Welcome to Better Europe’s weekly update on EU Affairs.
ONE SUPERVISOR, TWENTY-SEVEN HANDBRAKES
Let’s integrate everyone else’s European capital markets, just not my own please. That seemed to be the spirit last weekend when Finance Ministers agreed on their position to bury the ambition for the Market Integration and Supervision Package. Out of fear for loss of national control over financial giants, the ministers toned back ambition on the integration of financial market supervision at EU level — so Germany’s BaFin will continue supervising Deutsche Börse rather than handing over the keys to the EU’s ESMA in Paris. And even where powers are granted to ESMA, such as supervising the estimated ten to fifteen crypto asset service providers, member states continue to hold the handbrake. This is because most decisions that move to ESMA’s permanent Executive Board would still be subject to a pause mechanism at the Board of Supervisors , which brings together all national authorities who symbolically meet in a room in Paris with national flags in front of their name. So much for the grand building block of the Savings and Investment “Union”. All hope is now on the Parliament, where even German MEP Markus Ferber doubts that the Council compromise is ambitious enough. And before addressing financial sector complaints about alleged overregulation of banks as a source of transatlantic competitive disadvantage, perhaps we should first address the now overripe low hanging fruit of the integration of EU financial markets.
LESS MINING, MORE RECYCLING PLEASE
While the Parliament spent last week endorsing its report on the revised Critical Raw Materials Act, civil society ploughed through the 46 new projects selected by the Commission last week to benefit from the Strategic Project label — a label that comes with fast-track though not guaranteed permits and privileged access to funding. The criticism? No one outside the Berlaymont knows how the projects across 16 countries were selected. And no one knows whether the environmental and human rights records of the promoters were ever checked against the law’s sustainability requirements. Spoiler: several projects sit in areas which are expected to face high levels of water stress. What is uncontested, now with Parliament’s approval at committee level, is that we will get a European Critical Raw Materials Centre. The seat is to be selected by the end of next year with no candidates yet, though Italy has proposed its former copper mining region Veneto as a storage hub. The agency would coordinate purchasing, strategic stockpiling, support investment and monitor market developments. But perhaps, the NGOs argue, the solution is recycling, repair, reuse — and less mining in the first place. The first round of projects supports that argument: one in three projects is late, suspended or dead. A label, it turns out, does not move markets.
SHOW US THE MONEY: THE THIRD OPTION
“The ghost of Euroclear is back”, said a Flemish VTM journalist earlier this week. Europe needs to spend less or earn more, is the consensus at Council level. The frugals want to cut spending – the friends of cohesion want more funding, preferably not from national contributions to the joint budget. The only uncontested funding source so far seems to be the Carbon Border Adjustment Mechanism, but part of that funding could also come from the 200 billion euros of Russian reserves blocked at Euroclear, argue the Baltics, the Netherlands, Finland, Poland and Sweden. The ghost of Euroclear is also the reason why Belgium was the only member state to abstain from the agreement on the Market Infrastructure and Supervision Package. Keeping the supervision of Euroclear in Brussels instead of moving it to Paris, Prime Minister Bart De Wever argues, gives at least a bit more confidence that Belgian taxpayers will not be footing the bill if the blocked assets at Euroclear end up being repaid to their owners. And so it’s full circle at the Summit again: spending less or earning more, it turns out, has a third option — get someone else to pay.