Brussels Playbook: Ukraine tariffs — Kaili kicks
back on kickbacks — German subsidies
BY JAKOB
HANKE VELA
APRIL 27,
2023 7:05 AM CET
Brussels
Playbook
By JAKOB
HANKE VELA
DRIVING THE
DAY: UKRAINE AGRI DRAMA
EU SEEKS
LAST-MINUTE DEAL ON TARIFFS: EU diplomats are seeking to strike an 11th-hour
deal with Eastern EU countries on agriculture, in order to extend Ukraine’s
tariff-free access to the EU market for another year.
Diplomats
are warning that the decision to extend that deal — which was postponed at the
last minute — is becoming a test of the EU’s credibility. A failure to extend
market access would throw into doubt Brussels’ promises to help Ukraine on its
path toward EU accession.
Refresher:
After Russia’s illegal and brutal invasion of Ukraine last year, Brussels
suspended all remaining import duties and quotas on Ukrainian goods for one
year to help Kyiv’s war-ravaged economy.
The
emergency liberalization comes on top of the EU-Ukraine Free Trade Area deal
from 2014, which cut most tariffs but maintained tariffs on certain industrial
and many agricultural goods to protect EU poultry, wheat and maize producers,
who struggle to compete with Ukraine’s highly productive and competitive agri
industry.
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Victims of
their own success: The emergency liberalization program worked, as Ukrainian
sales to the Union of maize, wheat, eggs and other products soared — in fact,
it has worked too well, at least in the eyes of Eastern farmers, who now warn
they risk going bankrupt amid plummeting prices.
While last
year European leaders feared grain shortages and a food crisis, the Continent
is now facing a new supply glut, as many traders stockpiled grain expecting
higher prices, but are now facing falling prices.
Turns out,
four decades after the EU’s infamous “lakes of milk” and “mountains of butter”
crisis, in a highly digitized economy where AI offers investment advice,
traders and governments alike are still terrible at predicting the future
supply of agricultural goods.
The question
now is whether the EU will extend the emergency liberalization for Ukraine for
another year. EU ambassadors were expected to vote on an extension on
Wednesday, but the vote was postponed to Friday, according to two diplomats and
one official.
Hungary, Poland,
Slovakia, Romania and Bulgaria have all called for the re-introduction of
tariffs on Ukrainian agri-food products. While several Western EU ambassadors
were ready to vote for an extension with a qualified majority (overruling the
opponents), the Swedish presidency of the Council of the EU and the Commission
are still hoping to strike a deal with the Easterners.
Can’t solve
every problem with money: EU countries have already agreed to grant the most
affected farmers in the Union’s East financial aid worth €100 million, but the
Commission has warned against using up all of the EU’s €450 million dedicated
agricultural crisis reserve on this one crisis — warning that it’s still early
in the year, and that the coming months will likely bring more problems for
farmers that will require aid … just think of the already looming droughts!
What’s
next: Time is running out for the EU to extend Ukraine’s tariff-free access,
which ends in early June but needs to be approved by the Parliament, after EU
ambassadors agree. “Friday is the latest possible date for a vote, in order to
get approval from the Parliament in time before the current regime lapses,” one
of the EU diplomats told Playbook.
REPORT
WARNS OF GROWING SHARE OF CONTAMINATED UKRAINIAN LAND: Russia’s invasion has
rendered almost 5 million hectares of Ukrainian agricultural land unsuitable
for use.
Mines,
contamination from explosives and armed fighting mean a growing share of land
is being lost, warns the GLOBSEC think tank in a new paper that will be published
today, and which Playbook readers can find here.
“With
174,000 square kilometers of potentially contaminated territories as of April
2023, Ukraine has become one of the most contaminated countries in the world
and currently faces enormous challenges in clearing its territory from mines
and unexploded ordnance,” warned Iuliia Osmolovska, director of GLOBSEC’s Kyiv
office, adding that according to some estimates, “land area of grain crops
could be reduced by 45 percent after two years of war.”
ALSO TODAY
— BJÖRN SEIBERT IN INDIA: Commission President Ursula von der Leyen’s chief of
staff Björn Seibert is arriving in India today, officials tell Playbook, to
prepare the first EU-India Trade and Technology Council meeting.
Seibert
will meet Foreign Secretary Vinay Mohan Kwatra and Commerce and Industry
Minister Piyush Goyal to prepare the first TTC meeting, which is penciled in
for May in Brussels. Von der Leyen announced plans to strengthen trade and
political ties with India during her trip to the country last year.
During his
trip, Seibert will also meet Prime Minister Narendra Modi’s sherpa, Amitabh
Kant, to discuss preparations for the G20 summit of the world’s biggest
economies in September.
PARLIAMENT
LATEST
KAILI
DENIES KICKBACK ACCUSATIONS: Greek MEP Eva Kaili denied facing another criminal
investigation into suspicions of fraudulent payments involving four former
assistants in the European Parliament from 2014 to 2020.
Through her
lawyers, Sven Mary and Michalis Dimitrakopoulos, Kaili said in a statement
Wednesday that “after thorough investigations from the competent institutions,
corruption never took place concerning compensations that were paid to her
associates.”
Kaili was
responding to POLITICO’s report on leaked documents revealing fresh details
about this separate investigation the MEP is facing, apart from Qatargate.
According
to a letter from the European Public Prosecutor’s Office (EPPO) to Parliament
President Roberta Metsola, the probe is looking at Kaili for three potentially
fraudulent activities: whether she misled Parliament about her assistants’
location and work activities; took a cut of their reimbursements for “fake”
work trips she orchestrated; and also took kickbacks from part of their
salaries.
Forces
against me: “All the above consist [of] the offense of defamation,” Kaili said,
arguing that controls take place regularly. “It is obvious that some forces,
acting with malicious political motives, attempt to criminalize standard
administrative procedures of the European Parliament, as they realize that
charges against me concerning known case [Qatargate] are falling apart,” she
added.
PARLIAMENT’S
PLUSH PENSION POT FACES €300M HOLE: EU taxpayers could soon be coughing up €23
million per year to bail out a pension scheme for hundreds of former MEPs that
is poised to implode, Eddy Wax reports. Top Parliament officials are racing to
try and rescue a legacy pension fund that faces a €308 million shortfall and
could run out of money as soon as 2024.
“The fund
will run out of capital soon,” states an internal document prepared by the
Parliament’s top civil servant Alessandro Chiocchetti, and seen by POLITICO,
which says the fund benefiting hundreds of former EU lawmakers faces a
“dramatic financial situation.” Read more.
MELONI’S
MEPs ABSENT AS FAR-RIGHT SLAMS MIGRATION DEAL: Italian MEPs from Giorgia
Meloni’s ruling Brothers of Italy party were noticeably absent from a press
event on the EU’s draft migration and asylum deal held by MEPs from nine other
far-right parties in the EU Parliament Wednesday, including from their own
European Conservatives and Reformists (ECR) group.
Border
bros: The besuited male MEPs from parties like Poland’s Law & Justice,
Hungary’s Fidesz and Spain’s Vox railed against the “Brussels elites” over a
majority of MEPs’ decision last week to open talks with the Council on the
migration reform. Incensed by the inclusion of a policy of mandatory relocation
of migrants, they announced a new “policy group” to put pressure on national
governments, who want a long-awaited deal by next spring.
Pressure
movement: “We will campaign in the member states against an open-borders
migration pact and the European Parliament’s left-wing version of the migration
pact,” said Charlie Weimers, a Sweden Democrats MEP, who is leading the push.
Sweden’s government, which holds the rotating Council of the EU presidency and
relies on Weimers’ party’s support to govern, was buffeted last weekend when
the party threatened to withdraw its backing over the EU draft migration deal.
Meloni
keeps quiet for now: Despite voting against the pact at the earlier committee
stage, Meloni’s Brothers of Italy supported a Parliament push last week to open
talks with the Council to agree on a long-awaited deal on how to handle
migration into the EU. “They voted in favor of the mandate to negotiate because
they believe progress can be made with the input of the Italian government,” an
ECR group insider told Eddy Wax.
MEP BOOTED
FROM SPANISH SOCIALISTS: Spanish MEP Mónica Silvana González, who was docked
around €10,000 by the Parliament in January for harassing three of her
assistants, has left the 21-strong Spanish Socialist delegation but remains in
the broader Socialists and Democrats group, a spokesperson told Eddy on
Wednesday. Silvana did not reply to requests for comment.
What’s up
with Monicas? Silvana is not the only MEP named Monica to be sanctioned for
harassment this year. Monica Semedo — a Renew lawmaker from Luxembourg — said
last Friday that she’s going to take the EP to court over her fine.
MORE ON
RUSSIA’S WAR
XI TRIES TO
REASSURE UKRAINE: Chinese leader Xi Jinping on Wednesday reassured President
Volodymyr Zelenskyy that Beijing would not add “fuel to the fire” of the war in
Ukraine and insisted the time was ripe to “resolve the crisis politically.”
While Xi’s remarks — as reported by the state’s Xinhua news agency — made no
specific reference to international fears that China could send arms to
Russia’s invading forces in Ukraine, his words will be read as a signal that
Beijing won’t give direct military assistance to Russian President Vladimir
Putin.
More from
Stuart Lau and Veronika Melkozerova.
POTENTIAL
US PRESIDENTIAL HOPEFUL CALLS FOR CEASEFIRE IN UKRAINE: Florida’s Republican
Governor and potential presidential candidate Ron DeSantis said he supported
the idea of a ceasefire in Ukraine — a move long opposed by Kyiv, which has set
reclaiming its lost territory as a precondition for any talks with Russia.
“It’s in
everybody’s interest to try to get to a place where we can have a ceasefire,”
DeSantis said in an interview with the Japanese, English-language weekly Nikkei
Asia.
British
fans: DeSantis is meanwhile heading to Britain for high-level talks this week
as a part of a four-country “trade mission” to promote his state on the world
stage. Nigel Farage’s new right-wing party Reform UK is trying to cozy up to
DeSantis, who is expected to announce his bid for the 2024 Republican
presidential candidacy in the coming weeks and become one of Donald Trump’s
rivals in the campaign.
Stefan
Boscia has more on how the Floridian has become a popular figure among some
British conservatives as a seemingly less chaotic right-wing alternative to
Trump.
G7 BAN ON
RUSSIAN DIAMONDS GATHERS PACE: G7 countries are pushing to agree to ban sales
of Russian diamonds when the group’s leaders meet for a summit next month.
Preparations are well on track to announce more details at the summit in Japan
starting on May 19, a European government official involved in the negotiations
told POLITICO’s Barbara Moens.
This comes
amid growing hopes that new technology will enable authorities to track the
gems around the world.
Which
technology? The Swiss company Spacecode now claims to have a solution to that
problem: a new device that can identify which region of the world individual
diamonds come from. According to Pavlo Protopapa, who is chairman and CEO of
the company, Spacecode now has the technology to trace the geographic
provenance of diamonds by understanding the morphology — the chemical
composition and the optical properties of a diamond — as stones from certain
regions have similar characteristics.
But but
but: That’s not to say it’s a done deal. One question is when the technology
will be ready to roll out in time, as Ukraine’s supporters want to impose the
Russian diamond ban as soon as possible. Another issue is how the diamond
sector will react. Tom Neys, a spokesperson for the Antwerp World Diamond
Centre, warned the sector will not accept “rubber stamping solutions” and said
that any solution needs to be watertight. More from Barbara here.
THE CHECHEN
SOLDIERS HOPING TO END RUSSIAN RULE: Chechen volunteer soldiers fighting for
Ukraine say when this war is over, they hope to free their region from Russian
rule back home. Jamie Dettmer has the story from Kyiv.
CITY OF
SPIES: Foreign interference and espionage have increased to levels not seen in
decades, Belgium’s General Intelligence and Security Service warned in a report
for 2022, the first time it had published such an analysis.
“At the
time of writing, we observe that espionage and foreign interference activities
have reached levels that had not been seen since the Cold War,” the service
said. “The feeling of latent instability and the impression of an irreversible
Belgian societal degradation provide ideal conditions for ill-intentioned
people to expand their playground and exploit this situation.”
AUDITORS
SLAM EU DEFENSE PLAN: Despite the EU’s grand plan to boost its defense
capabilities, the Union’s spending watchdog warned that Brussels is unprepared
to meet the task.
The
European Court of Auditors (ECA) warned in a report Wednesday that the
Commission lacks a long-term strategy on defense and is understaffed to meet
its increasing needs in this field. But the EU’s executive wrote in its
response to the ECA, seen by POLITICO’s Gregorio Sorgi, that it has already
taken steps to improve long-term planning.
**Register
for the Brussels Economic Forum on 4 May, focusing on competitiveness, with
Executive Vice-President Dombrovskis, Commissioner Gentiloni, Spain First
Deputy PM Calviño, Eurogroup President Donohoe, and IMF Managing Director
Georgieva.**
IN OTHER
NEWS Share on Twitter Share on Facebook Share on Linkedin Share on Handclap
THE REAL
REASONS EU’S PHARMA INDUSTRY IS AILING: The European pharmaceutical sector is
screaming bloody murder after the Commission on Wednesday unveiled plans to cut
into the industry’s profits in a bid to improve access to medicines throughout
the bloc. The source of their ire: a proposal that would shave two years off
the amount of time new medicines have the market to themselves. A shorter
exclusivity period means earlier competition from unbranded competitors,
leading to lower drug prices — and lower profits.
But exactly
why the sector is ailing — and whether the pharma legislation will indeed
finish the victim off — warrants a bit of deeper digging. Carlo Martuscelli has
the full explainer here on the real reason Europe’s medicines industry is
dying.
GERMANY’S
HABECK PUSHES FOR ELECTRICITY SUBSIDIES: German industries should get a subsidized
electricity price to boost their competitiveness, Vice Chancellor and Economy
Minister Robert Habeck said Wednesday.
“If we want
to master the transformation [toward renewable energies] and if Germany is to
continue to develop as a business location … we would be well advised to give
companies a fair chance to carry out this development,” Habeck told reporters
during a press conference. “For me, this also includes an industrial
electricity price.”
Get ready
for the next fight on energy subsidies: These subsidies could potentially be
financed by the remaining funds from Germany’s €200 billion gas price relief
package, he said. That fund, introduced at the height of last year’s gas crisis
triggered by Russia’s war on Ukraine, had provoked strong criticism from
European partners including France, Italy and Spain, which accused Germany of
distorting the EU’s single market by using its financial heft to shield its
citizens and companies in a way that other countries couldn’t.
But
subsidies are also controversial within Germany’s own ruling coalition, with
the liberal FDP calling for a drastic reduction in subsidy programs — which
have exploded since the COVID crisis — to balance out Germany’s budget.
More from
Hans von der Burchard here for POLITICO Pro subscribers.
COMMISSION
SAYS IT RULED OUT CONFLICTS OF INTEREST IN MERGER STUDY: RBB Economics, a
consultancy that helps big businesses with mergers, “was the best placed to
carry out” a study on the EU’s merger controls that was criticized by transparency
campaigners at Corporate Europe Observatory as a potential conflict of
interest, the Commission said Wednesday. (Refresher from prior Playbook here.)
“The
Commission takes very seriously any professional conflicting interest that
could affect the objective result of a procurement contract,” the EU executive
said. “Factual elements are used to objectively verify whether a professional
conflicting interest exists.”
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