Welcome to Better Europe’s weekly update on EU Affairs.
GERMANY PUTS DEMANDS ON THE COMMISSION AMID CHAOS AT HOME
One would think that German politicians would be too busy with domestic issues to make demands at EU level, given that the extreme-right Alternative für Deutschland (AfD) for the first time won the regional elections in Thuringia. Yet, the German coalition government made an effort to express discontent when German Commission President-elect Ursula von der Leyen nominated Italian far-right minister Raffaele Fitto as one of six future European Commission Executive Vice Presidents. At the same time, the German government saw no problem in joining Italy’s for a revision of the CO2 reduction targets for cars, and in requesting a six-month delay of the EU Deforestation regulation. While Chancellor Scholz’s Sozialdemokratische Partei Deutschlands (SPD) came in first in Brandenburg with an extremely thin margin, the liberal Freie Demokraten (FDP) failed to secure a single seat in any of the three eastern states and are now threatening to leave the coalition government.
ECB EAGER TO MOVE FORWARD ON DIGITAL EURO
The European Central Bank is making significant progress on the digital euro project, according to central banker Piero Cipollone. Launched three years ago, the project is now halfway through the preparatory phase which consists of finalising the digital euro rulebook and runs until October 2025. The Governing Council of the ECB will then decide whether to proceed to the next phase at the end of 2025. As explained to ECON MEPs, the ECB cannot issue a digital euro without a solid legal basis. If it all goes according to plan, a pilot project for the digital euro could be launched by mid-2027. According to the ECB’s good news show, the digital euro would enhance Europe’s competitiveness and strengthen the single market and European sovereignty – issues brought to the fore by the Draghi report. Unfortunately for the ECB, both Parliament and the Council do not share their sense of urgency and neither institution is ready to start tirilogue negotiations.
FRANCE ESTABLISHES NEW GOVERNMENT UNDER BARNIER’S LEADERSHIP
After a two-month transition period following the legislative elections in July, France now has a new government led by Michel Barnier, a former European Commissioner and the EU’s chief Brexit negotiator. The government is composed of members of the EPP-affiliated Republicans and Renew’s centrist/centre-right parties including Macron’s Renaissance, and features a mix of familiar faces and newcomers. It has a significantly more right-wing orientation than its predecessor. Due to the increased fragmentation of the French Parliament, the new government however does not hold an absolute majority, with only 213 out of 577 seats. Therefore, it will need to pre-agree each legislative initiative either with the left-leaning New Popular Front or the extreme-right Rassemblement national. In fact, Barnier’s government currently relies on extreme-right support, as their MPs have assumed a kingmaker role. For the EU, the distribution of ministerial portfolios among the various parties notably suggests continuity in economic policies, with Prime Minister Barnier expected to play an active role in budget discussions, to push strongly for nuclear energy, and to support a shift towards relatively protectionist trade measures.