European Union

Place:        Justus Lipsius building, Brussels
Chair:        Ivan Korčok, Minister for the EU of the Slovak Republic 

All times are approximate and subject to change

 +/- 08.30 
 Arrivals (live streaming) 

+/-  09.20
Doorstep by Delegated Minister for the EU Ivan Korčok 

+/- 10.00
Beginning of Council meeting (roundtable)
Adoption of the agenda
Adoption of legislative A items (public session)
Multiannual Financial Framework (MFF) 2014-2020 (public session) 
Adoption of non-legislative A items
Preparation of the European Council on 20-21 October 2016
European Council follow-up
Legislative programming                     

+/- 13.00
Press conference (live streaming)              

 

                    

On 20 September 2016, the Council issued a recommendation calling on the eurozone member states to establish national productivity boards. 

The boards will  analyse developments and policies that can affect productivity and competitiveness. They will provide independent analyses and reinforce policy dialogue at the national level.

This will help reforms aimed at achieving sustainable economic growth and convergence.

Potential economic growth in the euro area and the EU as a whole has slowed considerably since the turn of the century. This trend is due in particular to a decline in total factor productivity. Since 2008, growth has been further weakened by a drop in investment. 

Looking forward, economic growth will depend on increasing productivity. This requires well-balanced policies aimed at supporting innovation, increasing skills, reducing rigidities in labour and product markets and allowing a better allocation of resources. 

Research and analysis carried out by the productivity boards will encourage developments that should help the smooth functioning of the EU's economic and monetary union. 

Five presidents' report

The recommendation is part of the Commission's October 2015 package of measures giving substance to the so-called five presidents' report on the further development of the EU's economic and monetary union (EMU). 

It was endorsed by the European Council on 28 June 2016. 

The five presidents' report was prepared by the president of the Commission, in close cooperation with the presidents of the European Council, the Eurogroup, the European Central Bank and the European Parliament. It was submitted to the European Council in June 2015.

Tasks

The draft recommendation calls on each member state to set up a national board responsible for: 

• diagnosis and analysis of productivity and competitiveness developments; 
• independent analysis of policy challenges in this field. 

Addressed to the eurozone countries, the recommendation encourages other member states to set up similar bodies. It calls for productivity boards to engage in dialogue and the exchange of best practices, and where appropriate produce joint analyses. 

Communication and information

The recommendation foresees that the boards will operate separately from public authorities as concerns public communication, procedures for nominating board members and access to information. As a rule, their analyses should be made public. 

The independent expertise provided by the boards, including through the presentation of annual reports, will be used by the member states and the Commission in the context of the "European Semester" annual policy monitoring process. 

The recommendation was adopted at a meeting of the General Affairs Council, without discussion. 

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In this section you will find video coverage of events illustrating the relations between the EU and the former Yugoslav Republic of Macedonia.

Download this video here.

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EU-Lebanon relation is laid down in the Association Agreement which was adopted in 2002, entered into force on 1 April 2006 and open the way to fully incorporate Lebanon into the European Neighbourhood Policy (ENP).

Download this video here.

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Norway is closely associated with the European Union through its membership in the European Economic Area (EEA).

Download this video here.

On 20 September 2016, the Council approved the conclusion of an agreement with Andorra that will improve tax compliance by private savers. 

The agreement will help clamp down on tax evasion by requiring EU member states and Andorra to exchange information automatically. 

This will give their tax administrations improved cross-border access to information on the financial accounts of each other's residents. 

The agreement upgrades a 2004 agreement that obliged Andorra to apply measures equivalent to those in an EU directive on the taxation of savings income. It will extend the automatic exchange of information on financial accounts in order to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid. 

The new agreement was signed on 12 February 2016. It was concluded (on 20 September) at a meeting of the General Affairs Council, without discussion.

General : Following a busy plenary session in Strasbourg, MEPs work this week in their constituency or take part in parliamentary delegations. Parliament President Martin Schulz travels to London to meet among others UK Prime Minister Theresa May, while some MEPs are in Lebanon to assess the country's response to the refugee crisis.

Source : © European Union, 2016 - EP

General : Following a busy plenary session in Strasbourg, MEPs work this week in their constituency or take part in parliamentary delegations. Parliament President Martin Schulz travels to London to meet among others UK Prime Minister Theresa May, while some MEPs are in Lebanon to assess the country's response to the refugee crisis.

Source : © European Union, 2016 - EP

A 7-strong delegation of Civil Liberties Committee MEPs will be in Lebanon this week to look into the situation of refugees and resettlement. MEPs will visit refugee camps and meet UNHCR, UNICEF, UNRWA, international NGOs and the International Organization for Migration (IOM) staff working with the refugees. They will also meet representatives of the Lebanese Parliament and Minister for Social Affairs Mr Rashed Derbas (tbc).
Committee on Civil Liberties, Justice and Home Affairs

Source : © European Union, 2016 - EP

A 7-strong delegation of Civil Liberties Committee MEPs will be in Lebanon this week to look into the situation of refugees and resettlement. MEPs will visit refugee camps and meet UNHCR, UNICEF, UNRWA, international NGOs and the International Organization for Migration (IOM) staff working with the refugees. They will also meet representatives of the Lebanese Parliament and Minister for Social Affairs Mr Rashed Derbas (tbc).
Committee on Civil Liberties, Justice and Home Affairs

Source : © European Union, 2016 - EP

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After a gentle ride down the Danube, the choppier political waters of home.

Having pondered the future of Europe with fellow leaders at Friday’s summit in Bratislava, Angela Merkel is this morning digesting the latest warning given to her by the German electorate, after Berlin went to the polls.

The election marks another breakthrough for the anti-immigrant and eurosceptic Alternative für Deutschland party, which will enter the capital’s state parliament for the first time, having finished in fifth place with 14.2 per cent of the vote. As for Merkel’s CDU, it held on to second place but saw its vote share fall to 17.6 per cent - its poorest result ever in Berlin.

The outcome should not be overstated; the AfD stands no chance of actually enjoying power in a coalition. It is, though, the latest in a pattern of striking AfD successes – just two weeks ago the party spectacularly leapfrogged Ms Merkel’s CDU to claim second place in her home region of Mecklenburg-Vorpommern.

Markus Söder, a senior member of the CSU, the Bavarian sister party of Merkel’s christian democrats, described the vote as “the second massive wake-up call in a fortnight.”

Read more

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Donald TUSK, President of the European Council, attends the UN high level meeting on addressing large movements of refugees and migrants. The President addresses the UN General Assembly (UNGA) on behalf of the EU on 21 September.

Download this video here.

First of all let me thank Prime Minister Fico for inviting us to Bratislava. My words of gratitude also go to the Slovak people for their hospitality and patience. I know that it is not always easy, especially with all the security measures in place, but you did a great job. 

Bratislava is the first summit during which we discussed the common EU future of 27 States, without the UK. It was a sad moment for Europe when the British people decided to leave, and so it required an honest diagnosis. Today we had a frank discussion about the root causes of the current political situation in Europe. The fact that millions of Europeans feel insecure is real. People are concerned about, what they  see, as lack of control, and express fears over migration, terrorism and last but not least, about their economic and social future.

Our assessment is sober but not defeatist. While we all agree that the European Union is not perfect, we also agree that it is the best instrument we have. That is why we are determined to correct the past mistakes and move on with common solutions as the EU of 27. We will not continue business as usual. To move the EU forward we have discussed a Bratislava roadmap, which sets out the objectives for our work ahead of the Rome meeting in March next year, when we want to conclude this process.

Let me mention some of the objectives discussed today:

- Never to allow for the return of uncontrolled refugee flows of last year and to ensure full control of our external border to get back to Schengen. We are determined to continue our co-operation with Turkey and Western Balkans but also to establish migration compacts with African countries;

- To do everything necessary to support Member States in ensuring internal security and fighting terrorism. Intensification of information-exchange among security services of Member States is an urgent priority;

- To strengthen EU cooperation on external security and defence. In December, the European Council will decide on how to make best use of the options available in the Treaties;

- To create a promising economic future for all, by strengthening the single market and increasing investments;

- and finally, to safeguard our way of life and to provide better opportunities for the young Europeans. These objectives are matched by a number of very concrete measures. I will not go into all the details, you can find them in the roadmap. Let me just mention that a number of leaders have decided to immediately deploy extra personnel and equipment to help guard Bulgaria's border with Turkey. I want to thank them for this cooperation.

We should deliver more practical and tangible decisions in the next months. To that end, let me congratulate President Juncker for his excellent initiatives, which he presented in his State of the European Union speech. We discussed many of them today and I hope that all the institutions will cooperate on their implementation.

To conclude, let me say that the Bratislava Roadmap will guide our actions when we meet during our regular European Councils meetings in October and December, and also in Valletta, and later in Rome for informal meetings. I hope that the Bratislava Summit will lead to the renewing of trust and confidence in the European Union. This will only happen if and when people realise that we are delivering on our promises through loyal cooperation between Member States and institutions. Today I can say that there is hope. Thank you. 

Today we meet in Bratislava at a critical time for our European project. The Bratislava Summit of 27 Member States has been devoted to diagnose together the present state of the European Union and discuss our common future. We all agreed on the following general principles.

Since 2010, the EU’s political institutions have often been slow to respond to the challenges of the sovereign debt crisis, banking crisis and economic recession in much of the EU. In this context, the European Central Bank (ECB) has attempted to compensate for the political inertia with the adoption of a range of new unconventional monetary policies. This approach has, however, generated problems of its own, notably by undermining the ECB’s legitimacy: it has resulted in the ECB stretching its mandate, has led to an increasing politicization of the ECB’s decisions, and has undermined the transparency of both the ECB’s monetary policy and national macroeconomic policies.

Elections are not the only source of legitimacy
In democratic systems, legitimacy can stem from (at least) three different sources: First, it can stem from the participation of citizens in the election of political elites or the formulation of policies (input democracy). Second, it can be derived from policies that serve the general good (output legitimacy). And third, throughput legitimacy can come from the ‘quality of EU policymaking processes, judged by their efficacy, accountability, transparency, and inclusiveness’. This third concept is particularly relevant for non-majoritarian technocratic institutions (like central banks), that by nature perform poorly in terms of input legitimacy.

But what are the conditions of legitimacy in the case of an institution like the ECB? In the case of delegation to non-majoritarian institutions like the ECB, the mandate and powers of the institution should be clearly and narrowly defined and its policy-making should be characterized by a high level of ‘expertise, procedural rationality, transparency and accountability by results’. Similarly, Moravcsik finds a high level of ‘insulation’ of EU policy-making acceptable provided that the policies are regulatory, economic and fairly depoliticized. Before the sovereign debt crisis, academics often felt that the ECB’s precise mandate and policy output generated sufficient legitimacy (Majone, Moravcsik, Tallberg). The ECB could be criticized for lacking operational transparency, as its accountability to European institutions and national governments had been limited to ensure its independence. However, it could compensate for this by creating more transparency in national macroeconomic policy-making through its low-inflation policy, which prevented governments from using inflation as a tool to hide economic problems.

In the course of the sovereign debt crisis, many of these conditions for legitimacy were eroded. Specifically, the unconventional monetary policies of the ECB led to three problems.

Mandate stretching
The ECB’s policies stretched its original mandate in two respects. First, the mandate of the ECB as set out in the Maastricht Treaty defines the pursuit of low inflation (price stability) as the bank’s primary goal. Second, the Maastricht Treaty prohibits the monetization of member state debt and the ‘bail-out’ of one member state through another member state.

The inflationary effects of the ECB’s unconventional monetary policies became the subject of intense disagreement. This concerned especially the impact of the ECB’s liquidity boosting measures (notably, the purchase of covered bank bonds) and the ECB’s Securities Markets Programme (SMP) — specifically the purchase of sovereign debt on secondary markets of those euro area member states most at risk of default and facing high bond yields. Prior to mid-2012 euro area inflation remained well above the 2 per cent target and the ECB was frequently unable to neutralize the inflationary impact of its sovereign debt purchases. In Germany, in particular, the perceived departure from the ‘low inflation’ focus exposed the ECB to widespread criticism.

Second, the ECB pursued a course that arguably contradicted the treaty prohibitions on the monetization of sovereign debt and government bailout. Four nonconventional policies have had significant fiscal implications: the SMP, the Long Term Repurchase Operations (LTRO), the announced but yet to be activated Outright Monetary Transactions (OMT) Programme and, most recently, Quantitative Easing (QE). With the exception of the OMT Programme, these policies undermine both the transparency of national fiscal and macroeconomic policy and the strength of national structural reform efforts.

Under the SMP (2010-2012), the ECB bought sovereign bonds in an effort to bring down debt yields, thus enabling governments to fund themselves at lower rates. The SMP was widely criticized for breaking the ban on the monetary financing of debt and transforming the ECB into, de facto, a ‘lender of last resort’.

In early August 2011, the ECB extended bond purchases beyond the three ‘Programme countries’ — that is the euro area member states that were subject to macro-economic policy programmes monitored by the ‘troika’ of the European Commission, the ECB and the International Monetary Fund — to two countries (Spain and Italy) that were not subject to ‘troika’ monitoring. Thus, the ECB acted as de facto ‘lender of last resort’ without the quid pro quo of fiscal / macroeconomic policy constraint, despite ECB’s claims that the SMP was adopted to restore the effective transmission of its monetary policy throughout the euro area.

LTRO involved lending to commercial banks at a very attractive 1 per cent fixed rate with unlimited access to central bank liquidity subject to the provision of adequate collateral. Collateral requirements were in turn eased a number of times and the maturity of LTROs was lengthened. The principal impact of LTRO was that euro area banks — especially those in the periphery — borrowed funds to purchase sovereign debt with higher yields — notably that on the periphery. In addition to contributing very directly to the dangerous sovereign debt-bank doom loop, the ECB’s LTRO operations effectively helped to lower sovereign debt yields by increasing demand, thus allowing the cheaper financing of governments.

Third, the OMT Programme consists principally in a promise to conduct unlimited interventions in secondary sovereign debt markets to purchase the debt of a country on the condition that the member state government concerned accepts the conditions of a European Stability Mechanism (ESM) programme. In effect, OMT allowed the ECB to act potentially as a ‘lender of last resort’ in government bond markets.  It also amounted to a significant form of ‘slippage’ in terms of the potential fiscal policy powers that the ECB assigned itself — albeit via the ESM.

Finally, on 22 January 2015, the ECB launched its QE programme with the purchase of up to €1.1 trillion in mostly government bonds. Officially, the ECB sought to diminish the risk of euro area deflation and bring the inflation rate up closer to target (ECB 2015). In practice, the desired and real effect of ECB policy was to lower government bond yields — albeit this time throughout the euro area — although the impact on different government debt varied, with yields on bonds already at historic lows.

The politicization of ECB policy-making
With the stretching of the ECB’s mandate, its decisions became increasingly politicized, in the sense that they attracted vocal internal and external criticism. Politicization took three main forms. First, dissent within the Governing Council and the opposition of the German Bundesbank and other Northern European Governing Council members to the ECB’s decision to engage in emergency bond buying exposed deep divisions over policy approaches. Northern European members argued that nonconventional monetary policy reduced the pressure on euro periphery governments to introduce much needed reforms.

Second, the tendency of governments to question ECB policy intensified. Government criticism focused on the ECB’s role in the Troika, but its unconventional monetary policies also attracted vocal criticism from the German government and especially Finance Minister Wolfgang Schäuble.

Third, the public took a greater critical interest in ECB policy-making and national political debate intensified. Public awareness of the ECB rose from 71 per cent in the autumn of 2007 to 85 per cent in the spring of 2015. In the meantime, public trust in the ECB declined from a high of 53 per cent in the Spring of 2007 to a low of 31 per cent in the Spring of 2014. The European Parliament also expressed concerns (ECB Annual Reports 2011 and 2012) over the ability of the ECB’s unconventional monetary policies to achieve their goals as well as over the risk of unintended consequences.

Non transparent monetary policy
In the course of the crisis, the ECB undertook a number of measures to improve its process legitimacy as it realized the increasing salience of its policies. For example, it moved to improve transparency through the publication of summaries of its meetings from 2015 onwards. However, at the same time, unconventional monetary policy arguably had the effect of creating less transparency on the ground. ECB unconventional monetary policy — by lowering bond yields — has undermined structural reform efforts in member states, thus directly contradicting stated ECB preferences on structural reform and the explicit objective of the Maastricht Treaty of avoiding the possibility of ‘fiscal dominance’. Furthermore, ECB monetary policy has undermined the transparency-inducing effects of EMU at the national level that Erik Jones vaunted.

Conclusion
Over the course of the sovereign debt crisis, both the ECB’s policies and the public perception of these policies changed. As a result, many arguments that had been used to support the democratic legitimacy of the ECB’s policies became less obviously valid. For a start, EU monetary policy is no longer regarded as a purely technocratic matter with limited (re)distributive effects. The ECB’s unconventional monetary policies supported certain member states while creating difficulties for other member states — notably Germany, given the impact of low and then negative real interest rates upon the country’s savers, pensions and banking sector.

The European Central Bank is at a crossroads. Its original mandate was to be an independent technocratic institution, the legitimacy and credibility of which was set in terms of meeting its price stability mandate — output legitimacy. However, from the outbreak of the sovereign debt crisis, ECB unconventional monetary policies had a significant impact upon the direction of euro area member state macro-economic policies — and in a manner that contradicted the ECB’s terms of delegation as outlined in the Maastricht Treaty, thus also undermining its input legitimacy. In light of the political salience of these policies and their impact, it is questionable whether the independence of the ECB remains democratically viable. ECB policy-making has become problematically controversial and politicized. At the very least, the reinforcement of European parliamentary scrutiny over ECB policy making is more urgent than ever.

Based on A.L. Högenauer and D. Howarth. 2016. “Unconventional Monetary Policies and the European Central Bank’s Problematic Democratic Legitimacy,” Journal of Public Law/Zeitschrift für öffentliches Recht 71(2): 425–448.

The post Unconventional Monetary Policies and the ECB’s Problematic Democratic Legitimacy appeared first on Ideas on Europe.

On 19 September 2016, the Council, by common accord with the President of the Commission, Jean-Claude Juncker, appointed Julian King as the new commissioner for security union. The appointment applies for the remainder of the current term of office of the Commission which ends on 31 October 2019.

Julian King is a British national and has been UK ambassador to France since January 2016. He replaces Jonathan Hill who resigned on 25 June 2016.

UN General Assembly, New York

Sunday 18 September 2016
(local time)
17.00 Meeting with UN Secretary-General, Ban Ki-moon 

Monday 19 September 2016
(local time)
08.30 Opening ceremony of the High-Level Plenary Meeting on addressing large movements of refugees and migrants
09.30 Meeting with President of Egypt Abdel Fattah el-Sisi
10.00 Meeting with Prime Minister of New Zealand John Key
+/- 13.50 Speech at the High-Level Plenary Meeting
14.30 Meeting with Prime Minister of Kosovo Isa Mustafa
15.00 Meeting with Prime Minister of Norway Erna Solberg
15.30 Meeting with the President of the former Yugoslav Republic of Macedonia Gjorge Ivanov

Tuesday 20 September 2016
(local time)
09.00 Opening of the 71st UN General Assembly
12.00 Meeting with the Chairman of the Presidency of Bosnia and Herzegovina Bakir Izetbegović
12.30 Meeting with Prime Minister of Australia Malcolm Turnbull
13.15 Luncheon hosted by UN Secretary-General, Ban Ki-moon
15.30 Leaders' summit on the global refugee crisis
ttbc Address at the Leaders' summit on the global refugee crisis
19.00 Reception at the EU delegation to the UN

Wednesday 21 September 2016
(local time)
+/- 12.15 Address at the 71st UN General Assembly debate
15.30 Meeting with Prime Minister of Iraq, Haider al-Abadi
16.00 Meeting with Prime Minister of Bangladesh Sheikh Hasina
17.00 Meeting with Prime Minister of Republic of Moldova, Pavel Filip
17.30 Meeting with Prime Minister of Georgia Giorgi Kvirikashvili

The Subcommittee on Security and Defence and the Committee on Development held a public hearing to discuss the intertwined challenges of development and security and how to address them in a joined-up approach.
Location : Paul-Henri Spaak 5B001
Source : © European Union, 2016 - EP

On 30 June from 9.00, BUDG committee held a high-level joint hearing with LIBE, AFET and DEVE committees on the budgetary implications of the refugee and migration crisis. The keynote speech was given by Mr George Soros, founder and Chair of Open Society foundations. Other speakers included the Commission's Directors General for Budget, DEVCO and NEAR, Directors of Frontex and EASO, the UNHCR Europe Director, ECRE Secretary General and Oxfam representative.

MEPs discussed the past andpresent budgetary initiatives, solidarity and cost-sharing between MemberStates and the EU external actions' financing in relation to the crisis.

Location : Paul-Henri Spaak PHS 3C50 (3rd floor), European Parliament, Rue Wiertz 60, Brussels, Belgium
Programme
Draft Programme
Statement submitted to the European Parliament Joint Hearing by George Soros on 30 June 2016
Interview - Refugee and migration crisis: the financial cost
Extracts from the Joint Hearing
Source : © European Union, 2016 - EP

Delegations

Source : © European Union, 2016 - EP