Welcome to Better Europe’s weekly update on EU Affairs.
TENSIONS ERUPT OVER VDL 2.0 AS NATIONAL FIGHTS ARE EXPORTED TO BRUSSELS
Tensions in the European Parliament have reached a boiling point as Ursula von der Leyen’s second Commission faces growing opposition. The crisis erupted after the European People’s Party (EPP) launched an attack on Teresa Ribera, the Spanish Socialist candidate for First Vice President. What was expected to be a routine confirmation hearing after the socialists had accepted not to block any EPP designate quickly turned around with the EPP, under pressure from its Spain’s member Partido Popular threatening to derail the whole new team. The EPP demanded that Ribera face the Spanish parliament over her handling of the Valencia floodings. At the same time, the EPP pushed for the confirmation of controversial candidates such as Hungarian Olivér Várhelyi and Italian Raffaele Fitto, whose inclusion the Socialists and Liberals flatly rejected. Despite a mediation effort by von der Leyen, the situation remains unresolved. While the EPP faced little resistance in securing the approval of its 16 nominees, the battle over the Vice President has proved far more contentious and is just another example of how national political dynamics are increasingly threatening the delicate balance of European governance. If divisions persist, the start of the Commission on 1 December could be delayed, severely hampering von der Leyen’s ability to push her agenda forward.
FINANCIAL SUPERVISORS SPEAK UP ON IMMINENT RETAIL INVESTMENT TRILOGUES
Usually, the three financial supervisory authorities only come in play once EU legislation has been adopted and they are asked to help the Commission draft the ‘Level 2’ rules, a reference to delegated laws and technical standards covering anything from the genuinely technical to political hot potatoes where the politicians preferred to leave things open so they could all walk out of the trilogue claiming a win. This time, ESMA and EIOPA, the two supervisors dealing with investment products step in much earlier with an open letter to voice their disagreement with Parliament’s amendments on the Retail Investment Strategy, which introduce the introduction of national benchmarks and a non-public database to be built by the supervisors to check whether retail investors are getting ‘value for money’. The letter also takes aim at the Commission, for failing to include a ‘legislative financial statement’ specifying additional funding for the agencies to deal with new tasks. The uncommon intervention is interesting as the supervisors’ boards are made up of national supervisors, who are known to take very similar positions in negotiations as their respective home member states do in Council. So perhaps it’s time for to start tetralogues?
DEFORESTATION VOTE: PARLIAMENT FAILS LITMUS TEST ON GREEN DEAL
The European Parliament has voted to delay the EU’s anti-deforestation law by a year, accepting to push its start date back to December 2025. The law, originally due to apply at the end of 2024, targets products such as soy, cocoa and coffee linked to deforestation and aims to ensure that EU consumers aren’t fuelling the destruction of forests in places such as the Amazon or Southeast Asia. But this delay is just the tip of the iceberg. At the request of the European People’s Party (EPP) and under pressure from European industries dependent on cheap soy for cattle and leather for car seats, the Parliament adopted a series of amendments that weaken the impact of the law. While some amendments were withdrawn, the plenary approved others with support from the extreme-right Patriots and Europe of Sovereign Nations groups, including the suggestion to create a ‘low-risk’ category of countries that almost completely exonerates exporters from those countries from the legislation by imposing extremely low spot checks (0.1% of goods) on them. The move sparked outrage among environmentalists who warn it could undermine the law’s power to protect forests. Beyond the immediate impact on this specific law, the vote shows that the EPP can build alternative majorities if the extreme right “accidentally” support their amendments, which according to some breaks the “cordon sanitaire” and could have repercussions as early as von der Leyen’s Commission confirmation vote.