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The end of the year may be fast approaching, but that has not yet brought any clarity on the EU’s proposed gas price cap — much to the frustration of some capitals. We’ll bring you up to speed with the latest thinking and why diplomats are unimpressed.
EU finance ministers are meeting in Brussels today, after economics commissioner Paolo Gentiloni for the first time acknowledged the bloc is set to enter a recession in the winter months, calling for measures to ensure it is as brief as possible. The commission puts out detailed forecasts on Friday.
We’ll also look at the improved mood music between the new UK prime minister and EU officials, but also at why the fundamentals haven’t changed.
And we’ll hear from Lithuania, whose China-defiant, pro-Taiwan stance is starting to pay off.
Two weeks after the EU trumpeted a deal to bring down energy prices after a late night summit it is beginning to unravel, write Alice Hancock and Andy Bounds in Brussels. Countries that want a ceiling on the price of imported gas are refusing to support other measures such as joint purchasing of supplies until the European Commission outlines more details about the cap.
They worry that the free market bureaucrats of the commission oppose the idea and will not come up with a realistic price cap proposal. Meanwhile Germany, which believes that traders would take their gas elsewhere if the EU imposed a maximum price, is likely to block anything Brussels does suggest.
The package that the commission put forward — at least 70 pages long — covers three main areas: corralling gas demand to buy as a bloc, default rules for sharing gas should a member state be cut off, and ways to control high prices including a so-called “market correction mechanism” (aka price cap).
Member states sceptical of a price cap believe its creation should be contingent on eight strict criteria outlined in the original commission proposal, which include not jeopardising security of supply, not increasing consumption, and not impacting intra-EU gas flows.
But diplomats say at least 10 states, including Italy, Belgium and Greece, want details of a price cap plan, which the commission is currently working on, before they agree to any other measures. A roundtable of energy providers, regulators and consumer associations was convened by Brussels yesterday to discuss ways to bring prices down.
Latest revisions of the proposals, due to be circulated among member states today, have maintained the softly, softly approach to the cap saying that the council “may” adopt a temporary price cap mechanism if it fulfils the eight criteria, according to people with knowledge of the document.
There has also been a lot of rewording around who should pay for what when it comes to offering up gas to other member states in case of emergency, the people said.
Some diplomats remain unsatisfied. “All the measures agreed at the European Council should be implemented at the same time,” said one.
Another senior diplomat noted the recent decrease in gas prices (partly because of warm weather) and said “we remain convinced that prices will remain relatively manageable only so long as we are credibly moving forward on the price cap” and even if it was not used it was a useful “deterrent”.
The dispute means an emergency energy council on November 24 “could be a fiasco with no deal and the gas price could go higher because the market responds to that,” said another diplomat. The commission said no plans or dates for a price cap proposal could be confirmed and that it wanted “agreement on principles” of the idea before it could “advance with details”. All clear, then.
Chart du jour: Climate-proofing companies
Around three-fifths of EU companies surveyed by the European Investment Bank ahead of COP27 report that weather events are currently having an impact on their business. But only a third have invested in climate resilience measures.
Plus ça change
New UK prime minister Rishi Sunak continued his detente with Brussels yesterday with a meeting with commission president Ursula von der Leyen in Egypt, where they are attending the COP27 climate summit. But while the mood music may have improved, the same cannot be said about the fundamentals in the EU-UK relationship, writes Andy Bounds.
Sunak and von der Leyen reiterated their joint support for Ukraine and talked up negotiations on the Northern Ireland protocol, the bugbear in post-Brexit relations.
“They agreed on the importance of working together to agree a resolution,” the UK said afterwards.
Meanwhile back in London the UK/EU parliamentary assembly, a gathering of MPs and MEPs, had its second session.
Maroš Šefčovič, the Brexit commissioner, said the protocol — which regulates trade between Great Britain and Northern Ireland — could be fixed in “a couple of weeks” if the UK agreed to the EU’s offer. That would mean “minimal checks” rather than scrapping all checks as London wants.
Leo Docherty, the UK’s new Europe minister, also reverted to familiar speaking points, saying that the EU should let the UK into its Horizon research programme. (Brussels has refused to do so until the UK applies the protocol).
He also confirmed the Northern Ireland protocol bill, which would unilaterally override it, would continue its progress through parliament. “We are not expediting it but we are not halting it,” he said.
EU negotiators have made it clear there cannot be a deal while London has this “loaded gun” on the table.
So for all the warm words, the cold hard reality remains as it was under previous prime ministers. A deal requires a level of compromise neither side has so far been willing to show.
Using the T-word
Lithuania’s cosying up to Taiwan has brought Beijing’s ire on the Baltic country but it has also produced concrete results, writes Richard Milne, Nordic and Baltic Correspondent.
Yesterday marked the official opening of Lithuania’s trade representative office in Taipei — but without using the word “Taiwan” that so enraged China when the island opened a similar mission in Vilnius last year.
Taiwan also announced its first investment in Lithuania as part of its charm offensive following the unofficial trade embargo that China imposed on the Baltic country. It is using its $200mn central and eastern European investment fund to put money into a Lithuanian laser company and chip production in the Baltic country.
The investments are more symbolic than big business but have delighted Lithuanian diplomats, who have spent much of the past year touring other parts of the Asia-Pacific region to build up relations with a range of countries aimed at reducing dependence on China.
Some accused Vilnius of taking on too much by picking a fight with Beijing at the same time as Russia geared up to launch its full-scale invasion of Ukraine. Lithuania had little direct trade with China but was surprised by Beijing’s decision to target goods made in Lithuania by multinational companies. Instead, Vilnius expressed its support for freedom and democracy as reasons for supporting Taiwan.
Few inside the EU have moved as decisively as Lithuania but others have edged in that direction including Slovakia, some of whose lawmakers visited Taiwan this summer, and Estonia, which joined Vilnius in abandoning the old 17+1 format China used to deal with central and eastern European countries.
What to watch today
EU finance ministers meet in Brussels
EU commission chief Ursula von der Leyen and Council president Charles Michel speak at COP27
Salvini 2.0: Italy’s new rightwing government is attempting to stop European charities landing migrants rescued from the Mediterranean at the country’s ports, in tactics reminiscent of the times when League leader Matteo Salvini was interior minister.
Nada to see here: Spain’s economy minister Nadia Calviño in an interview with the FT brushed off doubts from business and Brussels about the management of billions of euros of EU recovery funds.
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