. The new law brings sweeping new powers to the ruling party as it will essentially allow them to dictate the membership of the constitutional court.
Critics have called the move a politically motivated attack on the independence of the judiciary and accused Warsaw of violating the rule of law. In an embarrassing result for the government, Malgorzata Gersdorf, the court’s ousted president, has refused to step down and denounced the government of trying to “purge” the country’s highest court.
Defending the law at the European Parliament on Wednesday, the Polish prime minister Mateusz Morawiecki dismissed accusations from MEPs that his government was spreading anti-EU propaganda and violating the bloc’s rule of law and fundamental democratic values. The Prime Minister vehemently denied these charges, claiming that ‘’every country has a right to set up its own legal values with its own traditions.”
Warsaw and Brussels have been locked in a bitter row over the rule of law changes for months and the European Commission last year opened a legal case against Poland under the Article 7 procedure, which allows for the suspension of certain rights of a member state. Escalating the issue even further, the case will now also be referred to the European Court of Justice, where it will decide whether the rule of law has been broken.

Dates ahead: Monday 9th – Sunday 15th July

Wednesday 11th July: ECB Non-MPC meeting
Sunday 15th July: Final of FIFA World Cup 2018
And Beyond 
Tuesday 17th July: EU General Affairs Council
Thursday 19th July: Beginning of Golf British Open

Compliments of Vulcan Consulting, a member of the EACCNY