EU debt repayment plans caught in Green Deal crossfire

Good morning and welcome to Europe Express.

It feels like monsoon season, with deadly floods in Belgium, Germany and the Netherlands. Matching the rain outside is criticism from capitals and lobby groups pouring down on the European Commission for its green policy package, with several capitals pushing back against the rising energy cost that these measures will bring. Given the political heat, the commission is considering a delay to proposals on how to use revenues from climate-related taxation to repay the bloc’s debts.

On the rule of law front, the commission yesterday made clear that it expects Poland to abide by the EU top court’s rulings and injunctions — including a judgment yesterday saying that the country’s disciplinary chamber for judges is illegal.

A commission spokesperson hinted at the possibility of holding back the approval of Poland’s recovery plan if Warsaw decides to break with EU law — just like the commission has with Hungary.

We’ll also hear from France, where mandatory vaccinations for healthcare workers and patrons seem to be working in Emmanuel Macron’s favour despite street protests.

In the Netherlands, Peter R de Vries, the crime journalist who was shot in the head on a street in Amsterdam last week, passed away in hospital yesterday. Two suspects are in custody in relation to his murder.

Collateral damage

Among the apparent casualties of the European Commission’s bumpy green rollout is a set of proposals aimed at diverting some of the revenues from climate-related taxes to repaying the bloc’s massive debt fuelling the €800bn recovery plan, writes Sam Fleming in Brussels. 

Brussels was due to unveil detailed plans to create new “own resources” next Tuesday, but these are now likely to be delayed, officials say. These new own resources — effectively bespoke revenues allocated to the commission — are meant to be derived from a widened Emissions Trading Scheme (ETS), a new carbon border tax and a digital levy.

The digital levy was already delayed until the autumn earlier this week amid pressure from the US, which worries an EU measure targeted at tech companies could roil global tax talks.

But details of how the ETS and the carbon border tax could contribute to own resources could also be held back. The timorousness reflects political pressure on the commission from member states, which are deeply anxious about the impact of the green package on their citizens — in particular the idea of extending the ETS to cover cars and housing, 

Announcing plans to divert some of the billions raised by those levies to the commission to repay its debts could only add to the political backlash. But any delay would provoke dismay in the European parliament, which has championed efforts to create new own resources.

Johannes Hahn, the budget commissioner, who had been leading the work on new own resources, voted against the environmental package in the commission’s college meeting on Wednesday, in part because of his concerns about the fate of the own resources package.

But Hahn was by no means alone in expressing concerns about the commission’s handling of the green deal legislation, even if his was the only dissenting vote.

EU Green Deal commissioner Frans Timmermans admitted in a news conference yesterday that discussions had heated up in the college. “Sometimes it gets hot in the kitchen”, he said in a news conference. “But it’s the meal that you serve up that citizens are interested in, not how you cooked it,” he added.

It’s clear that there will still be a few days of animosity 

Disquiet within the commission centres on the heavy impact the carbon reduction measures could have on households, above all via the ETS extension, and the effects of the welter of new targets and regulations on European industry and competitiveness.

Some top officials were also left infuriated by the way the internal process was handled, as they struggled to get their concerns taken on board. The sight of a commission struggling with internal dissent over such a pivotal climate package will not enhance its prospects when it comes to member states, which will need to thrash the legislation out with the parliament.

Just a day after Brussels’ landmark green deal was launched into the world, the legislative package is already looking decidedly shaky.

What do you think about using climate-related taxes to repay the recovery debt? Click here to take the poll.

Chart du jour: Not overheating yet

Spikes in price growth in both the UK and the US have economists worried that the recovery from the pandemic could lead to worrying rise in the pace of inflation, leading some to question exactly when to withdraw support for economies. The eurozone is yet to see surges on par with those happening across the channel and the Atlantic, but many expect inflation will pick up in the latter part of 2021. (Read more here)

Vaccination politics à la française

President Emmanuel Macron’s decision on Monday to make vaccinations compulsory for health workers looked on the face of it to be a bold move. But his gambit may also be paying off politically, writes Anna Gross in Paris.

On the one hand, Macron said care workers not vaccinated by September 15 would lose their jobs. On the other, he extended the remit of the “health pass” to encompass all cafés, restaurants and leisure venues — while announcing that tests would soon have to be paid for — thereby making life more unpleasant for the rest of the population that hadn’t yet been jabbed.

It’s very courageous to take such a decision just a few months before an election in France

The decision caused street protests to erupt across the country on Wednesday — Bastille Day — as thousands revolted against what they viewed as a draconian measure targeting the very people who had done so much to protect the country during the pandemic.

But even with the protests, a majority of the French supported Macron’s measures announced on Monday, according to a Le Figaro poll.

And around 81 per cent of people in France over the age of 18 are either prepared to get the vaccine, or already have, according to the latest Odoxa poll, double the proportion from December last year.

Many of those willing vaccine recipients are annoyed by the idea that a vocal minority of anti-vaxxers could contribute to a devastating fourth wave in the autumn.

“People in France are exhausted, they’re tired, they can’t live in this way of lockdowns and restrictions, particularly in summer time,” said Mircea Sofonea, an infectious disease modeller at Montpellier University.

There have been more than 2.6m vaccine appointments booked since Macron’s announcement on Monday, with daily bookings far exceeding previous records, according to Doctolib, a French online medical appointment booking site.

Macron’s move is proving to be just the nudge they needed.

What to watch today

1. Justice and interior ministers meet for an informal council in Slovenia

2. European Commission president Ursula von der Leyen is in Ireland to approve its national recovery plan

Smart reads

• Compromise on tech: The US and EU working together has always been a delicate tightrope to walk, most recently epitomised by the EU’s now-delayed digital tax. The Centre for European Reform argues that the two powers should not seek regulatory harmonisation, but instead co-operate on semiconductors and the promotion of new sources of rare earths outside China.

• Merkel’s legacy on China: China sticks out as Angela Merkel’s biggest blind spot when assessing her foreign policy legacy, not because she hasn’t perceived the shift in Chinese politics under Xi Jinping, but because she failed to adjust her own policy accordingly, argues the American Institute for Contemporary German Studies.

• Ecological geopolitics: With the EU aiming to establish itself more on the global stage, Carnegie Europe suggests that the bloc combine its diplomatic ambitions with its far-reaching climate goals to develop a distinct brand of ecological diplomacy.

• The consequences of pushbacks: So far this year the EU-backed Libya coastguard have intercepted around 15,000 people at sea bound for Europe. A shocking report by Amnesty International details the detention, torture and sexual violence faced by migrants when detained in Libya.

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