Hungary on the menu — EPP goes to Greece — Russia’s frozen assets scoop – POLITICO
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- November 18, 2022
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By SUZANNE LYNCH
with ZOYA SHEFTALOVICH
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DRIVING THE DAY: RULE-OF-LAW SHOWDOWN
HUNGARY IN FOCUS: Ministers from across the EU meet today in Brussels for the General Affairs Council, and there’s one issue set to dominate: Hungarian Prime Minister Viktor Orbán’s never-ending clash with Brussels is coming to a head, and it’s … all about the money.
DETAILS: The EU may see itself as a noble institution, formed in the aftermath of World War II with the aim of creating a community of like-minded countries with similar values. But when it comes down to it, for a lot of member countries, EU membership is about cold, hard cash and the promise of economic prosperity.
The numbers: For Hungary, the magic number is €7.5 billion — that’s what the European Commission is threatening to cut in regular EU funds to Hungary due to the country’s flagrant breach of rule-of-law standards. In addition, another €5.8 billion in pandemic recovery cash is on the line. And boy, does Hungary need it. Inflation has soared past 20 percent, and the country has seen widespread protests about teachers’ pay and conditions.
The dates: Hungary has until this Saturday, November 19, to enact 17 measures set out by the European Commission to meet its concerns about democracy and rule of law, or it risks losing part or all of the €7.5 billion. Then, the Commission will give its assessment, with November 30 now the likely date. On December 6, EU finance ministers will formally have their say on whether to release the money. But the word around Brussels is that it’s a done deal.
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Hostage tactics: As my colleagues Paola Tamma and Lili Bayer write in a new piece out this morning, the Commission is expected to unlock the funds. As they put it: “Orbán has taken the EU hostage, essentially demanding billions in exchange for lifting vetoes on everything from Ukraine aid to a global corporate tax deal.”
Not happy: But while ministers will have the final say, expect a huge row within the Commission about releasing the cash. The European Parliament is already up in arms. “If the Commission releases the money to Viktor Orbán, Ursula von der Leyen will be personally responsible for turning Hungary into a swamp of corruption,” Moritz Körner, a German MEP with the liberal Renew Europe group, said Thursday.
Many EU countries are also not happy — as illustrated by a declaration signed by Belgium, Ireland, Luxembourg and the Netherlands calling on the Commission to undertake a “thorough and updated risk analysis” of the 17 measures to ensure there is no further threat to the union’s “financial interest.”
More threats: Hungary’s negotiating tactics have involved not just holding up a global corporate tax deal and blocking €18 billion in funds for Ukraine. Playbook has learned Budapest has yet to agree its plan with the Commission on the Asylum, Migration and Integration Fund — a key part of the EU’s migration and home affairs program. Along with Cyprus, Hungary has yet to advance its plan.
What to watch: Today’s meeting is expected to generate some testy exchanges — some member countries, for example, are primed to raise specific issues, for example the fact that some districts in Hungary that are not controlled by Orbán’s Fidesz party are struggling for cash. More statements are expected — from the Benelux countries and France and Germany.
Also on the agenda: Commission Vice President Maroš Šefčovič is set to update ministers on Brexit — but despite positive noises from (yet another) British prime minister, there is little specific progress to report on the Northern Ireland protocol talks.
Now hear this: The special guest on this week’s EU Confidential podcast is Zsuzsanna Szelényi, a former political colleague turned harsh critic of Orbán. She charts the Hungarian prime minister’s journey from democratic hope to what she describes as increasing authoritarianism.
**Know first and save time with POLITICO Pro. Get prime and customized access to exclusive reliable scoops on the policy developments in Europe that matter to you. Learn more here.**
FOCUS ON PARLIAMENT
2024 IN SIGHT: The next European parliamentary election may be 18 months away, but the European People’s Party is already limbering up for the contest. Playbook is told EPP leaders will be gathering in Athens in early December for a meeting, the first in a series ahead of the 2024 ballot. The idea is to get the EPP party around a table to talk strategy and take stock, away from the usual pre-European Council pow-wows in Brussels, when the focus is usually on the upcoming summit.
HAPPENING TODAY: But before that, there will be smiles all round in Lisbon during the second day of the EPP political assembly, with those gathered welcoming a new member into the fold: OL’anO, the party of Slovak Prime Minister Eduard Heger.
It’s a welcome boost for the EPP, which is no longer the big beast in the European political jungle. Compared with the heyday of the Angela Merkel years, the EPP lacks some of the heavy-hitting political names around the Council table, with leaders like Germany’s Olaf Scholz, France’s Emmanuel Macron, Spain’s Pedro Sánchez and Italy’s Giorgia Meloni all members of rival groups. But the EPP has high hopes that its political fortunes may be changing.
ALWAYS LOOK AT THE BRIGHT SIDE: The recent Swedish election returned an EPP leader to the European Council table: Ulf Kristersson, the new Swedish prime minister. Meanwhile, Ireland’s Leo Varadkar is set to become Taoiseach again next month as part of a rotating arrangement between the coalition government. Looking further afield, the EPP hopes that elections in Spain and Poland next year could return EPP prime ministers.
SPEAKING OF PARLIAMENT … The main political groups agreed Thursday evening to back a resolution on Russia, to be voted on next Tuesday at the plenary session, designating the country as a state sponsor of terrorism and a “state which uses means of terrorism.” Lithuanian MEP and former Prime Minister Andrius Kubilius told Playbook the resolution, which he hopes will be backed by a majority, “sends a strong political message, while also calling for new legal instruments” to be created by the Council to impose consequences on the perpetrator.
The designation is controversial. The Biden administration has resisted the move, despite strong calls from many in Congress. As with all votes on Russia in the European Parliament, it will be revealing to see how each MEP — and their political groups — vote next week.
LAST-MINUTE SURPRISE: At the COP27 U.N. climate summit in Sharm El-Sheikh, the EU last night proposed the establishment of a new global fund to aid the victims of climate disasters in the most vulnerable countries, our man on the ground Karl Mathiesen writes in to report. In a dramatic late-night meeting, the EU shifted from its previously held position on the most explosive subject at the talks. Australia then backed the plan, leaving the U.S. isolated.
But there are conditions: No amount of money can repair the damage of climate change if emissions are not cut rapidly, so the rider the EU attached was hefty: global emissions must peak before 2025. That means a new round of climate pledges ASAP. The EU also insisted on talks on aligning all financial flows with global climate goals.
Over to you, China: Without the world’s biggest emitter changing its plan to grow emissions until 2030, peaking in 2025 will be impossible. So this was a gauntlet thrown down to Beijing.
What next? Talks are supposed to end today — but with progress still patchy and a major new proposal to discuss, none of the delegates in Sharm El-Sheikh are booking scuba courses for the weekend, Karl reports in today’s Morning Energy newsletter.
Green revolving door: Talks on loss and damage in Sharm are being guided by Germany’s climate envoy Jennifer Morgan, who’s also the former head of Greenpeace. Karl also has a story out this morning looking at how the green movement is taking bigger and bigger roles in government — trading the moral high ground for the powers of high office.
Tune in for more: POLITICO’s team on the ground in Sharm El-Sheikh pick over what was achieved in the talks — and what wasn’t — in a live Twitter Space discussion at 3 p.m. Details here.
IN OTHER NEWS
MIGRATION MEETING: A special Justice and Home Affairs Council has been scheduled for November 25. The meeting was called by the Czech Council presidency on the back of the recent standoff over migrants arriving to Italy, and the subsequent row between Italy and France. Other issues will also be discussed, such as the recent increase in migrants coming into the EU through Serbia.
Also one to watch: Next week’s debate in Strasbourg on migration, where Spain is also expected to get some unwanted attention over the death of refugees at Melilla in June, following a recent BBC investigation.
FROZEN ASSETS: The EU has frozen a total of €68 billion in Russian assets — most of which are in Belgium, according to an internal Commission document seen by POLITICO. The wide-ranging paper, covering all parts of the Commission’s interactions with Ukraine, was obtained by Playbook’s own Jakob Hanke Vela.
Follow the money: Belgium accounts for €50 billion of the €68 billion figure, Paola Tamma writes in to report. Luxembourg is second with €5.5 billion. Together with Italy, Germany, Ireland, Austria and France, they account for over 90 percent of the frozen assets.
Don’t know, don’t tell: But the EU doesn’t know how much of Russia’s national reserves is frozen in the EU. The internal document gives the approximate figure of €33.8 billion, but adds that “this is now under assessment, so not to be quoted.”
Confiscating assets: The Commission is still waiting for the Council to approve a decision to make sanctions evasion an EU crime, which would facilitate the confiscation of assets in case of criminal conviction. The problem — somewhat surprisingly — is Poland, which has stalled the process, according to the document. While Warsaw is entirely on board, it first needs to pass a national law, which it’s in the process of doing, a diplomat said.
TODAY’S MUST READ: In the story of Europe’s energy crisis, the tiny German town of Lubmin is ground zero, write POLITICO’s Charlie Cooper and Louis Westendarp in a brilliant feature out this morning. The town, which neighbors the electoral district that Merkel represented for 31 years, is where the disputed, lucrative and now all-but defunct Nord Stream gas pipelines make landfall. Worth your time.
MBS REPUTATION REHAB UPDATE: The Biden administration declared last night that the high office held by Saudi Arabia’s Crown Prince Mohammed bin Salman should shield him from lawsuits for his role in the killing of journalist Jamal Khashoggi. Details here.
TRADE WOBBLES: There was more bad news for the EU-Canada trade deal known as CETA last week, after the Irish Supreme Court ruled the country’s proposed ratification of the agreement is unconstitutional. Dublin now faces an unenviable task: holding a referendum on the matter, or amending national legislation that could open up a legal quagmire and is highly complex.
Insight: Playbook spoke to Patrick Costello, the Irish member of parliament who successfully challenged the ratification of the deal. “I’ve no issue with free trade,” said Costello, a Green party member. “Some people are trying to paint me as an anti-trade radical. Trade is an EU competence, and trade between Ireland and Canada is a good thing. But my concern is the role the investment court can play.”
The problem: Costello echoes some of the concerns that have been knocking around discussions on CETA and other trade deals for years, which center on the investment court systems established to resolve disputes. Costello said that could have a “chilling effect” on Ireland’s ability to pass “progressive legislation,” as he sees it — particularly in fields like climate change. Among the precedents cited in his legal action is the Eco Oro V. Colombia case, which saw the company sue the state for billions, thanks to the existence of an investor-state dispute settlement system.
State of play: CETA has been provisionally in place since 2017 and is supposed to come fully into force once all EU member countries ratify it. The fact it was a “mixed agreement” meant the trade parts of the deal — which are an EU competence — could go ahead, while other parts, for example, related to the investment court, could be subject to challenge at national level. Ireland is not the only country to throw a spanner in the works: Germany has yet to ratify it in full, though the coalition government said it will in the coming weeks.
Trade optics: As Ireland grapples with what to do next — the government in Dublin is hoping a referendum won’t be needed — the latest bump in the road is hardly a positive when it comes to the EU’s trade agenda. Years after the EU-Canada trade deal was signed, the fact CETA still has not been fully ratified is not a good look. After all, if the EU can’t sign a trade deal with a squeaky-clean, “like-minded” country, as the jargon goes, who can it do business with?
MORE WOBBLES: Next month, when senior European and American officials gather in Washington for the set-piece EU-U.S. Trade and Tech Council, the talks are likely to be hampered by the transatlantic spat over American subsidies for electric car production, report POLITICO’s Mark Scott, Barbara Moens and Samuel Stolton.
FRIDAY FEATURES: In this week’s Westminster Insider podcast, host Ailbhe Rea looks back at the economic program still haunting the current debate: the austerity of the early 2010s. And Paul Dallison’s Declassified column is a World Cup special: “Fake beer, fake fans, real problems.”
**On December 7, POLITICO will unveil its POLITICO 28 list during its annual gala dinner. Our award-winning event and publication will recognize the 28 most powerful players driving change and solving problems in European politics, policy and business for the year 2023. The event will also feature an exclusive interview with European Parliament President, Roberta Metsola. Register here.**
— General Affairs Council begins at 10 a.m. Press conference expected at around 5:15 p.m. Watch.
— COP27 U.N. climate summit concludes in Egypt. Commission Vice President Frans Timmermans delivers speech at closing ceremony.
— European Commission President Ursula von der Leyen continues visit to Bahrain; delivers speech at the IISS Manama Dialogue.
— EU High Representative Josep Borrell in Uzbekistan; meets with President Shavkat Mirziyoyev; attends Samarkand EU-Central Asia Connectivity Conference.
— Commissioner Margrethe Vestager meets Spanish Foreign Minister José Manuel Albares and Economy Minister Nadia Calviño in Madrid.
— Commissioner Janez Lenarčič in Albania; press conference with Defense Minister Niko Peleshi after 10:15 a.m. Watch.
— Commissioner Ylva Johansson participates in the G7 interior and security ministers’ meeting in Wiesbaden, Germany.
— European Parliament President Roberta Metsola in Barcelona; delivers closing remarks at the Barcelona-European digital capital conference, 1:15 p.m.
— ECB President Christine Lagarde delivers keynote speech at the Frankfurt European Banking Congress at 9:30 a.m.
— EPP political assembly continues in Lisbon.
SPOTTED … at a Thanksgiving reception hosted by the U.S. Mission to the EU on Thursday night: Deputy chief of mission Kelly Adams-Smith and spokesperson Eric Barbee; Álvaro de Elera, member of cabinet of Commission Vice President Věra Jourová; Adrian Garcia-Esteve of Instinctif; Erica Lutes, executive director of Fulbright Program Brussels; Antonio Amendola of the Transatlantic Alumni Network; Dan Michaels of the Wall Street Journal.
BIRTHDAYS: MEPs Krzysztof Jurgiel and Kathleen Van Brempt; Olivier Bailly from the European External Action Service. Proclamation of the Republic of Latvia.
Celebrating Saturday: MEPs Katarina Barley and Elżbieta Kruk; Former MEPs Rory Palmer and Bogdan Brunon Wenta; Former MEP Gianni Pittella, now the mayor of Lauria; Prime Minister of Denmark Mette Frederiksen; Chief executive of Square Jack Dorsey; Abdel Fattah el-Sisi, president of Egypt.
Celebrating Sunday: MEPs Sira Rego and Eleonora Evi; Former MEPs João Ferreira, Hannu Takkula, Diane James; Friends of Europe’s Giles Merritt; Yahoo Finance’s Julie Hyman; RAI’s Emma Farnè; Director of Debating Europe Adam Nyman; U.S. President Joe Biden turns 80.
THANKS TO: Laura Kayali, Paola Tamma, Lili Bayer and our producer Grace Stranger.
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