Brussels Playbook: Gas troubles — 100 days of Metsola — Hungary fallout

 

Brussels Playbook: Gas troubles — 100 days of Metsola — Hungary fallout

BY SUZANNE LYNCH AND JAKOB HANKE VELA

April 28, 2022 7:00 am

https://www.politico.eu/newsletter/brussels-playbook/gas-troubles-metsolas-100-days-hungary-fallout/

 

POLITICO Brussels Playbook

By SUZANNE LYNCH and JAKOB HANKE VELA

with ZOYA SHEFTALOVICH

 

THREAT GETS REAL: Russia followed through on its threat to cut energy supplies to Europe on Wednesday, as gas stopped flowing to EU members Poland and Bulgaria. As outlined previously in Playbook, both countries are well-positioned to weather the storm (Greece also said it would step in to help Bulgaria on Wednesday). But the development opens up a potential new front in the standoff between Moscow and Brussels over Russia’s war on Ukraine, as the Kremlin seeks to instrumentalize its energy leverage over Europe.

 

BIG QUESTION: Is this a shot across the bows, or is it the beginning of a Russian strategy shift? Gas prices soared on Wednesday, reflecting in part the fear that more countries could be in the firing line.

 

Power games: Yes, Europe is hooked on Russian energy; but Russia also depends on European countries, which are by far the biggest buyers of its energy exports. Though President Vladimir Putin has been conscious for a while of his country’s dependency on the European market — he announced plans for another Russia-China pipeline during his visit to Beijing in February, for instance — infrastructural limitations mean it’s unlikely non-European buyers could make up for a major drop-off in trade with the Continent.

 

Clear as oil: As our colleagues America Hernandez and Paola Tamma write, despite European Commission President Ursula von der Leyen’s insistence on Wednesday that payments in rubles would breach EU sanctions, some diplomats say the guidance from Brussels has so far been unclear.

 

**A message from ETNO: European telecom companies continue supporting Ukrainian refugees. Learn more about our voluntary actions to tackle the crisis, including free calls, roaming and distribution of SIM cards. Read also the joint commitments recently taken by 34 EU and Ukrainian operators to keep refugees connected.**

 

At a meeting of EU ambassadors on Wednesday, several countries criticized the Commission’s approach, in particular its guidance earlier this month that companies could open accounts in Russia to pay for gas and oil but then it was up to Russia to convert it into rubles. Their point was that this presupposes some cooperation on the Russian side — which is unlikely.

 

SANCTIONS LATEST: Meanwhile, a new package of EU sanctions is now expected next week. “The sixth package of sanctions will come in due time. We’re working intensively on it,” von der Leyen told reporters in Brussels on Wednesday. While senior Commission officials have been working intensively on the new measures, EU countries are expected to meet with senior members of von der Leyen’s team, including chief of staff Björn Seibert, in the coming days (possibly over the weekend).

 

Details: A curb on Russian oil imports is expected — but still up for debate is what form the sanctions will take. Countries including Germany favor some kind of transition period, rather than a price cap or imposing tariffs on Russian oil imports.

 

Watch out for nuclear: While much of the discussion about EU sanctions on Russia since the Ukraine invasion has focused on fossil fuels like gas and oil, some countries are pushing for nuclear fuels to also be targeted. (Russia is the source of some nuclear fuel and infrastructure in Europe.)

 

THE WAR JUST GOT HOTTER: Russia’s war in Ukraine is at risk of morphing into something even more dangerous, writes POLITICO’s Jamie Dettmer this morning. “Statements by senior United States and Russian officials the past few days reflect the mounting danger of a broader and more unpredictable war. They have also included — once again — thinly disguised Russian warnings on the perils of a nuclear exchange.”

 

ICYMI — EU EASES TRADE WITH UKRAINE: The European Commission is proposing a temporary lifting of tariffs and quotas for all Ukrainian imports, according to a draft regulation dated Wednesday, to help counter the “negative economic impact” of Russia’s invasion. The suspension of import duties comes on top of tariff reductions earlier agreed to in the Association Agreement between the EU and Ukraine.

 

**Europe’s biggest start-up and tech event is back! Viva Technology brings together start-ups, CEOs, investors, global tech actors, and well pronounced speakers. It will take place on June 15-18, in Paris. Find out more.**

 

100 DAYS IN OFFICE: Today marks 100 days since Roberta Metsola became president of the European Parliament. The Maltese politician has certainly shaken up the image of the office — smart and articulate, she is also relatively young by the standards of EU officialdom (she turned 43 the day she was elected).

 

First off the mark: But it was her surprise decision to travel to Kyiv five weeks after Russia’s latest invasion that set her apart — on April 1, Metsola became the first leader of an EU institution to visit Ukraine after the war began.

 

So what prompted the trip? “It was a difficult decision to take at the time — Kyiv was still surrounded — but it was, I think necessary,” Metsola told Playbook Wednesday. “I was invited by the president of the Ukrainian parliament — the Verkhovna Rada. We had been in almost daily contact together … officially and unofficially online and through WhatsApp, etc. When I was invited, I didn’t hesitate.”

 

Trip report: Metsola traveled for 13 hours by train accompanied by Ukrainian special forces. What she found was a deserted city: “Empty roads, many checkpoints; but entering the parliament, it was full of life, hundreds of members conducting politics, meetings, drafting political statements … You could tell that they were fighting for their country … and that was what struck me.”

 

Presidential demands: Metsola says Ukrainian President Volodymyr Zelenskyy was upfront about what his country needed: “His demands were clear: I need logistical help. I need financial help, and I need political solidarity afterward,” she said. Among the specifics Metsola offered was to make contact with non-EU countries affected by the curb on grain exports, particularly in Africa. She said the European Parliament also indicated it would be prepared to back a full embargo on gas — then, as now, a politically difficult ask for the EU.

 

Reality check: On the other big Ukrainian request — EU membership — Metsola was less concrete. She implied Ukrainian accession will happen: “There is a sense that, look 97 percent of Ukrainians want to join, so there is no scenario where we have come this far and we suddenly say actually, this is not a good idea.” However, she suggested that actually joining the club will take time, pointing out that “we also owe an answer to the Western Balkan countries that have been waiting for a long time, and we have Moldova and Georgia at this stage.”

 

Zelenskyy’s skills: “I was struck by the preparedness of the president’s team. And their direct demands, which obviously were tailor-made, when they speak with different parliaments and different country leaders … they know what they want, and how to get it. And I think that has been extremely effective.”

 

VISION FOR EUROPE: The Conference on the Future of Europe wraps up next month, with May 9 expected to be a big day in Strasbourg, with MEPs, Ursula von der Leyen and French President Emmanuel Macron (representing the Council presidency) due to receive the conclusions from the exercise. Asked how the EU could become more democratic, Metsola suggested Parliament should have a bigger role in deciding who runs the European Commission. “I think that we have a golden opportunity … to send a message on the ninth of May … to set the stage for what comes next,” she said. “We will immediately trigger a process, which will follow up on the conference.”

 

Looking ahead: “I look at the 2024 [European parliamentary] elections as the possibility for us to identify where and who should be voted” to lead the EU, she said. “Now whether it should be in the treaty, we’ll have to see whether it should change.”

 

HAPPENING TODAY: Metsola and the presidents of Parliament’s political groups will meet with NATO Secretary-General Jens Stoltenberg behind closed doors, for a debrief on NATO’s discussion at the Ramstein base and on future work.

 

HAPPENING NEXT WEEK — CATALAN DEBATE: The European Parliament’s Conference of Presidents is expected to decide today whether to schedule a plenary debate next week in Strasbourg on claims by Catalan MEPs that Madrid spied on their phones. Metsola confirmed the matter would be discussed, but don’t hold your breath, because the main groups in Parliament are likely to decide against a debate. Metsola also noted that the Parliament has given MEPs and staffers opportunities to have their electronics checked for spyware, following allegations in the Pegasus Reports of EU governments spying on MEPs.

 

 

HUNGARY LATEST: As expected, the European Commission formally triggered its new rule-of-law mechanism on Wednesday against Hungary — a major step forward in the EU’s attempt to stall democratic backsliding in its own backyard. In an internal note, seen by POLITICO’s Lili Bayer, the Commission said “there are reasonable grounds” to conclude structural issues in Hungary “are indicative of breaches of the principles of the rule of law.”

 

Details: The Commission’s note ticked off a few of the issues it sees in Hungary: “Systemic irregularities, deficiencies and weaknesses in public procurement procedures.” It also cited an “unusually high percentage of contracts” awarded in single-bidder competitions and the funneling of contracts to “specific companies” that have grabbed large market shares as a result. In addition, it flagged “possible irregular auctioning of state-owned agricultural land” and pointed to “limitations to effective investigation and prosecution of alleged criminal activity.”

 

Questions remain: Noting that the Commission had not shared the text with Parliament, MEP Daniel Freund expressed concern it will focus on “corruption only and not on the independence of the judiciary.” He told Playbook: “Of course, if it focused on the judiciary, that would raise the question why it is not triggering sanctions against Poland too. In my view Poland also meets the criteria so the Commission should trigger the mechanism on Warsaw.”

 

Next steps: Prime Minister Viktor Orbán’s chief of staff, Minister Gergely Gulyás, confirmed that the Hungarian authorities had received the Commission’s letter and will respond with the government’s view today.

 

GRETA, CHANGED: During the pandemic, Greta Thunberg and the movement she inspired were forced online. That experience helped her reemerge as a different activist — with a tougher message. It’s not just the future we should worry about, she now declares, but the billions of people who are being hurt by climate change right now. Read our colleague Karl Mathiesen’s profile of Thunberg, which traces her evolution, including intimate moments when climate activists challenged her to see the world differently.

 

Climate, Changed: Karl’s story is part of a major new year-long POLITICO project called “Climate, Changed,” which launches today. Check it out here.

 

NO CITY FOR OLD FOLKS: Europe’s local leaders are scrambling to accommodate the growing number of aging urbanites, writes Aitor Hernández-Morales in his latest piece from POLITICO’s Living Cities Global Policy Lab.

 

**As the West is ramping up sanctions towards Russia, POLITICO Pro keeps you informed on any news regarding European trade policy. Contact us from your business email address to request a free trial.**