EU seeks to make stalled Swiss deal tick again

Good morning and welcome to Europe Express. Today we will look at how Brussels’ relations with Switzerland, land of precision timepieces, are very far from clockwork.

Three years after they agreed in principle on simplifying the intricate mechanism of their relationship, the sides are nowhere near sealing the deal. That’s mainly on Switzerland, where authorities have first played for time and are now seeking to rewrite the agreement. We will explore what possibilities the European Commission will probably put forward during a meeting with the bloc’s EU affairs ministers today.

We will also look at the political shelf life and prospects of Italy’s premier Mario Draghi, as the country’s president Sergio Mattarella nears the end of his term.

Slicing the cake

EU-Swiss relations have always been a messy fondue. But the current deadlock could end up with Brussels cutting Bern’s access to parts of the single market, write Valentina Pop in Brussels and Sam Jones in Zurich. 

When the UK voted for Brexit in 2016 and set the stage for years of clashes with the EU, officials in the European bloc decided they needed to take a more disciplined line with Switzerland. They wanted to pare down the existing 120 EU-Switzerland sectoral agreements — and give the European Court of Justice jurisdiction over disputes.

“Basically the Swiss have the best of the worlds, they can have the cake and eat it,” said an EU diplomat familiar with the talks. “But this is not sustainable. Everyone needs to get a fair share of the cake.”

Talks on an overarching agreement had been going since 2014, after a referendum in which Swiss voters rejected freedom of movement. A provisional deal was penned in 2018 — but Brussels didn’t hear back. 

In recent weeks, including during a visit to Brussels by Guy Parmelin, president of the Swiss Confederation, it has become increasingly clear that Bern has no intention of ratifying the agreement. In an interview on Saturday, the EU ambassador to Switzerland, Petros Mavromichalis, warned the moribund negotiations were “the chronicle of a death foretold”. 

Now, officials in Brussels speak of two options to break the impasse, which will be presented to EU affairs ministers today: 

1. Cajole Bern to agree to the deal, with some minor adjustments

2. Do nothing and let the sectoral agreements or equivalence decisions lapse, cutting Switzerland off in areas such as medical devices or access to EU research funds under the bloc’s new seven-year budget

The hard EU approach emerged after the failure of a previous attempt to strong-arm Bern. The European bloc refused to renew an equivalence decision for the Swiss stock exchange, which lapsed in 2019 — but Bern did not cave.

We must have the intellectual honesty to say that in its current form, the draft agreement would not find a popular majority

The Swiss side meanwhile has demanded to carve out three areas from the agreement: freedom of movement, social benefits and wages for EU workers in Switzerland and state aid rules. EU officials said the demands were unacceptable as they were core areas to any deal on single market access.

An opinion poll over the weekend showed 64 per cent of Swiss in favour of a deal with Brussels. But getting the agreement past the finishing line would be no small feat. It would require not just a nationwide referendum but also a political accord across parties, trade unions, business lobbying groups — and all 26 cantons.

Any compromise with the EU is strongly opposed by Switzerland’s biggest political party, the rightwing populist SVP. The country’s other political groups also have problems with parts of the draft accord. Social democrats have resisted any move that would water down Swiss labour protections, for example.

But Bern’s rigid stance could be tactical. It may be hoping that some of its EU member neighbours will blink first and agree to more substantial concessions. The possible motivation: to prevent a total breakdown in relations — which would ultimately hurt the bottom line of many companies in the EU.

Chart du jour: Swiss stakes

Both the EU and Switzerland have a lot at stake in renegotiating their relationship.

Prossimo presidente

Who will be Italy’s next president — and why should EU-watchers care?

The seven-year mandate of Italian president Sergio Mattarella expires next year and all eyes in Rome will soon turn to who will replace the 79-year-old head of state, writes Miles Johnson in the Italian capital.

As per Italy’s constitution, the president is a kingmaker. He has the power to call elections, select who is allowed to form governments and use moral suasion to keep the political system functioning. Indeed, it was Mattarella’s intervention in February that created the chance for Draghi to be parachuted in as prime minister at a time of national crisis.

The premiership is a role to which people familiar with Draghi’s thinking have long believed he was attracted. The awkward timing of Mattarella’s departure casts a degree of uncertainty over the longevity of the Draghi unity government.

If Draghi “moves upstairs” next year to become Italy’s president, his time in office would be cut short before any of his ambitious investment and reform programmes get going. At the same time, Italy’s next general elections must be held before mid-2023. That is the date when Draghi is expected to step aside and allow Italian politics to resume as normal with a political, rather than technocratic, government.

Will he sacrifice becoming president to have an extra year to finish what he has started? What the sphinx-like Draghi is planning to do remains unclear. Mattarella could be re-elected next year and stay on until 2023, allowing Draghi to complete his time as prime minister before replacing him. Giorgio Napolitano, who was reappointed president in 2013 before stepping down two years later, stands as a recent precedent.

What is certain is that some Italian politicians appear keen on getting Draghi out of the Italian prime minister’s office sooner rather than later. Last week, Matteo Salvini, leader of the rightwing League party, said he would support Draghi becoming president.

“With Draghi promoted to head of state . . . the chances of early elections would rise dramatically,” said Francesco Galietti, head of Policy Sonar, a political risk consultancy. Salvini himself is certainly hoping any vote could propel him to become prime minister, as is his rival on the right Giorgia Meloni (More on her here).

Many in Rome and Brussels continue to rejoice at the impact Draghi has had. But the speculation over his future is a reminder that at a certain point, not too far away, “business as usual” must resume in Italian politics.

Two things to watch today

1. EU affairs ministers tune in to a virtual meeting to prepare the next summit and explore options for an EU-Swiss agreement and enlargement.

2. EU and UN officials hold a virtual meeting on migration management with African ministers.

Notable, Quotable

We, easyJet, [BA owner] IAG and the others have to compete with these state-aid, crack cocaine junkies

• The pandemic has caused a sharp policy reversal in airline privatisation, as European governments have stumped up billions of euros in state aid to save their national flag carriers. All this has dismayed low-cost carrier Ryanair, whose chief executive has filed 16 lawsuits in EU courts challenging the support (full story here).

• The German Greens have faced their first election hiccup as the party moved to expel Boris Palmer, mayor of Tübingen, over a series of racist posts on social media. The exclusion process could drag on for months. (Der Spiegel)

• At-risk migrant groups in Scandinavian countries are among those being vaccinated the most slowly against Covid-19. (FT)

• An open letter allegedly written by active duty soldiers has warned French president Emmanuel Macron of an impending civil war because of his alleged concessions to Islamism. It comes after a similar letter from officers and 20 retired generals last month. (Read more)

Recommended newsletters for you

Brexit Briefing — Our essential weekly guide to the world, post-Brexit. Sign up here

Swamp Notes — Expert insight on the intersection of money and power in US politics. Sign up here