Why EU defence and security policy will stay in the hands of capitals

Good morning. A scoop to start: Ukraine and Russia are in preliminary discussions about a partial ceasefire to stop attacking each others’ energy infrastructure, according to people familiar with the talks.

Today, I preview a report on the EU’s defence and security situation that will be presented today. And we have a dispatch from our Paris bureau chief on France’s chaotic budget discussions.

Recalibrating

If desperate times call for desperate measures, it seems things in the EU are not that bad yet.

A report on the bloc’s defence and security situation today is set to ring alarm bells about climate change and conflict, but it won’t decree a radical overhaul of the existing security architecture, according to people briefed on its contents.

Context: The Covid-19 pandemic, the wars in Ukraine and the Middle East, floods, drought and rising temperatures all herald a change in the security environment. The European Commission in March charged former Finnish president Sauli Niinistö with taking stock of the situation.

The report, to be presented today, will look at how the EU can better prepare for and defend itself against future threats. Several people briefed on its contents said that Niinistö will stop short of recommending the transfer of more power to Brussels or the creation of new agencies to centralise security powers.

This will come as a relief to member states who have been jealously guarding those competences, particularly since the announcement of a new EU defence commissioner last month. “We are very satisfied that the responsibilities and distribution of powers between the EU and member states will not be called into question,” one EU diplomat said.

Instead, Niinistö will make recommendations on how to improve existing agencies and strengthen co-operation between member states, for instance by sharing more intelligence to counter hybrid threats, according to the people briefed on the report.

One proposition will be to strengthen the bloc’s disaster response arm, the Emergency Response Coordination Centre (ERCC), three people said.

Niinistö is also set to make recommendations on strengthening defence procurement and the arms industry, they added.

Member states are divided over how much of a role the EU should take. It has traditionally been powerful on trade and regulation while security remained a remit of the capitals.

Niinistö may also be treading carefully so as not to upset Nato. The alliance’s membership includes 23 EU countries and it has previously warned of over-reach. “He made sure to underline that Nato is the backbone of our security, and the EU is more the civil arm,” a second EU diplomat said.

Yesterday, Nato secretary-general Mark Rutte and European Commission president Ursula von der Leyen over lunch agreed to set up a task force to strengthen co-operation between the EU and Nato.

Chart du jour: Sickly

Languishing economy and warring coalition partners: Is Germany on the verge of a snap election?

Much ado

When French premier Michel Barnier proposed a belt-tightening budget earlier this month, he cast the €60bn package as a careful mix of cuts and “targeted and temporary” tax hikes on companies and the wealthy.

Then lawmakers in the National Assembly got their hands on it, writes Leila Abboud.

Context: France has repeatedly overshot its deficit targets since last year, prompting concern that the government has lost control over spending. Barnier’s shock-therapy budget is meant to start tackling the problem but it will take until 2029 for a return to back within EU targets — if all goes well.

In late-night marathon debates over the past days, lawmakers have tabled hundreds of amendments that would add around €40bn of extra taxes to the package.

MPs, mostly on the left but with the occasional support of the far right, backed higher taxes on dividends, an end to corporate tax cuts central to President Emmanuel Macron’s business-friendly reforms, and a new tax on billionaires, among other changes.

So are French chief executives and billionaires feeling cold shivers down their backs?

Nope. Under the strange mechanics of the French constitution, Barnier and his government have at their disposal a powerful weapon to pass the budget by overriding lawmakers, known as clause 49.3.

Barnier will undoubtedly be forced to use it since he has no majority, and the opposition will vote against the budget. And clause 49.3 comes with a major benefit: it allows Barnier to pick and choose which amendments to retain.

The downside is that his government will then invariably face a no-confidence vote, which could take place next month.

So for now, it’s safe to tune out of the cacophony of France’s budget debate, while MPs engage in political theatre without having to make any budgetary sense whatsoever.

What to watch today

1. Former Finnish president Sauli Niinistö to present report on EU defence with European Commission president Ursula von der Leyen.

2. European Commission to present a report on EU enlargement progress.

Now read these

• In broad daylight: The former owner of a bank in Latvia has been sentenced to prison for organising the brutal murder of a whistleblower.

• Phone hack: A Brussels court yesterday sentenced 119 people for drug trafficking based on evidence from the decrypted Sky ECC software.

• Solo trip: Viktor Orbán’s voyage to Georgia, hailing its contested election as “free and democratic”, has been met with dismay around Europe.