Brussels Playbook: Poland gets the cash — Denmark votes — Gas ban dissipates

 

Brussels Playbook: Poland gets the cash — Denmark votes — Gas ban dissipates

BY JAKOB HANKE VELA AND SUZANNE LYNCH

June 1, 2022 7:06 am

https://www.politico.eu/newsletter/brussels-playbook/poland-gets-ee-denmark-votes-gas-ban-dissipates/

 

POLITICO Brussels Playbook

By JAKOB HANKE VELA and SUZANNE LYNCH

with ZOYA SHEFTALOVICH

 

POLAND WINS 

COMMISSION TO UNLOCK RECOVERY CASH FOR POLAND: European Commission President Ursula von der Leyen is today set to approve Poland’s national recovery plan, under which the country can receive around €24 billion in grants €12 billion in ultra-cheap loans.

 

Unusual: The College of Commissioners, meeting today, will discuss the step in person — a first, as all other national plans were approved via written procedure without discussion, a senior official told us. That alone is a sign of the scruples this is causing to some commissioners.

 

Big objectors: Playbook hears four commissioners — including heavyweights First Vice President Frans Timmermans, Vice President for Values and Transparency Věra Jourová and competition chief Margrethe Vestager — will today raise objections to the plan, as Poland still hasn’t reinstated the judges it illegally fired, despite a Court of Justice of the EU ruling. Their argument is not that Poland shouldn’t get EU cash, but rather that it hasn’t taken the necessary legal steps to meet basic preconditions for the Commission to approve its plan.

 

Rule of law concerns: Warsaw suspended critical judges under a provision illegal under its own law, but also ruled illegal by the EU’s highest court, which ordered the Euroskeptic government to immediately reverse the decision. The Commission held up approving Warsaw’s spending plan as long as Poland did not comply with the ruling. But today, Brussels will give in, essentially admitting defeat. Why is the Commission ceding that crucial leverage, you ask?

 

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Holding EU hostage works: Warsaw has been vetoing a planned EU law to impose a minimum tax of 15 percent for multinationals, which was agreed internationally at the OECD. EU finance ministers meeting last week were supposed to debate the planned law, but had to postpone the discussion, given Warsaw’s persistent refusal to come on board.

 

Critics say Warsaw has been playing hostage diplomacy with the tax proposal, in order to force Brussels to unlock its recovery cash. U.S. Treasury Secretary Janet Yellen said as much publicly, remarking last month that “Poland has some issues with the EU — frankly, I don’t think that they largely pertain to the global minimum tax itself, but rather other issues between Poland and the EU.” Warsaw refutes the accusation, arguing it has substantive problems with the minimum tax plan — but von der Leyen must hope the critics are right, as otherwise she will have approved the cash in vain and Poland will continue to block the tax.

 

Official spin: Of course, von der Leyen will have to sell the smelly deal today, so she will likely highlight progress on the disciplinary chamber, which Poland is reforming, even though critics and legal experts have warned that Warsaw could still effectively punish judges for the content of their rulings. She’s also likely to point to “milestones” agreed with Poland as part of the national recovery plan, which contain rule of law obligations.

 

But there’s no denying that von der Leyen is giving up her biggest lever for a host of smaller — untested — ones (the milestones) which, crucially, are the result of a negotiation with the Polish government.

 

DANISH DEFENSE VOTE  Share on Twitter  Share on Facebook  Share on Linkedin  Share on Handclap2

REFERENDUM DAY: Danes goes to the polls today in a referendum that will decide if the country will scrap its opt-out from EU defense and security policy — the latest indication that Russia’s war on Ukraine is dramatically changing the European security landscape. Scene-setter here.

 

THE GHOST OF MAASTRICHT: The Nordic nation secured an opt-out from EU security and defense policy 30 years ago, one of four arrangements Copenhagen negotiated with Brussels after Danish voters rejected the Maastricht Treaty in 1992.

 

THE PUTIN EFFECT: But Russia’s war has changed the dynamic. Prime Minister Mette Frederiksen declared that “historic times call for historic decisions” when she announced the referendum in March. It comes as neighboring Finland and Sweden have taken wide-reaching decisions on their defense policy by applying to join NATO — a direct consequence of Russian President Vladimir Putin’s invasion.

 

THE DANISH PARADOX: Despite not being privy to the EU’s defense policy, Denmark is an active NATO member and has already pledged to spend an extra 7 billion kroner on defense over the next two years. The main practical upshot of a Yes vote would be that Denmark could participate in the EU’s common security and defense policy missions.

 

WHAT THE POLLS SAY: A poll from public broadcaster DR, published Tuesday, showed 44 percent of voters are expected to vote Yes, while 28 percent are expected to say No. But there is a crucial bloc of undecided voters.

 

NOT SO FAST: Long-term observers of Danish politics and voting patterns warn that it’s not a done deal. Danes have a history of voting against further EU integration. In 2015 they voted against a proposal to end an opt-out from EU justice and home affairs, amid fears of losing sovereignty over migration policy.

 

Speaking in Brussels after Tuesday’s Council summit, Frederiksen made a final plea to Danes to vote for an opt-in. “The world has changed, our continent has changed, and the requirements of Europe and Denmark have also changed, not least regarding defense. That is why it is necessary — and in my view logical — that European countries move closer together, also regarding defense and security.”

 

 

SANCTIONS UPDATE  Share on Twitter  Share on Facebook  Share on Linkedin  Share on Handclap9

NEXT STEPS PLEASE: Russia’s EU neighbors — including Lithuania, Latvia, Estonia and Poland — have led the charge for faster and harsher sanctions targeting Moscow since the beginning of the war. And some of their leaders are already calling for the next sanctions package.

 

Paying Putin: They argue there’s no time for the EU to rest on its laurels, as every month Europe keeps sending money to Russia is potentially prolonging the war. “The stronger the sanctions, the quicker the war will end,” Latvia’s Prime Minister Krišjānis Kariņš said earlier this week. “Three months after the start of the war, we have gone sanction after sanction after sanction, ever tighter ever tighter, notwithstanding the fact that the sanctions also negatively affect us, European Union’s member states.”

 

Reality check: Don’t expect a gas embargo anytime soon. After a month of haggling only to get a watered-down compromise on an oil embargo against Russia (here are six things you should know about that), a ban on Russian natural gas is far-fetched, to say the least.

 

Out of energy: Many EU leaders say they are eager to see Putin and his armies defeated, or at least “not winning” in Ukraine, as Germany’s Chancellor Olaf Scholz puts it. But when it comes to gas, a large group of countries, including Germany, is clear it won’t support sanctions. Berlin says it will need to keep using Russian gas until 2024. And as POLITICO’s Matthew Karnitschnig points out in his essential analysis, the beauty of the EU’s Russian oil ban for Germany is that it is a highly symbolic move that will make it easier for Berlin to continue to resist what it most fears: a natural gas embargo.

 

Gassy giants: Multiple EU leaders insist we have now reached the point at which the penalties against Moscow will have higher costs and more risk of damage to the EU’s own economy — and potentially to their own jobs as voters grow increasingly angry over the soaring cost of living.

 

Austrian Chancellor Karl Nehammer, whose country sources around 80 percent of its natural gas from Russia, said the gas embargo will not be discussed in a next sanctions package … Belgium’s Prime Minister Alexander De Croo on Tuesday said this is the “end of the road” when it comes to energy-related sanctions. Besides Germany and Austria, a number of landlocked countries such as the Czech Republic, Hungary and Slovakia would also run into trouble without Russian gas.

 

Too sensitive: Apart from the economic concerns, there’s the politics. Ursula von der Leyen is unlikely to get her fingers burned in the near future on a gas embargo, after she struggled to get the oil ban through. Read more by POLITICO’s Barbara Moens on the (evaporating) chances of a gas embargo.

 

MACRON PRAISES ‘STRATEGIC AMBIGUITY’ ON GAS BAN: But French President Emmanuel Macron did not exclude a possible embargo on Russian gas as a next step if the situation in Ukraine gets worse. “I think nothing should be ruled out because nobody can tell how things will evolve, how the war will evolve,” Macron told reporters Tuesday. “We have to keep a credibility, and this strategic ambiguity is also useful,” he said, suggesting that the threat of a gas ban could have a deterrent effect on Moscow.

 

Easier for Paris: “France is in a very special situation, because we are very little dependent and we can very quickly today organize ourselves not to have problems,” Macron acknowledged, noting that such a measure would be more problematic for others.

 

How temporary is the ‘temporary’ pipeline exemption? Setting a timeline for ending the sanctions exemption for oil arriving via pipeline would require a leaders-level discussion about money, according to one of Hungarian Prime Minister Viktor Orbán’s top advisers. Balázs Orbán (no relation), who serves as the Hungarian leader’s political director, told POLITICO’s Lili Bayer on the sidelines of the EUCO summit that the agreement leaders reached was about the bloc’s “unity.” But, he said, “if we would want in the longer run to detach landlocked countries from Russian oil,” then investments would be needed that don’t have a “commercial” but rather a “geo-strategic” basis, and financing would thus have to be “ensured in some way.”

 

IN OTHER NEWS  Share on Twitter  Share on Facebook  Share on Linkedin  Share on Handclap1

NEW GERMAN TANK DEAL: Berlin will help get Soviet-era tanks from Greece to Ukraine by sending Athens modern German vehicles to replace them, Olaf Scholz announced Tuesday. Ironically, the Greek BMP-1s that will be sent to Ukraine are originally of East German origin, while Berlin will send Marder infantry fighting vehicles to Athens as replacement — the same vehicles Ukraine has tried in vain to get from Berlin. More from Hans von der Burchard

 

GERMANY LOSES EU SWAY AS EAST TURNS AWAY: Ostpolitik is now Lostpolitik. Russia’s war and Berlin’s reaction to it have eroded Berlin’s authority and influence in Central and Eastern Europe, write POLITICO’s David M. Herszenhorn, Jacopo Barigazzi, Barbara Moens and Hans von der Burchard.

 

BLACK SEA BLOCKADE UPDATE: Brussels and Kyiv are staring at the brutal reality that there is simply no way to export Ukraine’s massive harvests without opening a maritime corridor through the Black Sea, report POLITICO’s Joshua Posaner, Eddy Wax and Hanne Cokelaere.

 

STATES OF EMERGENCY: The extended reliance of the Czech Republic and Hungary on emergency powers is both puzzling and a massive risk for their governments, argues commentator William Nattrass in this opinion piece for POLITICO.

 

BREXIT LATEST: The Northern Ireland protocol returns to the agenda today with European Commission Vice President Maroš Šefčovič due to meet Ireland’s Sinn Féin chief Mary Lou McDonald and Michelle O’Neill, Sinn Féin’s leader in Northern Ireland. Despite emerging as the largest party in last month’s Northern Ireland assembly election, O’Neill has not been sworn in as first minister as the unionist DUP continues to block the formation of an assembly in Stormont.

 

Latest update: McDonald said the two leaders will also meet European Parliament Vice President Pedro Silva Pereira and political groups, as well as the Commission’s top Brexit officials. The aim of the visit is to “brief EU leaders on the political situation in Ireland, north and south, on the levels of support for the protocol across communities in the north of Ireland and the need for the British government not to breach international law or take unilateral action,” she told Playbook ahead of today’s visit.

 

MONKEYPOX IN EUROPE: The monkeypox outbreaks across Europe began weeks earlier than the first public reports, according to the World Health Organization. POLITICO’s Helen Collis has more.