War in Ukraine prompts rethink of EU architecture

Good morning and welcome to Europe Express.

French president Emmanuel Macron is expected to hold a big, Sorbonne-style speech on the future of the EU next week — but that didn’t stop other European politicians from putting their ideas forward. We’ll bring you up to speed with what Italy’s Mario Draghi and Austria’s foreign minister had to say and where the debate is likely to land, now that the EU’s exercise in direct democracy, the Conference on the Future of Europe, has come to an end.

In Russia sanctions news, EU ambassadors are set today to pore over the European Commission’s proposals aiming for an oil embargo, which Ursula von der Leyen will present in the European parliament this morning. All eyes will be on the last holdout, Hungary, and whether it will agree with the sanctions package, which includes a longer transition period to implement the embargo.

Greece meanwhile got an F in media freedom this year — and we’ll explore why it slid behind Hungary, ranking last among EU countries in the annual World Press Freedom index.

As far as Russia boycotts go, we’ll look at what the war in Ukraine means for the World Trade Organization and the prospects for reform.

Building a bigger European house

The European institutions set up in recent decades have served its citizens well but they are “inadequate” for the reality confronting us today, writes Sam Fleming in Brussels.

Mario Draghi, the Italian prime minister, issued that warning to the European parliament yesterday as he called on the EU to embark on a shift towards “pragmatic federalism”. 

His words resonated in a number of capitals. That’s not because everyone is drawing the same conclusions from the current crisis as Draghi: his calls for more EU common borrowing certainly do not have broad-based support, for example.

But Draghi is by no means alone in arguing that the war needs to be the trigger for a far-reaching rethink on how the EU does business across a range of policy areas.

One of those is how the EU handles its relations with its nearest neighbours. Alexander Schallenberg, the Austrian foreign minister, this week told the Financial Times that Russia’s war of aggression was a “geostrategic moment” that should spark a rethink of the EU’s accession process.

States could be granted rapid access to “parts of the common market” and to selected EU institutions and programmes as a transitional process towards full membership, he argued. “We must anchor [all of] them in Europe, and in the west.”

In an interview with Europe Express yesterday, Enrico Letta, the former Italian prime minister and now head of the Jacques Delors Institute, agreed that the EU needed to rethink the way it handles enlargement.

He argues for a European “confederation” that would encompass countries such as Ukraine, Georgia, Moldova, Montenegro and North Macedonia. Their new status would give them a voice and role in European life, via mechanisms including regular summits with EU leaders, rather than leaving the question of EU accession as an entirely bilateral one.

Confederation members could gain trade benefits within the grouping or co-operation with the EU in areas such as research or participation in the Erasmus student programme. These countries, Letta said, needed “concrete and formal accession to the European family” — via a format that runs alongside the existing EU enlargement process.

The issue is particularly germane given Ukraine’s drive for EU membership — and the formidable obstacles that stand in its way. Some diplomats fear that unrealistic expectations are being stoked when it comes to Ukrainian membership, given how distant a prospect it is in reality.

The flurry of discussion on Ukraine’s EU prospects also risk alienating other potential member states that have watched their own applications stagger along inconclusively for years.

“Just like after world war two, you have to think of what kind of house you want to build in Europe,” said one diplomat. “How big is this house going to be, who will be the family members, and what will the rules be?”

Chart du jour: Italy jitters

Italy’s 10-year yield spread versus Germany, considered a barometer of political and economic risks in the euro area, climbed as high as 1.9 percentage points yesterday, its widest since the early stages of the pandemic when investors dumped riskier eurozone government debt.

Greece backsliding

Greece scored lowest among EU countries when it comes to press freedom, falling behind Hungary and Bulgaria in the annual World Press Freedom Index published yesterday, writes Eleni Varvitsioti in Athens.

The Mediterranean nation, which traditionally scores low compared with other EU countries on the index, has dropped 38 positions since last year and now ranks 108th on a list of 180 countries, just below Chad, Gabon and Burundi. The best-ranking country is Norway, while at the bottom of the list is North Korea.

The report bases Greece’s recent drop on amendments to the criminal code passed under the pretext of fighting the Covid-19 pandemic, which, as it says, “allows for a disproportionate restriction of press freedom on shaky legal grounds”. The offence of spreading false information is punishable with five years’ imprisonment.

According to the report, one of the reasons for Greece’s low score is that most media outlets are “owned by few individuals who are active also in other, highly regulated business sectors”. The close ties of media owners to the political elite mean the press is politically polarised, it says.

Greece’s recent financial crisis made matters worse, as low readership and decreased advertising revenues made media outlets more dependent on public funding and thus more vulnerable to political pressure.

At the same time, Greek female journalists frequently face sexism in the workplace, the report says.

A special mention is given to the unresolved murder of veteran crime reporter George Karaivaz, who was shot in broad daylight outside his home in Athens last year.

WTO boycott

After several countries walked out of the IMF and G20 meetings in April when Russia addressed the bodies, fears are growing over the prospects for the World Trade Organization gathering in Geneva in June, writes Andy Bounds in Brussels.

The WTO has twice postponed its biennial ministerial get-together because of Covid-19 and a third delay would further damage a body that is already limping.

Russia has the right to attend and to veto any deals. Officials in Geneva do not expect a western boycott but many EU member states want WTO chief Ngozi Okonjo-Iweala to persuade Moscow not to send a minister but to be represented by its ambassador to the WTO.

“It’s very difficult,” said an EU diplomat. “If a Russian minister speaks our delegation will leave the room. If they are on video we will turn down the sound.” They suggested Russia could be briefed on negotiations separately by WTO officials rather than be in the same room, but the Kremlin is unlikely to agree.

However, WTO officials do not expect Russia to be obstructive. “There is no mechanism for kicking Russia out. But they do not want to wreck the meeting,” one said.

The event has been condensed to four days, June 12-15, from six, and ministers are expected to visit only for one.

There would be no joint ministerial statement but rather a declaration by the chair of the talks, diplomats said.

Okonjo-Iweala visited Washington last week and was told the Americans would attend. But she admitted in a press briefing that a deal to reduce agricultural subsidies was far from guaranteed. Diplomats said an attempt to end the most damaging fishing practices could also founder over Indian and Chinese objections.

A plan to make it easier for developing countries to waive intellectual property rules to copy Covid-19 vaccine designs has a better chance. And countries are likely to agree to form a group to find ways to reform the organisation to make it more effective.

What to watch today

  1. European Commission president Ursula von der Leyen speaks on oil embargo proposals in the European parliament in Strasbourg

  2. Indian prime minister Narendra Modi meets French president Emmanuel Macron in Paris

Notable, Quotable

  • Beefed-up Nato: Since the start of the Russian invasion in Ukraine, Nato allies along the alliance’s eastern flank have collectively embarked on the most significant — and rapid — military deployment in the recent history of Europe.

  • Higher wages: Eurozone unemployment has hit a fresh record low after the bloc’s labour market weathered the initial fallout from Russia’s invasion of Ukraine, emboldening unions to intensify their push for higher wages.

  • Farming troubles: A collapse in the value of the Turkish lira over the past 12 months, combined with a surge in global commodity prices, has made the lives of Turkish farmers much more difficult than their European peers.

  • Chelsea’s future: Two of Roman Abramovich’s longstanding associates are set to keep their jobs running Chelsea Football Club if the leading bidder, a consortium led by US financier Todd Boehly, prevails.