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30 October 2013

EU Summit October 2013 No news is …BAD news!

Digital and Migration usurped by Spying Scandal 

The ‘hot’ topics on the agenda at last week’s Brussels EU Summit were expected to be digital economy and migration.

The former in order for the EU to regain ground against its competitors, which are already a step ahead in developing digital technology, and the latter to avoid tragedies such as that which took place recently off the Italian island of Lampedusa.

Shift in focus 

However, the outbreak of the scandal involving the US NSA spying on EU citizens & leaders disrupted the Council’s agenda by shifting the focus of the Summit towards data protection, which became the focal point for a disagreement on an issue close to the heart of many Member States, namely the entry into force of the EU’s Data Protection Regulation.

Reflecting the divergent views within the Council, individual Member State statements and positions were incorporated into the final Council Conclusions at the end of the two-day Summit. A sure sign that all was not well during the 2-day pow-wow.

Postponing 

Despite the high number of pressing matters requiring immediate action by EU governments, the main takeaway from the Summit was one of postponing final deliberations to the next Summit in December and setting long-term deadlines, thereby leaving significant room for manoeuvre – and, of course, possible delays.

Time is running out with the EU elections in May 2014, and by March MEPs will begin to mentally switch off and start focusing on getting re-elected. Hence, time is of the essence, which makes it even more frustrating that critical issues are continually being put on the backburner

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A. US Spy scandal: Clash of the Titans?

The main scoop of the Summit was the alleged scandal of the United States spying on EU leaders, including Chancellor Merkel. The news was launched by the French newspaper, Le Monde, which reported that the US’ National Security Agency (NSA) had collected tens of thousands of French and German phone records. Renegotiating intelligence relations During the Summit Member States released a Statement expressing concern about the possible negative repercussions on intelligence cooperation between the EU and US, and the intention of Germany and France to re-negotiate their intelligence relations with the US. The position of the French and German governments was supported by the vast majority of EU Member States, with the UK a notable exception, no doubt due to its supposed “special relationship” with the US. The EU Institutions also got involved, with Martin Schulz, President of the European Parliament, calling for a suspension of EU-US trade talks and President Barroso saying that the revelations had “shaken trust in privacy and data security.”

“The revelations over recent months and days have shaken trust in privacy and data security.” President Barroso

B. Digital Economy: A bridge towards new growth and job opportunities The discussions on the digital economy fell flat. The aim of creating more job opportunities and instituting a trained workforce of young professionals in the ICT sector sounds promising, as do Member States’ attempts to develop digital infrastructure and new technologies. For the strategy to be successful, it is key to gain the trust of citizens and businesses in the digital system, as they are the main users. In this respect, Member States said that they aimed to adopt a strong EU General Data Protection framework and Cybersecurity Directive. 2015: Adoption of Data Protection Regulation However, EU leaders postponed the timing for adoption of a regulation on data protection until 2015, mainly due to differences within the Council.

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Again, the UK, perennial bête noire, fears a European data protection regime would put additional burdens on business, whilst other Member States are opposed to any perceived watering down of their strict national rules. Prime Minister Cameron achieved one of his key objectives by delaying the timeframe of implementation of the new EU data protection legislation to after the next UK General Election. “Europeans must be able to trust their online providers, and know they are in control of their own data and ‘digital lives’”. EU Council President, Herman Van Rompuy

According to the amended final Council conclusions, the Data Protection regulation is expected to be completed “by 2015” instead of “by the end of 2014”.

US tech giants Google, Facebook, and Yahoo see this as a significant victory against the EU’s attempt to restrict costumers’ data sharing. Tax Fraud and Tax Evasion Two other issues discussed were tax fraud and tax evasion. Member States committed to combat these illegal practices and welcomed the recently published European Commission proposal for uniform VAT return, aimed at simplifying EU law. The proposal addressed specific issues crucial for the functioning of digital economy, such as differentiated tax rates for digital and physical products. However, in another example of kicking the can down the road, no final decisions on taxation-related issues were taken, as the Council postponed them to the next meeting in December.

C. Youth Unemployment: a short-term problem or a long-term tragedy? The fight against unemployment remains a key objective of the EU strategy with a specific focus on youth unemployment, which is twice as high as adult unemployment. The Council strategy is based on strengthening quality education at the national level dispensing key skills to meet labour market needs, on supporting youth entrepreneurship and on establishing apprenticeships and traineeships as important tools for getting young people into the labour market. Member States to “mobilise all efforts” Initiatives such as the Youth Guarantee scheme as well as the Youth Employment Initiatives are considered to be the main tools to succeed in this plan, with the support of the European Structural and Investment Funds (ESIF), and in particular the European Social Fund (ESF). The European Council recalled the need for the Youth Employment Initiative to be fully operational by January 2014 and calls on the Member States to mobilise all efforts necessary to this end.

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An important part of the employment plan and the goal of reaching an optimum currency area is to promote free workers’ mobility by granting them equal treatment in all European markets. In order to achieve this, the Council extensively discussed the enforcement of the Posting of Workers Directive, which aims to improve the protection of posted workers and facilitate provision of the services across borders, without, however, reaching an agreement on the final version of the proposal.

D. Fiscal, Financial and Social: ‘Three’ sides of the same coin The EU leaders focused on three different aspects of the European Monetary Union: fiscal, financial and social. As far as the fiscal aspect is concerned, the European Council has been actively promoting the process of establishing the Banking Union, which aims to place Eurozone banks under the overarching supervision of the ECB, followed by the creation of a bank resolution scheme for the block and, eventually, a common deposit scheme. The next crucial step for the banking union will be the Single Resolution Mechanism, which is set to centralise key competences and resources for managing the failure of any bank in the Euro Area and in other Member States participating in the Banking Union, because, as the President of the Council Hermann Van Rompuy stressed: “Once supervision is European, we cannot leave failures to the national level”.

Member States have committed to reach a Political Agreement on the Commission proposal by the end of the year, so that it can be adopted before the end of the parliamentary term. It remains to be seen if Member States will be able to respect this deadline. SMEs hardest hit On the theme of economic financing, the discussions mainly focused on small and medium enterprises (SMEs), many of which have been hard-hit by the crisis. The Council also called for greater involvement of the Member States, claiming that in order to promote inclusive and sustainable growth, the coordination of economic policies needs to be further strengthened by Member States.

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The last aspect, the social dimension of the EMU, is necessary to ensure that economic growth and social cohesion are mutually reinforcing and strengthening processes – yet, even on these matters, the European Council put back its final decisions for the next EU Summit.

E. Migration: Mediterranean Sea as the graveyard for hundreds of people. Specific attention was paid to the topic of migration after the recent deaths of more than 300 African migrants in a shipwreck off Lampedusa on 3 October. Member States responded at the Summit by enhancing cooperation with countries of origin and transit in order to address the root causes of massive migratory flows. In addition, the Council emphasised the urgency of implementing the new European Border Surveillance System (EUROSUR) and to reinforce FRONTEX activities in the Mediterranean. The Council invited the newly established Task Force for the Mediterranean, led by the Commission, to identify priority actions to tackle the issue promptly. However, no operational decisions are expected to be taken before December and once again, no concrete immediate policies have been put forward. Furthermore, the Council committed to revise its asylum and migration policies in June 2014, when strategic guidelines for further legislative and operational planning in the area of freedom, security and justice will be defined. In the meantime, in the strong words of President of the European Parliament Martin Schultz, Europe's migration policy has "turned the Mediterranean into a graveyard".

F. Eastern Partnership: EU between gains and challenges. Treaties between the European Union and non EU-countries, the so called Association Agreements, are currently interesting countries in the eastern regions of Europe where the Vilnius Summit, the third high-level meeting between EU and Eastern Partners, will take place on 28-29 November. EU leaders are very optimistic that Association Agreements will be signed with Ukraine, and initiated with Moldova and Georgia. However, despite the optimism, in the case of Ukraine there are still major challenges to be addressed that may threaten the finalisation of the signing process, not least whether Yulia Tymoshenko, former Tymoshenko holds the key

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Prime Minister of Ukraine, who the EU describes as a victim of ‘selective application of justice dictated by political motivation’, will be released from detention. The success of such an agreement depends on how Ukraine proceeds with its most famous prisoner, who still appears to wield considerable influence even whilst behind bars.

What they said:

On the digital economy: "Europe has been a global leader in this sector, but it has lost ground to key competitors. We are simply not using the full opportunities offered by the digital economy." José Manuel Barroso, President of the European Commission

On cutting EU red tape: “It’s not just a British concern. We need wealth creation, we need jobs, we need enterprise, and we are not going to get it if we over-regulate.” David Cameron, UK Prime Minister

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BigPictureBrussels 10/13 – EU Summit October 2013