Welcome to Better Europe’s weekly update on EU Affairs.
RULE OF LAW: SHRINKING SPACE, SHRINKING NGOS?
“The rule of law is not negotiable — it is the foundation of our European way of life” Ursula von der Leyen promised the Parliament when asking for a second mandate in 2024. Then why does a report from the Civil Liberties Union for Europe classify eleven Member States as ‘Dismantlers’ or ‘Sliders’ when it comes to the erosion of the rule of law? Only a few countries show progress on four indicators: the justice system, anti-corruption, media freedom and checks and balances. The group warns that steps to undermine the rule of law in the United States show how fast systems can be dismantled, and double standards and fragility have been exposed across the world, wondering whether the EU will join the negative slide or propose a renewed vision of “how the rule of law underpins Europe’s strength, values and competitiveness”, with its “witch hunts” against environmental and human rights groups supported by the Commission. Tempted to dismiss the conclusions because they come from the NGOs themselves? Well, the European Fundamental Rights Agency this week said pretty much the same: at the EU level, 70% of CSOs report that working conditions had deteriorated or greatly deteriorated. In terms of physical threats and attacks, in particular organisations that defend the rights of people in vulnerable situations and those that working on hate crime, anti-racism, and sexual and reproductive health and rights. Meanwhile, the Commission insists its Rule of Law Toolbox is working. But when both Member States and the EU itself contribute to shrinking civic space, the question is no longer about monitoring the problem, but whether the EU is actually part of it.
CHOP CHOP FOR DISMANTLING CLIMATE LAWS
Climate Commissioner Wopke Hoekstra this week announced profound changes to the EU’s Emissions Trading System, to reinforce “the stability and predictability of its carbon market”. Essentially, the proposal is to stop the invalidation mechanism that removes excess emission allowances from the system, allowing unlimited pile-ups of unused permits instead. In practice, that means more flexibility when shortages might hit in the future because firms fail to decarbonise fast enough. At a high price: it removes pressure on companies to cut emissions quickly, and punishes or even bankrupts the business model of sustainable frontrunners who benefit from expensive emission allowances — if that is “stable and predictable”, we’ve seen better April Fools’ Day jokes. The “modernisation” of the EU’s carbon market, as Hoekstra put it, feeds into the revision of the ETS system in July. The pile of emission rights is supposed to be exhausted by 2039 so that the EU industry is fully climate-neutral, an end-point that is likely to be pushed backwards by several years to give the most energy-intensive polluters are break in these difficult days. With Italy and Poland asking for more drastic measures such as full suspension of the system, maintaining the path to theoretical climate-neutrality is seen as a way to honour the commitments made at the European Summit a few weeks ago. Certainly not with the ambition to save the planet, but to reduce our European dependence on fossil fuels and all the geopolitical risk attached to it.
ECB DREAMS ABOUT ONE FINANCIAL SUPERVISOR FOR EUROPE
Twin Peaks, we love it. No, not the TV-series from the nineties but the concept in financial supervision, where the authorities are not set up by sector (banking, insurance, markets) but by activity (conduct of business and prudential supervision). Now, more than 15 years after the European Supervisory Authorities were set up and 25 years since the Euro and the Eurosystem, European Central Bank staff are dreaming of a much further reaching reform of financial sector supervision: “one market, one supervision”. Ok, you read that right: one supervision, not one supervisor. But to really create the Savings and Investment Union that the Commission and national political leaders are pushing for, the supervision of large cross-border firms should be moved to the EU level, similar to the banking sector following the financial crisis, argues the report. In fact, Europe today has 52 national financial supervisors using 16 different national models, ranging from sectorially separated supervision via twin-peaks to a fully integrated model in Germany, Poland, and Scandinavia. The Commission’s Market integration and supervision package is moving some supervision to the EU level, but at a time when national finance ministers are worried about the geopolitical crisis and related financial stability, giving away control over their big national financial institutions seems a bridge too far.