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European Union Geopolitical Watch – From July 16 to July 22, 2022

European Union Geopolitical Watch: Yanis Kourrad, Antoine Bézier, Etienne Mathieu

07/20/2022: EU Member States call for changes to environmental protection measures in the Common Agricultural Policy. -Yanis Kourrad-

The Russian offensive in Ukraine has led to a decrease in cereal exports from the two agricultural powers, leading the European Union (EU) Agriculture Ministers earlier this week to call for a relaxation of environmental protection measures under the Common Agricultural Policy (CAP).

The agriculture ministers called for an extension of the derogations granted to them a few months ago concerning crop rotation and the use of set-aside land. Crop rotation is an environmentally beneficial practice that aims to grow several different crops in the same area, but its binding targets will be increased from 2023 under new CAP rules. Amid fears of food insecurity and uncertainty over access to certain commodities, Janusz Wojciechowski, the Czech EU Agriculture Commissioner, said that “there are more and more arguments in favor of allowing these exceptions” and hopes that the negotiations will lead to a “positive decision in the near future“.

07/21/2022: European Central Bank tightens monetary policy by raising interest rates. -Yanis Kourrad-

Faced with an ever-increasing level of inflation, the European Central Bank (ECB) has tightened its monetary policy and decided, on Thursday 21 July, to raise its interest rates.

Aimed at containing the high inflation in the European monetary area, ECB President Christine Lagarde announced a 0.5 point increase in the main policy rate from 0% to 0.50% and in the rate that taxes a portion of bank liquidity not distributed as credit from -0.50% to 0%. This increase in interest rates is in line with the monetary policy pursued by other central banks such as the US Federal Reserve, which raised rates in March.

In a context of political crisis in Italy, following the resignation of the Prime Minister, Mario Draghi, but also of a continuing energy crisis linked to the war in Ukraine, the ECB wishes to avoid, at all costs, a sovereign debt crisis and has announced the implementation of a new instrument intended to provide protection for the most fragile States against speculative attacks.  It will be “the Governing Council (that) will determine the eligibility” of a country for this new tool since “the ECB does not take a position on domestic political issues” as the ECB President recalled.  The risks of a cut in energy supply by Russia also raises the question of “the European economic horizon” which seems to have “darkened” according to Christine Lagarde. Nevertheless, the recovery of tourist activity in Europe following the gradual lifting of health restrictions is at least stimulating the European economy.

07/21/2022: the President of the Italian Republic dissolves the Parliament. -Etienne Mathieu-

Following the resignation of Mario Dragui and the implosion of the government coalition, the Italian President Sergio Mattarella has announced the dissolution of Parliament on July 21, 2022.

New parliamentary elections will be held in September, and the peninsula’s right and far right hope to turn the elections into an electoral victory and even return to government. The coalition of the centre-right, the radical right and the far right is widely expected to win. It includes Forza Italia, Silvio Berlusconi’s party, Matteo Salvini’s League, and the very right-wing Fratelli d’Italia, which is not averse to references to the fascist era.

The specificity of the Italian parliamentary system is that both chambers have the same powers; both the Senate and the Chamber of Deputies can concurrently overthrow the government. Conversely, both can be dissolved by the President, as happened on Thursday.

Within the European institutions, Mario Draghi’s departure is seen as the end of a positive, Europeanist era for Italy, and the beginning of an uncertain and potentially populist and dangerous moment, which could spread elsewhere in Europe. The former President of the European Central Bank inspired confidence in foreign investors and European partners, and held out the promise of a period of economic and political stability in Italy. Russian President Vladimir Putin could take advantage of the situation and would hope for a fracturing of European unity in the face of Russia, while the positions of the Italian right towards the Russian-Ukrainian conflict remain ambiguous.

07/21/2022: Russian gas: Southern Europe opposes the “sobriety plan” presented by the European Commission. -Antoine Bézier-

On Thursday 21th July, Spain, Portugal and Greece voiced their opposition to the plan proposed the day before by the European Commission to deal with the drop in Russian gas deliveries. It contains various measures, guidelines and objectives: filling gas stocks to 80% of their capacity to face the winter of 2023-2024, limiting air conditioning in the summer and heating in the winter, diversifying energy sources and focusing on nuclear and coal, etc. Above all, it requires each Member State to reduce its gas consumption by 15% compared to the average over the last five years.

This very clause has aroused the displeasure of Madrid, Lisbon and Athens. The leaders of the countries in question consider this plan is only adapted to northern Europe and does not take into account the realities of southern Europe. They point to their very low dependence on Russian gas, their investments in green energy, and their strong storage and “regasification” capacities, unlike other EU countries. Indeed, with regard to the Iberian Peninsula, since the volume and possibilities of interconnection between Russian gas and the countries involved have always been very low, large storage facilities to receive gas from the United States and Nigeria have been built in recent years. For example, Spain hosts 34% of the EU’s “regasification” capacity and 45% of its liquid gas storage capacity. It would be absurd to ask these countries to save money on gas that does not come from Russia, when the Iberian Peninsula can be considered a strategic asset for diversifying the EU’s gas imports.

This issue once again highlights the tensions and mutual misunderstandings between southern and northern Europe.  “Spain has not lived beyond its energy capacity“, said Teresa Ribera, Spanish Minister for Ecological Transition, implicitly referring to the austerity measures that the countries of the North imposed on the South at the time of the 2008 financial crisis and the 2010-2013 sovereign debt crisis, accusing it of having lived beyond its means for many years. The energy crisis would allow Southern Europe to skilfully turn the traditional and pejorative distinction between thrifty and profligate countries to its advantage.

07/22/2022: Polish Left Party proposes leasing German nuclear power plants. -Yanis Kourrad-

At the last meeting of the Polish Parliament’s European Affairs Committee on 21 July, Lewica Razem’s Left Party MEPs discussed the possibility of renting out the German nuclear power plants still in operation and soon to be closed. In 2000, Germany embarked on a project to close all its nuclear power plants. The aim of the Polish party Lewica Razem was to highlight the way in which “the German government had deceived its citizens by telling them that it was impossible to keep the nuclear reactors in operation because of, among other things, fuel supply difficulties”, reports the European media outlet Euractiv. In reality, the closure of these nuclear reactors would have led to an increase in greenhouse gas emissions. Lucid, the MP Maciej Konieczny recalls “that it is a difficult request but to present it in the public space is to make public the absurdity of the situation that is taking place in Germany”. This Polish parliamentary proposal was above all an opportunity to reaffirm the need to prevent the total closure of these plants at a time when the European Union is experiencing an unprecedented energy and climate crisis

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