EU Insight, 16 December 2022

Brussels, 16 December 2022

EUROPEAN COUNCIL DISCUSSES UKRAINE, ENERGY CRISIS AND FOOD SECURITY

The European Council gathered for the last time this year. The discussions focused on the war in Ukraine, the consequences on energy markets and the economy as well as food security. Notably, EU leaders called on the Commission to further explore options to use frozen Russian assets to support Ukraine. Moreover, EU leaders mandated the Commission to table proposals by the end of January 2023 to foster EU competitiveness in light of the energy crisis and the US Inflation Reduction Act. Lastly, the European Council deferred the decision on the proposal to establish a market correction mechanism (a gas price cap) to Energy Ministers’ meeting next week.

COUNCIL ADOPTS UKRAINE ASSISTANCE, MINIMUM TAX LEVEL AND HUNGARIAN RULE OF LAW

The Council reached an agreement on the package containing the unlock of the Ukraine financial assistance of €18 billion, the implementation of the minimum taxation for largest corporations, and the Hungarian national recovery plan. The Ukraine decision will not only permit to financially support Ukraine in 2023 through a 10-year grace period loan of €18 billion, but it will also allow Member States to implement the Pillar 2 of the OECD Inclusive Framework on Base Erosion and Profit Shifting. Finally, the Hungarian national recovery plan approval from will allow Hungary to use the NextGenerationEU funds for an amount of maximum €5.8 billion.

CO-LEGISLATORS AGREE ON CARBON BORDER ADJUSTMENT MECHANISM

The Council and the European Parliament reached a provisional agreement on the Carbon Border Adjustment Mechanism, which aims to put a price on the emissions emitted during the production of carbon intensive goods imported into the EU, and thus encouraging cleaner industrial production outside the EU and avoiding carbon leakage. The provisional agreement paves the way for the official adoption in the Council and the European Parliament. The mechanism will start applying from October 2023, initially introducing only reporting obligations, while the rest of the obligations will follow a gradual phase-in.

BOSNIA AND HERZEGOVINA GRANTED EU CANDIDATE STATUS

Following the European Council conclusions from June and the subsequent Commission recommendation in October, the Council recommended to grant Bosnia and Herzegovina official candidate status. Bosnia and Herzegovina will now have to follow the steps outlined in the Commission’s recommendation to strengthen the rule of law, the fight against corruption and organised crime, migration management and fundamental rights.

PARLIAMENT CALL FOR GREATER TRANSPARENCY AFTER CORRUPTION SCANDAL

Following last Friday’s revelations on corruption at the heart of the European Parliament, the Parliament overwhelmingly agreed to terminate Eva Kaili’s term as Vice-President, due to her involvement. Additionally, the Parliament adopted a resolution to address the scandal. Concretely, it decided to suspend all work on legislative files linked to Qatar, specifically the visa liberalisation and the EU-Qatar aviation agreement . Moreover, the European Parliament will set up an inquiry committee to investigate the involvement of third countries in the Parliament and called on the Commission to issue a proposal to set up an Independent Ethics Body, covering all EU institutions.

COMING UP NEXT WEEK

• 19 December: Energy Council. On the agenda: market correction mechanism.
• 20 December: Environment Council. On the agenda: proposal for a nature restoration regulation.
• 21 December: College of Commissioners. On the agenda: Commission recommendation on union disaster resilience goals.

Karl Isaksson, Managing Partner Brussels, Kreab

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