FT / Brussels Blog

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What halted the main wave of Europe’s epoch-making migration crisis? Was it the fences of the western Balkans route? Or a transformative deal with Turkey? That is more than just an academic question as Europe wrestles with how to deal with Ankara, and the other policy dilemmas that stem from a world on the move.

This chart, inspired by some conversations with officials in Brussels, attempts to differentiate the two:

The first two lines show the political chain reaction triggered by the Austrians and others imposing quotas on their borders and effectively closing off the western Balkans route migration route.

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After months of agonising, the European Commission’s investigation into internet platforms is set to arrive with a bit of a whimper.

Fears of an all-encompassing inquisition into internet platforms – with commission officials bursting into the offices of Facebook and Google like a Monty Python sketch – have not come to pass.

"Nobody expects the European Commission."

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By Mehreen Khan

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Austria’s presidential vote on Sunday was billed as a political landmark for Europe: the first election of a far-right populist head of state since the second world war. Then thevote count started. The Freedom party’s Norbert Hofer may still end up in the Hofburg palace, elected for a party founded in the 1950s by a former SS general. But the result ison a knife edge and the Green party’s Alexander Van der Bellen could easily prevail. It’s down to postal votes. Vienna hosted two victory parties last night: a surreal end to a surreal campaign.

Regardless of the outcome, Mr Hofer’s rise is a reminder of some political chill winds in Europe. Other European far-right politicians have not yet come as close to power as the Freedom party. But if Mr Hofer succeeds, it would be possible to trace an arc of illiberal politics through Poland, Hungary (and to some extent) Slovakia and Austria that stretches from the Baltic sea to the gateway of the Balkans.

To varying degrees some of their ruling politicians share a nationalist, anti-immigrant, anti-Islam, anti-EU message. And, for all the grumbling, there isn’t much the EU can do about it. The main question is where populists, the far-right or anti-establishment parties will make their mark next, be it in France, Holland or some day in Germany.

Although the Commission has yet to propose the bulk of its digital single market reforms, in the Council the teams are already lined up.

On the one side are those member states who will welcome the proposals, which are aimed at boosting crossborder trade online.

By Mehreen Khan in London

The International Monetary Fund’s latest recommendations on Greek debt relief have leaked.

Yesterday, ahead of the latest meeting of eurozone finance ministers on May 24, the IMF repeated it would take part in Greece’s €86bn bailout only if its European partners could prove “the numbers add up”.

A key part of this calculation is for the fund to be fully assured that Greece’s debt mountain is finally placed on a sustainable downward trajectory.

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Welcome to Thursday’s edition of our daily Brussels Briefing. To receive it every morning in your email in-box, sign up here.

Gold prices down, sterling sharply up, bookies chalking Brexit at the longest odds since the campaign began (around 3/1). Has the Remain side in Britain’s EU referendum campaign made a decisive breakthrough?

Money is certainly moving against Brexit. A mini-trend of moderately better polls for the pro-EU side was buttressed on Wednesday by an ICM phone survey putting Leave 18 points behind. Referendum campaigns can break sharply as the public begin to seriously engage. Remain campaigners will be hoping this is that moment. Indeed after firing-off their big guns – the US president, macabre Treasury reports, Bank of England recession warnings – they may also be thinking: what took so long?

If a lead is sustained, two factors potentially play a role. ICM picked up a swing to Remain among Conservative voters, with around 60 per cent backing David Cameron’s position. They are still open to changing their minds, but for now the increasingly vicious Tory infighting seems to be encouraging a bit more loyalty to their prime minister. The second is that Remain are faring well on the economic argument – and that is where Mr Cameron thinks he will clinch the vote.

Now for the caveats. The Ipsos MORI poll on Wednesday could be an outlier. And even if it isn’t, why believe it? Pollsters called the last UK and Israeli elections dead wrong. Even pollsters are wary of polls these days. A debate over phone (better for Remain) versus online surveys (better for Leave) rages on in Britain. And in any event predicting behaviour in this vote is hard because there is no good quantifiable precedent.

Britain: 2016

Should an extraterrestrial land on Earth tomorrow and decide to base his decision on where to live solely on economic forecasts provided by the European Commission, there’s a fair chance they’d pick the UK.

In country-specific recommendations published yesterday for almost all EU countries, Britain comes out looking pretty good, with a “dynamic” economy, “strong” household balance sheets and a banking sector whose resilience “continues to improve.” Even the risks to the economic outlook are presented as being contained, or mitigated by the government’s “wide-ranging” reform agenda.

All well and good. The only perplexing thing is, how does this fit with the altogether less peppy assessment that the EU Commission made this time last year? What could be happening to change their view?

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Jean-Claude Juncker promised to lead a political European Commission and boy did he deliver. Compared to some politburo-like lifeless debates of the past, his college of commissioners have made a fair few touch-and-go decisions and late-turns (one mini-proposal on visas this month was commissioned and written within 12 hours of the meeting).

Today’s college clash over EU budget rules could be the most contentious yet. The issue is whether to start a process to fine Spain and Portugal for breaching their remedial deficit targets — a sanction never used since the creation of the single currency. What is at stake though is the Commission’s credibility as guardian of the EU’s fiscal regime. How far can it bend the rules?

There is little dispute over the economics. The vast majority of commissioners agree both countries took insufficient action to fix excessive deficits, a judgement that triggers a sanctions proposal. The question is when to announce it, and whether to signal that the fines, once set, may be tiny or indeed zero.

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Europe’s leaders have squabbled over nearly every policy aspect of the refugee crisis, apart from one: deportation.

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By Aleksandra Wisniewska

In March, Europe’s leaders gambled their political futures, diplomatic credibility and the lives of hundreds of thousands of migrants on a deal with Turkey.

After two months of raking over the terms of the deal, a simple question can be asked: has it worked on the ground? These four charts demonstrate the good, the bad and the ugly of the situation on the frontline of Europe’s refugee crisis.

The refugee crisis, at least when it comes to the Aegean, shows signs of abating. Arrivals to Greek islands dropped significantly from an average of 2,000 per day to under 100.

This does not mean Europe’s migration crisis has gone away.

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Is Recep Tayyip Erdogan bluffing? Almost every day this week, Turkey’s president has taken a crude swipe at the “hypocritical” EU. An EU-Turkey deal that has stopped the migrant boats looks in danger. He hasn’t quite repeated his past threat to arrange Berlin-bound buses for refugees. But Mr Erdogan has cast the coming months as a historic turning point. If the EU fails to deliver billions of euros in funding and visa-free travel rights, he warns, the migration deal will die and with it Turkey’s EU orientation.

Take this extract from Mr Erdogan’s speech on Thursday, where he lashed out over EU demands that he soften terrorism laws as a condition of visa-free travel:

“They believe they have the right [to fight terrorism] but find it a luxury and unacceptable for us. Let me say it clearly – the name for this is hypocrisy. A EU that tramples on its own values and principles will be worth nothing to its members, or the world …The visa business … we sorted it, we signed it … now they come with 72 conditions. They squeeze terrorism [reforms] in there. Where did that come from? Show me where that’s in the acquis, in the visa rules …. Did they demand it when South American countries were given visa-free travel? We know very well what the reason is – don’t let anybody be fooled. We’re waiting for this union’s warped and wary attitude to Turkey to end. In the near future we will either strengthen our ties with the EU, or we will find ourselves a new path. Our preference is to build new Turkey with our European friends. We’re waiting for their response.”

Where will this end? The positive scenario you hear in Brussels and Berlin casts this all as bluster. Mr Erdogan is brashly talking up his negotiating hand, tickling nationalist sentiment at home, while aiming to bag vote-winning visa rights to propel him in his real goal: an executive presidency giving him boundless power in Turkey. These officials think his bravado hides vulnerability. Turkey’s economy has weaknesses. And failing to deliver travel rights could also hurt Mr Erdogan at the ballot box. As Jean-Claude Juncker, European Commission president, claimed: “that will be his problem.”

The EU side think a compromise is in sight if they hold their nerve.

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So she finally got to say no. Every EU competition chief blocks a handful of mergers; Margarethe Vestager’s first veto was on Wednesday and it was delivered with some relish, stopping a £10.5bn tie-up between the UK mobile arms of Telefónica and CK Hutchison. The FT’s Lombard column has the Dane dispatching the deal to Valhalla. But this was more than routine deal-killing – it arguably marked the start of Vestager 2.0.

First the deal. The consolidation-obsessed telecoms sector tried desperately to ignore the signals, but for more than a year Ms Vestager was all but breathing fire on mobile deals, making plain her fears that they can raise prices while not really helping investment. In part to draw a line under the more accommodating approach of her predecessor Joaquin Almunia, she wanted to make a stand over a Danish telecoms tie-up, but the parties pulled out and stole her thunder. Wednesday’s decision was no surprise, but it has left the sector in a tizzy.

More broadly this was a milestone for Ms Vestager’s term in office: a threat carried through, a final decision taken, and a distinct approach set on merger control. Now her challenge is to make her mark in the biggest antitrust and state aid cases. There she has set many hares running. But issuing charges is the easy part. She has to show she can close tough cases too, including on Google, Gazprom and the blockbuster tax fight over Apple.

Here we go again. The protesters are back in Syntagma square. The EU’s summer has officially begun.

Yesterday’s anger was easy to explain. Shortly after midnight, the Greek parliament voted through contentious pension cuts and income tax increases, covering the bulk of a €5.4bn package of austerity measures demanded by creditors. That sets the scene for a meeting of the Eurogroup today to decide how much more the Greeks still need to do.

The Greek parliamentarians already appear to have been shaving close to their own jugulars. Kerin Hope, the FT’s correspondent in Athens, notes that riot police had to block the entrance to the assembly after members of Poesy, their own union, tried to force their way past security guards.

But despite the successful vote, Greece is far from in the clear. Before closing a review of Greece’s bailout and providing Athens much-needed aid, the IMF and the German government are insisting Athens go a step further an legislate an additional €3bn in “contingency measures” in case the agreed cuts prove insufficient to meet budget surplus targets.

Monday was supposed to be the day when eurozone finance ministers flew to Brussels for an emergency eurogroup meeting (just their first of 2016!) to agree a way forward on Greece’s star-crossed €86n third bailout. But despite weeks of intensive talks, negotiators are no closer to a deal then they were when they were sent back to Athens two months ago.

Last night, Christine Lagarde, the International Monetary Fund chief, sent a letter to all 19 finance ministers ahead of the Monday meeting with her demands: drop all the talk about new austerity measures and quickly agree a plan for debt relief so that a deal can be met before a possible Greek default in July. We got a hold of the letter, and have posted a news story on its contents here. But as is our practice at the Brussels Blog, we thought we’d offer up an annotated version of the full text, sent to national capitals last night:

The three EU chieftains– Jean-Claude Juncker, Donald Tusk, and Martin Schulz – swapped the corridors of power in Brussels for the halls of Rome’s Capitoline Museums on Thursday night, but the magnificent setting only seemed to deepen their gloom about the state of European integration.

The trio was in the Italian capital ahead of Friday’s ceremony to deliver the prestigious Charlemagne award to Pope Francis at the Vatican. But first they had to debate the future of Europe at a time when it appears to be in serious jeopardy amid the rise of populism, weak economic growth, and, the migration crisis.

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Just 24 hours after Frans Timmermans, the European Commission vice-president who has overseen the EU’s response to the refugee crisis, confidently announced in Brussels that he was recommending Turks be granted visa-free travel to Europe, the Turkish politician who had won that very concession held a similar press conference 2,500km away to announce he was resigning.

The proximate cause of Ahmet Davutoglu’s departure as Turkey’s prime minister was his increasingly strained relationship with Recep Tayyip Erdogan, the powerful president who found his hand-picked prime minister to be far less pliable than originally hoped. But EU officials are worried that Mr Davutoglu’s outreach to Europe was a contributing factor. Ankara has been buzzing about a new political blog that began attacking Mr Davutoglu earlier this week, accusing him of “collaborating with the West” and betraying Mr Erdogan by striking deals with the EU. Many believe Mr Erdogan himself gave the green light for the blog’s accusations. Turkish officials said the president was seething after Mr Davutoglu was pictured chummily touring refugee camps with Germany’s Angela Merkel and other EU leaders two weeks ago in the border city of Gaziantep.

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Jeremy Corbyn, leader of Britain's Labour party

Local and regional elections in Europe normally provide minor diversions for the political classes in between the titanic national clashes that pit a country’s most prominent leaders against each other. But over the last six months, it has been a series of regional votes that have sent shockwaves through some of the EU’s most well-established parties and reshaped national debates. In December, the far-right National Front finished first in six of France’s 13 major regions in the first round of voting, and was only denied victory in the second round when the ruling Socialists pulled out of multiple contests. Three months later, the equally anti-immigrant Alternative für Deutschland scored in double digits in three German länder elections, including a stunning 24 per cent in depressed Saxony-Anhalt, rattling the ruling Christian Democrats of Chancellor Angela Merkel.

Today, it is Britain’s turn to hold local contests, and while the populist UK Independence party is hoping to score gains outside its English base, the real potential for electoral mayhem lies within opposition Labour, which is in the midst of a brutal internecine war over the leadership of left-leading party boss Jeremy Corbyn. In the most high-profile vote today, a Labour candidate is expected to emerge victorious: one-time Corbyn ally Sadiq Khan is heavily favoured to succeed Tory Boris Johnson as London’s next mayor. But Labour risks losing seats almost everywhere else in the UK, including in Scotland, where the once-dominant party is at risk of slipping into third behind the commanding Scottish National party and the revived Conservatives.

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EU economic chief Pierre Moscovici, right, with Portugal's new finance minister in Lisbon

There’s been a rare spate of good economic news for the eurozone recently, with Eurostat announcing last week that the currency union’s gross domestic product had finally returned to pre-crisis levels and was growing at a 0.6 per cent quarterly clip – enough to outpace the US or the UK so far this year. But growth remains uneven across the 19-member bloc, and the first quarter’s performance remains meagre by historical standards. As a result, it will likely not be enough to help eurozone countries currently finding it difficult to get their debt and deficit levels back under EU budget ceilings.

Those countries sparring with Brussels over such budget targets – France, Italy, Spain and Portugal – will be in the spotlight today when the European Commission issues its new economic forecasts, which will include predictions on whether any of them are making progress towards getting their deficits below the 3 per cent of GDP threshold or – in the case of Italy, which is already below the deficit ceiling – are cutting their debt piles fast enough.