Welcome to Better Europe’s weekly update on EU Affairs.
GOLD IS GEOPOLITICS
This week, the Dutch central bank quietly moved 86 tonnes of gold (worth around €10 billion) from the US and Canada to London, as a consequence of “increasing geopolitical unrest”. Even if the UK isn’t even in the EU anymore, physical proximity seems to matter. The Dutch claim they are concerned about access to their gold tout court — they simply want easier access to potential liquidity in times of crisis. The 32% of Dutch Gold now held in London, they argue, can be traded faster as it has overtaken New York as the world’s top foreign gold storage spot. However, that argument didn’t hold when France sold and re-bought 129 tonnes, moving 5% of its reserves from New York to Paris. Germany even physically repatriated 300 tonnes in 2017 when Trump first came into office. Political debates in the country, and in Italy, have directly referred to the need to pull holdings out of the world’s most unpredictable jurisdiction, or as MEP Markus Ferber put it: “Trump is erratic and one cannot rule out that someday he will come up with creative ideas how to treat foreign gold reserves”. So yes, gold is geopolitics. Trust is shifting, and Europe is hedging its bets.
METSOLA’S THIRD TERM MEANS GERMAN REALPOLITIK
Two years ago, the Grand Coalition supported the EPP’s Ursula von der Leyen for a second term as Commission President. With S&D’s Antonio Costa in the Council, part of the package deal was to give the Parliament Presidency to the EPP’s Roberta Metsola, also for a second term. The socialists had understood that the deal, as usual, was to split up the Presidency and let them run the shop for the second half of the mandate – as has been done over the last two decades. But the EPP has a different reading: Costa is still in place, and giving the socialists two out of three institutions would be disproportionate to their weight in European politics. So Metsola is now eying an unprecedented third term as Parliament President, and the socialists find themselves increasingly caught in a game of Realpolitik. German MEP René Repasi started the dance by cozying up to his EPP German colleague Niclas Herbst to get a few crumbs in exchange for accepting Metsola for a third term. Those nice crumbs would be committee chairs, but overplaying hard-to-get could mean the EPP ends up making a deal with groups to their right, especially now that the cordon sanitaire is gone.
PENSIONS: THE EU GOLD RUSH
“Very few people in this room know how exciting IORPs are”, MEP Dirk Gotink told colleagues earlier this week in the Parliament. Say again? IORPs – institutions for occupational retirement provisioning. The name itself reveals one of the main political controversies surrounding complementary pension schemes: they are ‘provisions for retirement’, not meant to replace proper (state) pensions, a system on which most Europeans rely fully to finance their old age. Only in a few Scandinavian countries and the Netherlands, second pillar pensions provide the bulk of the income after retirement. And so unlike banks or insurers, pensions funds are largely subject to national rules, even if fund management and investment services are part of the EU’s internal market. So it’s no surprise that Dutch, Swedish and German MEPs are the only ones interested in the file. On the private pension side, the same debate appears, with socialist MEPs stressing that they reject the “catastrophic narrative regarding public pension systems” that need to be complemented by Pan-European Personal Pension Products, or PEPPs. The irony? The EU wants to “harmonise” pensions, but its one-size-fits-all approach risks breaking what already works. If it ain’t broke, why let Brussels fix it?