EU Insight, 21 June 2024

Brussels, 21 June 2024

LEADERS FAIL TO REACH AGREEMENT ON NEW COMMISSION PRESIDENT

EU leaders convened in Brussels following the EU elections to discuss the so called ‘top jobs’. While negotiations formally started this week, a deal on who should head the EU institutions had seemingly already been precooked amongst some EU leaders in the sidelines of last week’s G7 summit. As such, expectations were that Monday’s discussions should have led to the endorsement of Ursula von der Leyen for a second mandate as Commission President, Roberta Metsola continuing as Parliament President for the next 2.5 years, and Portugal’s ex-prime minister António Costa becoming the new President of the European Council. However, leaders from different political families failed to find an agreement on the balance of power. Negotiations will continue during next week’s European Council with pressure on leaders to deliver formal nominations.

EU’S 14^th SANCTIONS PACKAGE TARGETS RUSSIA’S GAS EXPORTS

After weeks of negotiations, EU Ambassadors endorsed the EU’s 14^th sanctions package against Russia, as the Union aims to continue punishing Russia’s invasion of Ukraine. Notably, the latest package targets Russia’s liquified natural gas (LNG) global exports, as new sanctions ban EU ports from reselling Russian LNG. While the sanctions do not affect the EU’s imports of Russian gas, they do aim to put pressure on the Kremlin’s finances by restricting its ability to use European ports as part of its global LNG supply chains, thus making the export of LNG proceeding from the Arctic to Asia more difficult. Contrary to the negotiations on past sanctions packages it was not Hungary, but Germany who held up negotiations this time around.

COUNCIL GREENLIGHTS NATURE RESTORATION LAW

The Council rubberstamped the controversial Nature Restoration Law, despite the opposition of several Member States including the Netherlands, Italy, and Sweden. The Council’s endorsement follows weeks of uncertainty over the bill’s future. To recall, the law’s main aim is to foster the restoration of natural habitats and thus protect biodiversity, by setting specific EU-wide land and sea restoration targets. Eventually, the initiative will dictate the restoration of at least 20% of land and sea areas which have been damaged by agriculture and industrial processes. With the Parliament having narrowly endorsed the bill back in April, it is set to enter into force in the coming months.

MEMBER STATES AGREE TO REVISED CRISIS MANAGEMENT RULES FOR BANKS

The Council reached its position on the so-called Crisis Management and Deposit Insurance framework. Launched in response to the March 2023 banking turmoil, the initiative revises existing EU legislation aiming to strengthen banks’ abilities to face internal crises and protect depositors. Concretely, the revised rules extend the existing resolution framework governing the failure of banks, to also cover some small and medium sized banks, as opposed to only large financial institutions. Furthermore, the revision aims to facilitate access to bank safety nets such as national deposit guarantee schemes as well as related EU safety funds to strengthen the resolution process. With the European Parliament having reached its position in April, the Council’s adoption paves the way for trilogue negotiations to potentially start at the end of this year.

COMMISSION OPENS EXCESSIVE DEFICIT PROCEDURE AGAINST FRANCE, ITALY, AND BELGIUM

The European Commission presented its European Semester Spring Package 2024. Overall, the package puts forth general policy recommendations aiming to coordinate the direction of national macroeconomic policies across the Union. Moreover, the Commission assesses Member States’ adherence to the EU’s fiscal rules, aiming to safeguard EU competitiveness and ensure sound public finances. Notably, the Commission opened excessive deficit procedures, i.e. a procedure started when Member States fail to adhere to the EU’s fiscal rules, against a series of Member States, including Italy, France, and Belgium.

COMING UP NEXT WEEK

• 24 June: Agriculture and Fisheries Council. On the Agenda: Plant and forest reproductive material, forest monitoring framework, and protection of animals during transport.
• 24 June: Foreign Affairs Council. On the Agenda: Russian aggression against Ukraine, the situation in the Middle East, Western Balkans, Georgia.
• 25 June: General Affairs Council. On the Agenda: Ukraine, security and defence, competitiveness, external relations, and the next institutional cycle.
• 26 June: College of Commissioners. On the Agenda: Convergence Report 2024.
• 27-28 June: European Council (EUCO). On the Agenda: Negotiations on EU top jobs and Strategic Agenda 2024-2029

Karl Isaksson, Managing Partner Brussels, Kreab

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Kreab • Tel: +32 2 737 6900 • karl.isaksson@kreab.com • www.kreab.com/brussels • X: @KreabEU  •  LinkedIn: Kreab Worldwide