Welcome to Better Europe’s weekly update on EU Affairs.
ECB VP: DIGITAL EURO ESSENTIAL FOR EU AUTONOMY
It’s an excellent time to push for the EU’s role as a global currency, ECB Vice President Luis de Guindos told MEPs this week. The central banker sees growing threats to Europe’s financial autonomy, so Europe should deepen capital markets, complete the banking union and unify the internal market. And, “with a more integrated approach, the euro can play a bigger role globally”. His remarks come as investors are fleeing the dollar and turning to eurozone assets, a shift that could strengthen the EU’s position as a global safe haven. De Guindos also warned that dependence on U.S. payment systems and dollar-backed stable coins risks undermining Europe’s financial sovereignty. In his view, the rise of a digital euro should be “our main response” – a very timely response, as it could become a strategic instrument for EU autonomy, especially during times of crisis, such as the blackouts that hit Spain and Portugal. The issue is no longer just about payments; it’s also about ensuring control and resilience of critical infrastructure. The debate confirms what many already have realised: ultimately, the success of the digital euro hinges on whether it is designed with Europe’s broader public interests in mind, and not just the priorities of the financial sector!
REARM EUROPE – SHOW US THE MONEY
Time for an update on defence funding – remember, the sector that is now united with the financial sector. Most observers had thought that the Club Med, the cash-strapped southern European Member States, would be first in line to activate the escape clause so that defence spending doesn’t count for the purpose of the EU’s not-so-respected budget rules. However, after Germany exempted defence spending from its famous national “debt brake”, it was no surprise that they would ask Brussels for a similar exemption. Sixteen countries are expected to use the fiscal space, including some such as Belgium that seem to be asking for a rain check just in case, as it would go against national announcements not to further increase its debt-to-GDP standing well over 100%. The problem? The sixteen do not include France, Italy and Spain, all three major potential defence spenders that would benefit from the clause given their high debt ratio. And as the headline figure of 650 billion euros declines along, it will be harder for the Commission to maintain its claim that this is “massive ramp-up of defence spending” when its formal recommendation comes out on 4 June.
THE EPP IS LEADING EUROPE, SAYS EPP
With a short week in Brussels, most political news seemed to be coming from Valencia this week – not because of the devastating floods taking 228 lives exactly six months ago, and not because of the blackout either. Rather, it’s that time of the year again when political parties meet in the sunnier part of Europe for their congresses, so the EPP decamped to the Spanish city to re-elect Manfred Weber as its president. After earning 503 votes out of the 570 cast, Weber used his victory speech to blast the faction’s political rivals, berating the S&D for abandoning the working class, and the Greens and liberals by accusing them of only appealing to the well-educated and privileged. All also got blamed for the success of the far-right in last year’s European Parliament elections, which is compelling considering that Weber in particular has no issue cuddling up to the ECR. And even if he’s left Brussels almost two years ago, former Commissioner Timmermans also got a shout out, with German Chancellor-designate Merz taking gleeful credit for steering Europe away from “the ideological climate agenda”. Commission President von der Leyen stepped out of her Executive shoes for the night, and made blatant jabs at Trump on academic freedom and his trade war. Prime Ministers in their speeches called for strengthening European defence and security. In short, as the final declaration says: “the EPP is leading Europe”.