Wed. May 25th, 2022

Good morning and welcome to Europe Express.

Italy’s presidential election enters a hot phase today, with political blocs able to declare their favorite candidate a winner with a simple majority. If only they could agree on what to do about Mario Draghi. We’ll explore the latest and who some of the floated names are.

On the eastern front, Russia got its written reply from the US yesterday: unsurprisingly, NATO’s door remains open to new members – the opposite of what the Kremlin wanted to hear. Meanwhile, European Central Bank warned lenders with significant Russian exposure to ready themselves for sanctions in case of an attack on Ukraine. Nothing to see here, Vladimir Putin told Italian business leaders, urging them to “feel as comfortable as possible” about the Russian market.

Speaking of Ukraine, I’ll bring you up to speed on why a proposal for an EU military training mission caused disagreement among EU foreign ministers earlier this week.

And in EU antitrust news, Intel scored a provisional victory in a case dating back some 20 years that pinged back and forth in the EU court system and still has one appeal left. One thing all sides can agree on: faster procedures.

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Waiting for white smoke

Political negotiations over whom to anoint as Italy’s next head of state are intensifying, as the presidential election process moves into a hot phase today following three inconclusive rounds, write Amy Kazmin and Davide Ghiglione in Rome.

Italian lawmakers are effectively deciding the future of Mario Draghi, the former European Central Bank president, who was pulled out of retirement last year to lead the government amid a deep political, economic and health crisis.

With his long career in public service and stellar international reputation, Draghi has long been considered a natural head of state.

But members of Draghi’s fragile national unity government fear that him moving into the country’s lavish presidential palace could propel Italy into early elections, if parties cannot agree on a new prime minister – a tricky task given looming general elections in 2023. Yet they have also been unable to reach a consensus on any other mutually acceptable presidential candidates.

Amid this fundamental dilemma, lawmakers have been casting a deluge of blank ballots in the first three rounds of voting, reflecting their agreement to avoid any result that could unsettle the delicate political equilibrium amid ongoing negotiations.

“It is clear all political forces want to ensure a certain continuity and are aware that they need to vote for a president with a pro-European approach, able to handle the national recovery and resilience plan as well as the economic and health crisis,” said Cristina Fasone, a professor of comparative public law at Rome’s LUISS University.

“But that does not necessarily mean that they will be able to prevent a political crisis from happening,” she said.

When the fourth round of voting takes place later this morning, the threshold for victory will be lower: a presidential candidate will need just half the votes cast to be declared the new head of state, making it easier for a political bloc to push a favored nominee to victory.

In the first three rounds, victory would have required a two-thirds majority.

With pressure mounting, Enrico Letta, leader of the center-left Democratic party, has declared that Italy’s political leaders must work quickly to forge a deal on the way forward.

“Our proposal is to lock ourselves in a room and throw away the key, with only bread and water on hand until we reach a definitive solution,” he said.

In recent days, rightwing parties have proposed several potential alternative candidates for the presidency, including Elisabetta Casellati, who is president of the Senate and a member of Silvio Berlusconi’s Forza Italia party.

But all the right’s proposals have been forcefully rejected by the left, which has, however, struggled to propose its own alternatives.

“There is still a lot of confusion among Italian political parties,” Fasone said. “The names that have been put forward by the parties do not necessarily have any value.”

The outcome of the process will have repercussions not just for Italy but for the entire EU, given the country, as the largest recipient of the EU € 800bn recovery fund, is due to receive nearly € 200bn in grants and loans in a once-in -a-generation opportunity to reboot its economy.

Chart of the day: Jobseekers, sought

Line chart of EU companies reporting labor as a factor limiting production (%) showing Worker shortages hit record highs

Worker shortages are omnipresent in Europe and particularly acute in IT and healthcare; in construction, where demand has been turbocharged by booming house prices and an infusion of EU funding for green retrofitting projects; and in hospitality, where ever-changing Covid rules make jobs seem less secure. (More here)

Mission, invisible

When EU foreign ministers earlier this week were unable to give their green light to a military training mission to Ukraine, the discussion was not even about the kind of combat training the USthe UK and Canada are conducting.

Rather, the issue was about how much visibility to give to six to 10 advisers (up to 35 at a later stage) the EU wants to send to Ukraine to help out with a revamp of the country’s military education system, which still uses Soviet- era methods.

Out of four options put forward by the EU diplomatic service (EEAS) in December, two are still on the table. First, a classic EU common security and defense mission with its own headquarters and command and control structures, which was the preferred choice of most countries on Monday.

The EEAS paper, seen by Europe Express, describes this option as having “high political visibility in Ukraine and demonstrates the EU engagement in the country”. The downside, which seems to have spooked some capitals, is that “the possible impact on EU broader policies and interests in the region is difficult to predict, especially in light of recent developments and increasing tensions caused by the build-up of Russian troops in and around Ukraine ”.

The ministers of Germany, Italy, Spain and Greece would rather go with the other, less visible, but also faster option – a so-called “assistance measure” funded through the EU’s new financial instrument called the European Peace Facility. This would allow a faster deployment as it would skip the months of preparations, planning and setting up command and control structures. And without much visibility for the EU, “this option would be more adapted to current geopolitical circumstances” the EEAS paper reads.

A spokesperson for Germany’s foreign ministry yesterday said EU countries were in agreement over the mission but were still discussing the instrument and legal basis for it – something Berlin hopes can be swiftly resolved. The spokesperson reiterated Berlin’s position that their preferred option was the one via the European Peace Facility.

EU foreign policy chief Josep Borrell also expressed confidence (around min. 1.35.36 of this panel discussion) that an agreement will be reached soon on what he described a “symbolic” mission, anyway: “Maybe without the crisis they would continue procrastinating and debating endlessly, but thanks to the crisis I think the decision will be taken.”

Snail-paced justice

US chip giant Intel scored a win against the European Commission yesterday in a case dating back to the early 2000s, but the legal wrangling will go on for even more years, highlighting the need for more efficient rules on Big Tech, writes Javier Espinoza in Brussels.

The US company is still fighting a € 1.06bn fine imposed by Brussels in 2009 for allegedly trying to undermine a competitor.

This dates back to when EU regulators penalized the company for attempting to disadvantage competitor Advanced Micro Devices by handing out rebates to computer makers, including Dell in exchange for buying the majority of their chips from Intel.

In the two decades since the original complaint was submitted, the case made its way to the EU’s top court, which partly upheld the decision but in a rare move sent the case back to the lower General Court. Yesterday, the General Court annulled the fine and criticized the commission for its “incomplete analysis” that did not meet legal standards.

The commission can still appeal against the ruling. Margrethe Vestager, the bloc’s competition chief, accepted defeat and said she would “study in detail what we can learn from this judgment; what is the balance between the things we won and the things we lost and the annulment of the fine ”.

Legal experts said the judgment was damning for the commission’s record. Damien Geradin, a Brussels-based lawyer, said: “This is a win for those seeking a more economic and less formalistic approach to abuses.”

Consumer group BEUC deplored the ruling and said the lengthy legal battle only made the case for “an urgent, speeding up of antitrust procedures”.

Intel said it would comment only after completing its own review of the judgment.

What to watch today

  1. European Investment Bank annual press conference

  2. Mark Rutte, Prime Minister of the Netherlands, meets his Slovak counterpart Eduard Heger in Bratislava

  3. Czech foreign minister Jan Lipavsky visits NATO to discuss Ukraine

Notable, Quotable

  • Ukrainian déjà vu: On the Russian border, the port of Mariupol is again in the line of fire, seven years after a devastating artillery strike. The city’s 565,000 residents weigh the threat of renewed Russian aggression, even if Ukrainian officials insist that talk of an invasion is an elaborate Kremlin bluff.

  • Unprepared for green: Fewer than 10 out of 13,000 companies had complied with the new reporting rules about their spending on environmentally sustainable areas such as renewable energy, which came into effect in Europe on January 1, said the US-based Conference Board.

  • Covid rules, relaxed: Denmark yesterday became the latest in a series of north-west European countries to relax Covid-19 restrictions despite a rise in infections. Ireland, the UK and the Netherlands have also eased their rules, as vaccinations keep most infected people out of hospitals.

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