European Union

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Written by Annastiina Papunen and Rebecca Torpey.

The special meeting of 17-18 April was the last European Council meeting before the European elections on 6-9 June. The EU Heads of State or Government concentrated on competitiveness, the situation in the Middle East and the war in Ukraine. The discussions on competitiveness – informed by a report by former Italian Prime Minister Enrico Letta on the future of the internal market – were lengthy and difficult. Whereas EU leaders agreed on the need for a new European competitiveness deal, the outcome was less ambitious on measures towards convergence of the business environment and more centralised supervision of financial markets. On Ukraine, the most salient topics discussed were the provision of air defence for Ukraine and of ammunition more generally, and the use of frozen Russian assets. On the Middle East, EU leaders condemned the Iranian attack on Israel, reiterated their previous statements on Palestine, called for be avoidance of further escalation of tensions in the region, and committed to increase support for Lebanon.

© European Union 2024 1.     General

Addressing EU leaders at the start of the meeting, the President of the European Parliament, Roberta Metsola, emphasised – in the context of the European elections – that the European Parliament stood ready to support Member States in ‘pushing back and addressing any malign interference with our democratic decision-making processes’. With the participation of the European Parliament President, the European Council had a lengthy discussion on the threat of disinformation, and agreed to ‘closely monitor and contain any risks stemming from disinformation, including through artificial intelligence, as well as foreign information manipulation and interference in electoral processes’.

2.     European Council meeting Ukraine

The European Council recalled its March 2024 conclusions and its full support for Ukraine. Before entering the meeting, the Dutch Prime Minister identified air defence and ammunition as the two short-term priorities for Ukraine. The previous week, Germany had announced that it would send a third Patriot system, in addition to other air defence equipment already sent, such as Gepard anti-aircraft gun tanks and Iris-T air defence systems. Germany has been reaching out to both NATO and non-NATO partners to join the Immediate Action on Air Defence initiative. The aim is to ask partners to check their air defence stocks and consider what could be sent to Ukraine.

MEPs had already been calling on the Member States to send more patriot systems; 86 MEPs recently sent a letter to European Council President Charles Michel, the High Representative/Vice President (HR/VP) Josep Borrell and some Heads of State or Government (DE, EL, ES, PL, RO, NL). Michel stressed that Ukraine needed not words but more military equipment. Even with the Patriot systems in place, each missile costs millions of dollars, while Russia is using comparatively cheap drones (among other equipment), produced in Russia and Iran. EU leaders also welcomed the progress on the frozen Russian assets proposals and called for their speedy adoption. Funds such as these could be utilised to cover the cost of much-needed military equipment.

Since the start of its invasion in February 2022, Russia has launched hundreds of missiles and drones at Ukraine – killing thousands of Ukrainians and causing considerable damage to the country’s energy infrastructure. In response, EU leaders have committed to providing additional humanitarian and civil assistance to Ukraine, such as power generators.

Main message from the European Parliament President: Metsola stressed that the EU’s support for Ukraine cannot waver. ‘We need to speed-up and intensify the delivery of equipment that they need, including on air defence’.

Competitiveness

As indicated in Michel’s invitation letter, competitiveness and the single market took centre stage in this special meeting, and the conclusions on these topics were long and detailed. Years of polycrisis and a complex global situation have made strengthening the economic base an urgent task for the EU, as there are worries that China, the US and India will leave an ageing Europe behind if no action is taken. EU leaders notably called for action to enhance productivity and growth in Europe, both to improve the living standards of EU citizens and to strengthen Europe’s economic standing in the world. European Parliament President Roberta Metsola said in the meeting that now is the time to show political will to deepen the single market or ‘we risk losing it all’.

One of the most intense debates related to further steps to deepen the capital markets union (CMU) in order to mobilise private capital, notably €33 trillion in private savings, for investment and innovation. Among the steps on CMU proposed, EU leaders agreed to harmonise ‘relevant elements of national corporate insolvency frameworks’. Proposals put forward by France and Germany, however, for ‘tougher and more centralised’ supervision of capital markets, were opposed by at least 10 smaller countries, led by Ireland and Luxembourg. The compromise text calls for an improvement in ‘the convergence and efficiency of the supervision’, and tasks the Commission with assessing the conditions for the European supervisory authorities to ‘effectively supervise the most systemic relevant cross-border capital and financial market actors’. After the meeting, Michel stated that ‘capital markets union is our European inflation reduction act’, which could deliver a similar boost to the EU economy. EU leaders will discuss CMU again during their June 2024 meeting. The divisive issue of new common EU debt was also raised as a possible way to finance a green and competitive Europe, but it was not mentioned in the conclusions.

Also subject to intense discussion was the question of whether or not to include corporate tax harmonisation on the list of steps forward. A number of countries, notably Ireland and Estonia, were strongly against this, as such a move might damage their competitive advantage. The conclusions therefore refer only to ‘a targeted convergence of business conditions’.

As part of the meeting, following a June 2023 European Council request, former Italian Prime Minister Enrico Letta presented his much anticipated 140-page report on the future of the internal market, entitled ‘Much more than a market – Speed, security, solidarity‘. The report argues that the single market is in dire need of updating, especially in relation to energy, telecoms and finance, which, as Letta underlined, are crucial components of economic security. Letta also advocates the formulation of a ‘fifth freedom’ to enhance research, innovation and education, in addition to the classic ‘four freedoms’ of free movement of goods, services, capital and people. Moreover, he underlines that ‘powerful forces of change – spanning demographics, technology, economics, and international relations – necessitate innovative and effective political responses’. The EU leaders welcomed the report and asked the current and upcoming Council presidencies to take work forward on its recommendations by the end of the year.  

EU leaders also called for a new European competitiveness deal to close gaps in innovation, growth and productivity, and to strengthen ‘Europe’s economic, manufacturing, industrial and technological base, thereby securing the Union’s economic resilience and industrial renewal, global competitiveness, technological leadership, and attractiveness as a business location’. The aim is also to have a level playing field – both inside the EU, through an effective State aid and competition framework, and globally. Former European Central Bank (ECB) President Mario Draghi is currently working on a report on EU competitiveness to be presented to EU leaders in June. In a recent speech, Draghi said that he would call for ‘radical change’, because a ‘rapidly changing world has caught Europe by surprise’, and many current EU processes are designed for ‘the world of yesterday – pre-COVID, pre-Ukraine, pre-conflagration in the Middle East, pre-return of great power rivalry’.

Another crucial component in efforts aimed at boosting EU competitiveness is the development and implementation of an effective industrial policy together with stakeholders. The globalisation and smooth supply chains of recent decades have seen factories move to countries outside the EU. The move needs to be countered and European strategic autonomy increased, for Europe to have ‘more factories and fewer dependencies‘. In this vein, EU leaders also stated that strategic dependencies should be reduced, as mentioned in the Versailles Declaration, especially on (i) energy, (ii) critical raw materials, (iii) semi-conductors, (iv) health, (v) digital, (vi) food, (vii) critical technologies, and additionally on (viii) chemistry, (ix) biotechnology and (x) space. The EU currently has an industrial strategy in place that was published in 2020 before the COVID-19 crisis, and updated in 2021.

Being digitally advanced as a society and at the forefront of ‘game-changing digital technologies such as artificial intelligence, blockchain, quantum computing and immersive reality technology’ was another essential element mentioned in the conclusions to strengthen EU competitiveness. In that context, EU leaders also requested a joint communication from the Commission and the HR/VP on ways to strengthen the EU’s leadership in global digital affairs.

The EU Heads of State or Government also looked into the current regulatory framework and the administrative burden it poses on companies. They stressed that the Commission should apply the ‘think small first’ principle, and carry out ‘high-quality, timely and thorough impact assessments and competitiveness checks, including of cumulative effects’ when designing major proposals, in order not to overburden companies or national authorities. EU leaders called for an initiative to cut reporting requirements by at least 25 %.

Finally, EU leaders underlined that a ‘competitive, sustainable and resilient agricultural sector’ was a key strategic interest of the Union. Reiterating their March 2024 conclusions, they called for the swift adoption of amendments to the Common Agricultural Policy Regulation and for work to be taken forward, notably on (i) cutting red tape for farmers; (ii) strengthening the position of farmers in the supply chain to secure their income; and (iii) ensuring fair competition internally and globally. They also mentioned cohesion policy, which rarely features in European Council conclusions, as having ‘a key role in narrowing disparities and stimulating long-term sustainable growth’.

EU-Türkiye relations

As anticipated, the European Council held a strategic discussion on EU-Türkiye relations. The European Council made it clear that progress on EU-Türkiye cooperation would be linked to the resumption of, and progress in, the Cyprus settlement talks. Talks have been stalled since the 2017 talks in Crans Montana. Furthermore, the European Council welcomed the appointment of María Angela Holguín Cuéllar as the United Nations Secretary-General’s Personal Envoy on Cyprus.

Middle East Iran/Israel

The European Council condemned the Iranian attack on Israel on 13 April, which utilised hundreds of missiles and drones – similar to the weapons supplied to Russia for use in its war against Ukraine. In advance of the meeting, a number of EU leaders (such as those of Greece and Ireland) called for restraint and de-escalation to avoid a regional conflict. The US, Israel’s main security guarantor, has also stated that it will not participate in any retaliatory attack on Iran. EU leaders were united in agreeing to further sanctions on Iran in response to the attack, namely in the sectors of missiles and unmanned aerial vehicles, i.e. drones.

Gaza

The European Council reiterated its calls for (i) an immediate ceasefire; (ii) unconditional release of all hostages; and (iii) full, rapid, safe and unhindered access to humanitarian aid for Palestinians. EU leaders restated the EU’s commitment to a two-state solution. Both Ireland and Spain wanted to discuss recognition of the Palestinian state, as part of momentum towards a two-state solution. Belgian Prime Minister Alexander De Croo stated that Belgium was open to recognising the Palestinian state ‘at some point’, but as part of a process and if further steps were taken.

Lebanon

Southern Lebanon has also been impacted by the escalation of violence in the region, with Israeli retaliatory strikes on Hezbollah on the southern Lebanese border and growing conflict between Hezbollah and other factions. EU leaders called on all parties to implement United Nations Security Council Resolution 1701, which calls for the full cessation of hostilities, notably between Israel and Hezbollah. The European Council committed to strengthening EU support for the Lebanese armed forces, as well as to providing additional aid for the most vulnerable in Lebanon – notably refugees. Struggling with a severe economic crisis, high inflation and poverty, Lebanon is also the country with the highest number of refugees per capita in the world – approximately 1.5 million refugees in total. Amid increasing numbers of Syrian refugees arriving in Cyprus, the Cypriot government announced that it was suspending examination of asylum requests, and wanted EU partners to reconsider the status of certain areas of Syria, so as to declare them safe for refugee returns. EU leaders recalled the need to ‘achieve conditions for safe, voluntary and dignified returns’ of Syrian refugees based on the UNHCR definition. The European Council tasked the High Representative / Vice-President and the Commission with examining and improving the efficiency of EU assistance for Syrian refugees and displaced people in Syria.  

Main message from the European Parliament President: Metsola noted that ‘the European Parliament voted overwhelmingly to have the Islamic Revolutionary Guard Corps listed as a terrorist organisation. We maintain that’.

Strategic agenda

As flagged up in the EPRS outlook, this meeting was also the moment to take stock of preparations for the next strategic agenda which have been going on in small groups of Heads of State or Government in recent weeks. Michel informed the members of the European Council of the results from the various small group sessions and indicated the next steps in the process.

In that context, the European Council’s indicative leaders’ agenda had also envisaged a discussion on internal reforms. Neither that topic, nor the specific call from the European Parliament to open a convention for Treaty change were addressed at this meeting.

Read the complete briefing on ‘Outcome of the special European Council meeting of 17-18 April 2024‘ in the Think Tank pages of the European Parliament.

Ukraine's anti-corruption agency on Tuesday accused the country's agriculture minister of illegally appropriating state land worth more than $7 million between 2017 and 2021.

Lead MEP Javi López (S&D, ES) will brief journalists on the revised rules following the final plenary vote.
Committee on the Environment, Public Health and Food Safety

Source : © European Union, 2024 - EP

Lead MEP Javi López (S&D, ES) will brief journalists on the revised rules following the final plenary vote.
Committee on the Environment, Public Health and Food Safety

Source : © European Union, 2024 - EP

By Julia Payne

BRUSSELS, April 22 (Reuters) - The EU needs to rethink its policies to make a 2035 ban on new petrol car sales feasible as electric vehicles (EVs) remain unaffordable and alternative fuel options are not credible, the EU's external auditor said, jeopardising its 2050 climate goals.

The 27-member bloc wants to achieve net zero emissions by 2050, meaning it will emit no more than it can balance out with measures to remove carbon dioxide from the atmosphere such as reforestation programmes.

It hopes to meet its targets with the widespread use of electric vehicles as road transport accounts for nearly a quarter of its emissions.

The EU wants to have at least 30 million zero-emission cars on European roads by 2030, or about 12% of the current car fleet. However, the European Court of Auditors (ECA) cautioned the bloc may create new economic dependencies and hurt its own industry.

As it stands, high EV production costs in Europe means the bloc will have to rely on cheap imports, mainly from China, if it sticks to the 2035 goal. China accounts for 76% of EV battery output compared with the EU that represents less than 10% of production globally.

"The EU faces a conundrum, how to meet goals without harming industrial policy and hurting consumers," Annemie Turtelboom, an ECA member, told reporters. She added that 2026 will be a key year for a policy review.

Tesla is the leading EV maker in the United States and Europe but has come under pressure to slash prices due to competition from Chinese cars. Similarly, European carmakers like Stellantis that owns Peugeot and Fiat, and Renault are now racing to develop their own affordable EV models.

While EV purchases have been on the rise in the EU, the increase was largely due to subsidies. Further, charging infrastructure is lacking with 70% of charging points concentrated in just Germany, France and the Netherlands. The EU is falling short of its aim to set up 1 million charging stations across the bloc.

"(EV) prices would need to halve and subsidies do not seem to be a viable tool ... Batteries alone already costs 15,000 euros when produced in Europe," Turtleboom added when speaking to reporters.

Alternative fuels like biofuels, e-fuels or hydrogen remain uneconomic at commercial scale.

Adding to the difficulties in hitting its 2050 goal, the ECA said the EU has not cut real CO2 emissions from cars despite new testing standards and measures such as Euro 6.

In a January report, the ECA attributes this to the gap between laboratory tests and real world emission tests. The Commission was relying on lab tests, which created a skewed version. In reality, average emissions from diesel cars are the unchanged from 2010 at 170 grams of CO2 per kilometre while petrol cars are just down 4.6% at over 160 g CO2/km.

"Despite lofty ambitions and strict requirements, most conventional cars still emit as much CO2 as 12 years ago." Nikolaos Milionis, ECA member, said in a statement, attributing part of the failure to a rise in the average weight of cars. (Reporting by Julia Payne; editing by David Evans)

Tuesday, 23 April

Source : © European Union, 2024 - EP

Tuesday, 23 April

Source : © European Union, 2024 - EP

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