Good morning and welcome to Europe Express.
Frontex, the EU’s embattled border and coastguard agency, is on the back foot again after the release of a critical audit report yesterday. The Warsaw-based organisation is already fighting multiple allegations of complicity in the illegal pushback of dinghies carrying migrants to Europe’s shores. I will explore what the latest skirmish with the EU Court of Auditors is about — and why the European parliament is also getting involved in this latest episode in the bloc’s longstanding migration neuralgia.
Dutch pride in the country’s financial rectitude has meanwhile suffered a blow from a rather embarrassing scandal surrounding pandemic-mandated face masks. We will look at what this latest mishap means for Mark Rutte’s troubled caretaker government.
And we will unpack the political reasons behind a French decision to slap Google with a rather meagre competition fine.
The European Border and Coast Guard Agency — still known by its original name, Frontex — has faced growing questions over its conduct since an expansion of its powers in 2019. The latest have come not from rights activists, but EU financial monitors.
The bloc’s Court of Auditors said the expansion of Frontex’s powers and budget over the past decade has thrown up several problems. No impact assessments were carried out before any of these measures were taken, auditors said, nor were any Frontex operations evaluated after the agency gained more autonomy from national governments.
“Frontex is not discharging its duties effectively and this is worrying, particularly as it has taken on more responsibilities,” said Leo Brincat, the European Court of Auditors member in charge of the report.
The goal of hiring 10,000 border guards by 2027, set when Frontex’s powers were last extended, “was not the result of any impact study but a political decision in 2017”, Brincat said. He added that a separate audit into how Frontex was conducting returns of migrants to their origin countries will be published in September.
In response to the auditors’ report, Frontex said that it had undergone a “massive transformation that would have challenged any organisation, especially in the times of the Covid pandemic”. The agency admitted that “improvements are needed” but said that many of the shortcomings identified “are related to external factors outside of the agency’s control”.
The organisation also denied being involved in human rights violations alleged by migrants, human rights groups and media investigations.
As a result of the controversies, the European parliament in April postponed signing off on Frontex’s accounts for 2019, pending an inquiry into the allegations of abuses.
Tineke Strik, the Dutch Green MEP leading the probe, said the parliament was still investigating how Frontex has fulfilled its obligations when it comes to fundamental rights and if it adequately followed up on accusations of violations. “They had an immense growth in tasks and people,” she said. “This is the moment to correct their mechanisms if necessary and make sure fundamental rights are given the same value as guarding borders.”
More broadly, Strik decried that the only migration policy EU member states appeared able to agree on was that the bloc should make it as difficult as possible for irregular arrivals to enter.
“There’s an atmosphere of impunity at the external borders,” she said.
Strik also criticised a lack of response from the European Commission when nations sought to shirk their responsibilities. One such case was the move by Denmark’s parliament last week to outsource its asylum processing of migrants to countries outside the EU, she said. “What we criticised about Donald Trump and Australia, we risk to do now ourselves.”
The commission has said that processing claims in a third country raised “fundamental questions about both the access to asylum procedures and effective access to protection”. It is analysing the Danish law before deciding on further steps.
Chart du jour: Europe’s sanctuary cities
While most EU governments are openly or tacitly backing the concept of Fortress Europe, some cities and municipalities — concentrated in the continent’s north-west — have opened up to refugees on an ad hoc basis. The statistics track pledges and actual relocations over the past three years, though in some cases, such as the Netherlands, data are for 2020. (More here)
The Dutch, unmasked
The Netherlands is facing another brewing scandal to add to its list of Covid-19 mishaps, writes Mehreen Khan in Brussels.
After being criticised for mixed messaging over lockdown measures and an initially sluggish vaccine rollout, the caretaker government of Mark Rutte is under fire over a bizarre face mask procurement case involving a millennial media celebrity.
In the past few weeks, it has emerged that the Dutch government struck a €100m deal last year for face masks from China via a private company whose founders netted around €20m in profit from the arrangement.
The catch? The company, set up by three Dutch entrepreneurs, had pitched itself as a non-profit organisation but charged above-market rates. What is more, the government was struggling at the time to procure enough personal protective equipment during the first wave of the pandemic.
One of the entrepreneurs is Sywert van Lienden, a 30-year-old political pundit and former civil servant with ties to the country’s conservative party, who netted €9m from the deal. He has apologised for misleading the public after the revelations were published in Dutch investigative media platform Follow the Money.
Dutch healthcare minister Tamara van Ark said yesterday that there would be an independent investigation into the deal. The probe will also scrutinise the government’s role in handing out the contract. It marked an embarrassing reversal from the minister, who only last week insisted the arrangement was all above board.
The episode has echoes of other recent procurement scandals in the EU, most recently the revelation that two members of Germany’s ruling conservatives received kickbacks from face mask supply deals. There is no evidence any Dutch politician profited personally from the €100m deal, but van Lienden’s connection with the centre-right junior coalition partner has come under scrutiny.
It was also another indignity for the caretaker government, in which senior figures have been attacked for lacking transparency and closing ranks when under fire — so much so it has spawned an unflattering new phrase in the Dutch political lexicon: the “Rutte Doctrine”.
GAFA power games
France has gone after Google for alleged abuse of its dominant position in the online advertising market space, slapping it with a €220m fine yesterday.
But while some decried the penalty as a mere slap on the wrist against the US tech giant that could be chalked up to the cost of doing business, it was in fact a significant political statement, writes Javier Espinoza in Brussels.
The French are eager to show leadership in curbing the powers of Big Tech ahead of the bloc’s new rules for online platforms encoded in the Digital Markets Act. That should come into force next year, when Paris will take on the EU’s rotating presidency.
The rationale behind the Google fine, issued by the French competition authority, is already being perceived as a potential blueprint for others in the US, the UK and elsewhere to tackle similar alleged abuses of power by Google.
But France is not the only country keen to be seen as the regulatory leader.
Germany has also proactively gone after Big Tech in recent weeks, with its competition watchdog opening cases against Amazon and Google. Berlin and Paris (plus The Hague) also recently applied more pressure on the European Commission, arguing in a joint letter that the Digital Markets Act is too soft on Big Tech.
By moving against tech groups at the national level, France and Germany may gain a competitive advantage over Brussels. The results of haggling between MEPs and member states over the Digital Markets Act are also being awaited. Those could potentially even envisage the break-up of the likes of Google and Facebook.
Two things to watch today
The European Commission debates the national recovery plans it has received with MEPs
World Trade Organization ambassadors meet for a two-day council on Covid-19 vaccine patent waivers
Germany’s foreign minister has said that the EU should move from consensus to majority voting in foreign affairs after recent EU statements on Hong Kong and Israel were blocked by Hungary.
Ireland and France have hit back at comments by the UK’s Brexit minister David Frost, who argued for more EU flexibility on Northern Ireland.
Seven years after flight MH17 was shot down over Ukraine, a Dutch court started hearing evidence in the case of three Russians and one Ukrainian accused of being involved in the incident, in which almost 300 people died.
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Vaccine cocktails cause headaches for Italy’s government
Buongiorno and welcome to Europe Express.
Italian cocktails such as the Aperol Spritz are being enjoyed in many European capitals these sunny days, but mixing Covid-19 shots is proving a recipe with potentially toxic effects for the government of Mario Draghi. We will explore why recent flip-flops on this latest vaccination trend are dominating the political debate in Italy.
Sticking with toxic politics, an en masse resignation at the Oslo city council has highlighted the difficulties even respectable Nordic oil producing countries face in working out how to meet their international climate obligations.
As for the EU’s stalled Banking Union, the ball did not move yesterday because of multiple differences between eurozone finance ministers gathered in Luxembourg. Eurogroup chief Paschal Donohoe, who has been trying to land a “work plan” setting out how to advance the complex initiative, said it would take more time to agree the plan between member states and that he would return to the matter later this year. Here is a full rundown of why the project remains blocked.
Toxic cocktail recipe
Mixing Covid-19 vaccines risks turning into a toxic cocktail recipe for Mario Draghi’s government, as an increasing number of Italians begin to shun immunisation, writes FT Milan correspondent Silvia Sciorilli Borrelli.
Italian authorities last week banned the Oxford/AstraZeneca vaccine for people younger than 60. At the same time, they sought to impose mRNA jabs, such as BioNTech/Pfizer and Moderna, as the second dose for almost 1m people who had already received a first dose of the vaccine.
Both moves were prompted by the death of an 18-year-old woman (who allegedly suffered from low blood platelets) from a rare form of blood clot two weeks after receiving her first AstraZeneca dose.
But this latest change in guidelines sparked panic among the public, with thousands of people cancelling their vaccination appointments. Adding to the public scare was Marco Cavaleri, a senior European Medicines Agency official, who was misquoted in Italian media as saying that the AstraZeneca jab should be banned altogether.
The EU regulator reiterated this week that the advantages of the AstraZeneca vaccine outweighed the risks for all age groups.
Nevertheless, the Italian government has come under fire for failing to restrict it for younger people earlier and for continuing to give the public mixed messages on a vaccine that has been discontinued in several European countries and was banned for certain age groups in others months ago.
The idea of an obligatory cocktail of vaccines was met with strong opposition in Italy, where several regional governments signalled that they would not follow Rome’s orders and vowed to offer citizens an option for their second dose.
Yesterday, after an increasing number of people refused the vaccine cocktail and with only 24 per cent of the population fully immunised, officials in Rome suggested Italy might follow the “Spanish model.” Under that policy, people can still opt to receive their second AstraZeneca dose regardless of their age after signing a liability waiver in case of adverse effects.
France has also approved mixing the AstraZeneca and mRNA vaccines for people under the age of 55, but it is not mandatory and applies to a smaller proportion of the population than in Italy.
Franco Locatelli, head of the health council, insisted preliminary studies showed mixing vaccines boosted the immune system’s response.
However, preliminary findings of a study published in The Lancet last month showed the vaccine cocktail amplified common side effects and therefore “might have some short-term disadvantages”.
The absence of unambiguous data on the effects of mixing led Italian commentators to harshly criticise the government’s decision and its poor communication on the AstraZeneca jab’s limitations.
Several analysts and politicians also claimed that the media had been sympathetic to Draghi’s government and the Covid-19 commissioner he installed, whereas the former prime minister, Giuseppe Conte, would have been “torn to pieces” had the same situation materialised.
Italy’s decision to set up vaccination “open days” — where people as young as 16 could show up without a booking to be immunised with any vaccine available — also came under fire domestically and abroad.
How would you feel about being inoculated with two doses of different Covid-19 vaccines? Take our poll here.
Chart du jour: Inflation extremes
The European Central Bank’s governing council meets on a hillside in Frankfurt today, with inflation targets one of the big issues on their agenda. Figures released for May showed inflation was on the rise across most of Europe, with Luxembourg recording an increase of 4 per cent. At the opposite end, Greece, hampered by low tourism numbers, is still recording negative inflation.
Norway’s Greens vs Big Oil
A fierce and sometimes surreal controversy has felled Oslo’s entire government, giving a taste of some of the debates that are likely to resurface in national elections in September, writes Richard Milne, FT Nordic and Baltic bureau chief.
The entire centre-left Oslo city council resigned in protest on Wednesday after a vote of no confidence in Green politician Lan Marie Berg, because of her failure to disclose a huge cost overrun in a new water pipeline for Norway’s capital.
Berg is one of the most polarising politicians in Norway, as her outspoken attacks on petrol cars and more have drawn a torrent of criticism, some of it heavily misogynistic and racist.
She is running for Norway’s national parliament in elections on September 13 that the centre-left opposition — of which her Green party is part — are on track to win.
But the controversy surrounding her underscored the difficulties that Norway, western Europe’s biggest petroleum producer, is experiencing in working out how to meet its climate obligations.
The International Energy Agency warned last month that there should be no new oil and gas exploration to reach the Paris agreement goal of limiting global warming to 1.5C more than pre-industrial levels. But Norway’s main centre-left Labour party and ruling centre-right Conservatives have shown no desire to call time on the country’s oil industry.
The Greens have said they would not support any government that continues with oil exploration, but it is far from clear whether the party will gain enough votes to enter parliament. Many Norwegian voters appear put off by their tough rhetoric, with the Centre party — rivalling Labour as the biggest centre-left group — defending diesel cars popular with their mostly rural supporters.
The surreal aspect of the events in Oslo is that the same centre-left government is likely to be reborn without Berg, who wants to focus on her parliamentary run. That led the Centre party to accuse her of self-indulgence for not simply resigning and sparing the capital the spectacle of high political drama in the midst of a pandemic. It also demonstrated the divisions within Norway’s centre-left and the difficulties they could have in forming a coherent national government should they win in September.
What to watch this weekend
Brexit commissioner Maros Sefcovic gives a speech today at the College of Europe on the EU’s post-Brexit relations with the UK
The Conference on the Future of Europe holds its first plenary session tomorrow in Strasbourg
WFH future: Remote working is here to stay, with a majority of European office workers preferring it to the old way of going in to the office. A policy paper by Bruegel suggests the EU should set up a regulatory framework for hybrid working.
Gig workers: Self-employed, in fierce competition for orders, without social protection and subject to algorithmic bias — this is the experience of most delivery service workers in Europe. The Centre for European Policy Studies has published a report about the situation of digital platforms workers in all 27 EU countries over the past five years.
Flying green: FT travel editor Tom Robbins writes about his experience onboard the world’s fully electric two-seat plane, which was recently certified for commercial use in the EU market.
Axe the G7: A week after the G7 summit in Cornwall, economist Jeffrey Sachs argues that the format is outdated and consistently fails to deliver results — and should therefore be consigned to the history books. (PS)
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The links with Tai that Brussels hopes will bind
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Hello from Brussels, where the barbed-wire barricades have been cleared away, the buses are back running on their usual routes rather than being diverted around the centre and in general the city has the typical morning-after feeling that follows a visit from the US president. Today’s main piece looks at what Joe Biden’s trip to Brussels actually meant for trade, while Charted waters delves into the nature of the trading relationship between the two jurisdictions.
Warm words now, but a cold reality awaits
And so the US presidential procession leaves behind, certainly in Brussels trade circles, a profound sense of relief that they are dealing with the personable and constructive Joe Biden and Katherine Tai rather than the abrasive and frequently toxic Donald Trump and Robert Lighthizer.
The big victory was the Airbus-Boeing deal after a mere 17 years of World Trade Organization litigation, not just in itself but for what it said about the possibilities of constructive engagement. Tai, the US trade representative, told a media roundtable in Brussels on Tuesday: “This was a test of our relationship and our ability to build confidence and trust.” However, as Trade Secrets wrote yesterday, it’s not a given that an ad hoc make-it-up-as-you-go-along approach will work between two economies and their aircraft manufacturers, which still have serious problems with each other’s subsidy models.
In fact, if you had to sum up the entire encounter, it was that while leaders and officials luxuriate publicly in a rhetorical hot tub of co-operation and mutual appreciation, they still need to pass through a cold shower of political and legal reality on the way to the changing rooms.
Having China as a rival in common is certainly a useful bonding experience and framing device. The Airbus-Boeing deal was portrayed as a joint response to the rise of aircraft manufacturers in non-market economies. Similarly, the US pledge to fix the “Section 232” national security tariffs on EU steel and aluminium that the Biden administration inherited from Trump was put in the context of global overcapacity driven by Chinese (and others’) steel production.
Still, when it comes to a choice between irritating an ally such as the EU (and possibly breaking international law) and disappointing a politically powerful domestic constituency such as the steel industry, which likes the tariffs, the Biden administration has so far chosen the former.
Plans to remove existing transatlantic irritants remain either fragile or aspirational. The Airbus-Boeing subsidies have been suspended but not abolished. Tai said on Tuesday: “We have pivoted to co-operation and collaboration, but it is going to be helpful to have the ability to bring these tariffs back to keep each other honest.” In other words: trust but verify, agree a ceasefire but do not disarm.
On the Section 232s, which are supposed to be fixed by the beginning of December, Tai said: “There are hard questions that we have to face and deep feelings that we’re going to have to address . . . we’re going to push ourselves and our partners in the EU for an outcome that is going to be good for our relationship, for our industries, for our economies, for our workers”. If you believe the zero-sum logic of protectionism, there may be some difficulty in addressing all those goals at once.
There are mysterious nose-tapping “wait and see” noises from both sides about how they might punch enough of a hole in the 232 tariff wall to let some European steel and aluminium into the US without alienating blue-collar workers enough to hand the Midwest to the Republicans. But it’s going to be technically and politically difficult to get that done in less than six months.
As for the WTO itself, certainly the Biden administration pleased the EU and others by moving quickly in its early weeks to unblock the appointment of Ngozi Okonjo-Iweala as director-general. But that wasn’t politically costly: only isolationist headbangers in US politics and business really want to destroy the institution. Asked on Tuesday about the prospects for reviving the WTO’s at-present paralysed appellate body, long disliked by the US steel industry for ruling American antidumping duties illegal, Tai said: “I’m definitely not answering that.”
The goodwill certainly sounds like it’s there. Every utterance on both sides was suffused with the rhetoric of co-operation. Tai even went out of her way to praise the EU for its submission to the WTO on the vaccine IP issue which, unlike the US stance, does not call for a patent waiver.
On that subject, incidentally, while declining to rule out the US itself submitting a negotiating text, she said: “I think that we have a unique ability in the WTO on this issue to be a facilitator, to have credibility with the different sides”. This strengthens our view that the US is far happier to get the good PR from supporting a waiver in principle than to stick its neck out by taking a position in the talks.
Whatever the vibe, the Biden administration is overwhelmingly focused on its domestic economy and maintaining political support, and the EU doesn’t have any votes in the next year’s US midterm elections. We’ll watch the outcomes with interest but without great confidence that everything will get fixed in short order.
We’ve written about the diplomatic relationship, but what about trade between the EU and US itself? As the chart below shows, the two have a tight — and increasingly important — relationship. The EU’s surplus has grown slightly of late, though by a smaller factor than the growth in total values of traded goods.
In terms of industries, here’s a breakdown of the most valued ones for the EU. The importance of machinery and transport equipment goes some way to explaining why Trump’s threat of tariffs on the car industry did so much to rile lawmakers here. Claire Jones
A round-up of stories from the Financial Times this morning. As jurisdictions get tougher on due diligence, lawyers are helping companies clean up their supply chains. We also have an opinion article, which pushes for a global consensus on how to stress test supply chains. This follows calls from the US — wise in our view — to set up a global forum for supply chain resilience. New Zealand wants to agree trade deals with the EU and UK this year in an attempt to become less reliant on China.
Many countries have imposed sanctions on Myanmar following the military coup earlier this year. Not so Moscow. Nikkei ($) reports that Russia’s rolling out of the welcome mat for Myanmar’s air force commander was a cue to the junta that its arms will flow to the south-east Asian nation.
Bloomberg ($) has a piece on European car sales failing to recover to pre-pandemic levels. We think this may have something to do with chip-induced supply shortages. In the meantime, the price of used cars has surged. Alan Beattie and Claire Jones
Biden warns Putin of ‘devastating’ fallout if activist Navalny dies in jail
Joe Biden warned Vladimir Putin that there would be “devastating” consequences for Russia if opposition activist Alexei Navalny were to die in prison after “open” and “frank” talks aimed at stabilising relations between the two countries.
In their first face-to-face meeting as leaders, the presidents agreed to begin bilateral talks on preventing cyber attacks, restart talks on arms control, restore their ambassadors to their respective embassies and explore a potential exchange of citizens held in each other’s prisons, Putin said.
Billed as a meeting riddled with difficult topics and mutual grievances, Putin told reporters following talks that lasted three and a half hours that there was “no hostility” and the conversation was “efficient . . . and constructive”.
“This was a productive meeting,” Putin said. “It was fruitful. It was to the point, and it took place in an atmosphere that was enabling . . . it gave us glimpses of confidence and hope.”
Putin praised Biden’s moral qualities and described his approach as pragmatic and well balanced, but said it was “hard to say” whether relations would improve as a result.
Biden told reporters he had handed Putin a list of “certain critical infrastructure [that] should be off limits” from cyber attacks, which comprised 16 entities including the energy sector and water systems.
“I said: ‘How would you feel if ransomware took down the pipelines that run from your oilfields?’” Biden said.
But he echoed Putin’s comments about the tone of the meeting, which he said was “good, positive . . . There wasn’t any strident action taken.”
He added that he raised the issue of Navalny’s detention with Putin and what would happen if the activist died in prison. “I made it clear to him the consequences of that would be devastating for Russia.”
Navalny was arrested and sentenced to prison recently after returning to Russia. “Human rights is always going to be on the table,” Biden said.
Putin had answered questions about Navalny by saying that he had broken Russian law and knew he would be jailed if he returned to Russia, and claimed that his political activity was seeking to weaken Russia.
The meeting started at about 1.30pm local time with a handshake between the two leaders at the 18th-century Villa La Grange by Lake Geneva, and ended just after 5pm, more than an hour earlier than aides had predicted.
Cyber warfare was one of the biggest irritants before the summit, following a major hack of US government agencies last year by Russia-based groups, and alleged disinformation campaigns in the US by Moscow-backed organisations.
Biden had described Putin as a “worthy adversary” ahead of the meeting and said he was going to clarify to the Russian leader “what the red lines are”. Russia was seeking to drive a wedge in transatlantic solidarity and the US was experiencing an increase in malicious cyber activity, Biden added. He promised to respond in kind if necessary.
“We believe cyber space is extraordinarily important in general and in particular for the US, and to the same extent for Russia,” Putin told reporters.
The agreed bilateral government talks on cyber security will be a first for the US and Russia, and have previously been resisted by Washington.
Biden and Putin also grappled with a long list of accusations, complaints and charges against one another, including alleged Russian meddling in US elections, US sanctions against Moscow and the Kremlin’s misgivings over Nato military expansion in eastern Europe.
Other difficulties in the relationship are torn-up arms control agreements and war in Ukraine.
Biden travelled to the Swiss city after a week in Europe meeting G7, EU and Nato allies. The response to threats posed by Russia was continually raised in talks with western leaders. The EU warned in a foreign policy paper on Wednesday of a “negative spiral” in EU-Russia relations.
The US president said world leaders had thanked him for holding the summit, which some analysts have criticised as handing Putin a diplomatic victory.
Biden said at the outset of the meeting: “As I said outside, it is always better to meet face-to-face to try to determine where we have mutual interest; co-operate, and where we don’t, establish predictable and rational” relations. He added: “Two great powers.”
Putin said that his ambassador would return to Washington, and the US ambassador would return to Moscow following the talks.
The respective diplomats left their posts earlier in the year after a chain of events prompted by Biden agreeing with an interviewer that Putin was a “killer”.
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