European Union

General : Volunteers from the Syria Civil Defence - better known as the White Helmets - risk their lives on a daily basis by serving as the main rescue group operating in besieged eastern Aleppo. Addressing Parliament’s foreign affairs and development committees on 5 December, their chief liaison officer Abdulrahman Al-Mawwas decried the current situation in Aleppo and called for both a no-fly zone and humanitarian corridors to prevent a large-scale humanitarian disaster.

Source : © European Union, 2016 - EP

General : Volunteers from the Syria Civil Defence - better known as the White Helmets - risk their lives on a daily basis by serving as the main rescue group operating in besieged eastern Aleppo. Addressing Parliament’s foreign affairs and development committees on 5 December, their chief liaison officer Abdulrahman Al-Mawwas decried the current situation in Aleppo and called for both a no-fly zone and humanitarian corridors to prevent a large-scale humanitarian disaster.

Source : © European Union, 2016 - EP

Donald Trump has no experience in public office. He has no public record upon which to judge him. So it is difficult to determine the likely foreign policy of the United States President-elect. But we can analyse him based on his campaign rhetoric, his choice of personnel and his personality.

Adopting a strong Republican posture, Trump has been quite consistent in terms of his opposition to Iran. He has selected a team that is strongly against Iran and the 2015 nuclear deal.

During the presidential campaign, Trump variously called the deal – aimed at limiting Iran’s nuclear capacity in return for an end to sanctions – as “incompetent”, “dumb” and a “nuclear rip-off”. But when it comes to criticism based on the terms of the agreement, Trump is short on specifics. Instead, he simply claims that he can renegotiate a better deal.

Mike Pompeo, Trump’s pick to lead the Central Intelligence Agency, is against uranium enrichment on Iranian soil – a core element without which there would be no negotiated settlement. But neither Pompeo nor like-minded Republicans have proposed an alternative to the 2015 agreement.

“Trump is short on specifics about his opposition to the Iran deal. Instead, he simply claims that he can renegotiate a better deal”

Despite his complaints, Trump will probably not walk into the Oval Office and scrap the deal on Day 1. This is primarily because even some of the deal’s most ardent opponents in Washington DC, and across the Middle East, are now arguing that the agreement is useful. It is, after all, constraining Iran’s nuclear enrichment capacity and activities.

The United States cannot single-handedly destroy the deal or reinstate international sanctions because the agreement is between the United Nations Security Council veto powers plus Germany, and Iran. Without a consensus, the US can at most withdraw from the agreement and try to sabotage the provisions of the agreement by using its political and economic leverage. The notion of renegotiating the agreement is a fallacy, since none of the other signatories have any incentive to do so.

So the opponents to the deal are undertaking a different approach to undo President Barack Obama’s engagement with Iran. They argue that Iran is already violating the agreement.

The Republicans quickly jumped on reports that Iran had been stockpiling heavy water in greater quantities than those permitted by the agreement. However, Iran quickly rectified such slips, and the International Atomic Energy Agency has found Iran to be complying with the agreement.

This shows that the agreement is working – Iran’s nuclear programme is constrained, capped, and under constant surveillance by the IAEA. In the rare instance that Iran does make a slip, the US Congress is in any case not the arbiter because the deal provides the necessary mechanisms for resolving any disputes that may arise between the signatory powers. All of this demonstrates the agreement’s steady and sturdy nature.

The deal’s opponents aim to re-impose Congressional – and possibly multilateral – sanctions against Iran via the deal’s ‘snapback’ mechanism. In the first instance, there is a danger that the Trump administration will renege on the lifting of US Congressional nuclear-related sanctions. As part of the deal, the US president is periodically required to waive these sanctions if Iran abides by its obligations under the deal. Failure to do so constitutes a violation of implementation of the deal.

“The EU needs to work with Iran to ensure its reintegration into the world economy and address the broader security dilemmas affecting the Middle East”

For its part, the snapback mechanism, enshrined in UN Security Council Resolution 2231, allows for reinstatement of seven former Security Council resolutions against Iran that imposed the stringent multilateral sanctions regime. So far there has been no reason to invoke this mechanism as Iran has not violated the agreement.

The US Congress has just extended the Iran Sanctions Act, originally adopted in 1996. The Republicans’ argument for the extension is to have in place a statutory foundation for snapping the US sanctions back “to keep Iran in check”. It is likely to adopt further sanctions against Iran as admonishment for its non-nuclear activities, including ballistic missile activities, support for armed groups across the Middle East and human rights abuses. Trump is likely to back these sanctions, having promised to act against such conduct during the campaign.

As has been proven in the past, sanctioning Iran leads to economic pressure on the country that risks empowering the hardline elements of the Tehran elite who oppose engagement with the Western world. A wiser course would be to seek greater interaction with Iran as this will bolster the credibility of the moderates who oversaw the nuclear negotiations and who favour engagement with the international community. Under a more hardline government, the Iranians may pull out from fulfilling their obligations under the current deal.

To secure the nuclear agreement, the EU needs to work with Iran to ensure its reintegration into the world economy and address the broader security dilemmas affecting the whole of the Middle East region. Otherwise, the now shaky-looking deal is at risk of being seriously undermined.

IMAGE CREDIT: CC / FLICKR – European External Action Service

The post The Iran deal is on its last legs appeared first on Europe’s World.

The Council: 

1.           WELCOMES the Commission Communication of 25 October 2016[1] on building a fair, competitive and stable corporate tax system for the Union (doc. 13729/16) and related legislative proposals; 

2.           RECALLS the European Council conclusions of 18 December 2014 stating the urgent need to advance efforts in the fight against tax avoidance and aggressive tax planning, both at the global and EU levels and REITERATES its commitment to principles of international taxation; 

3.           RECALLS its conclusions on Base Erosion and Profit Shifting (BEPS), adopted on 8 December 2015 (doc. 15150/15) and on the Communication from the Commission of 5 July 2016 on further measures to enhance transparency and the fight against tax evasion and avoidance of 11 October 2016 (doc. 13139/16); 

4.           RECOGNISES recent important achievements in the field of corporate taxation in the Union and in particular the legislation aimed at increasing tax transparency and ensuring that companies operating in the European Union pay taxes where profits are generated; 

5.           REAFFIRMS the importance of continuing to promote tax good governance in the EU's relations with international partners to ensure an effective level-playing field between the Member States of the EU and third States; 

6.           ENDORSES the view that the EU tax environment could benefit from a forward-looking framework for corporate taxation that is growth-friendly and efficient, fair and effective in tackling aggressive tax planning practices, without prejudice to Member States' competence in these matters; 

7.          UNDERLINES the importance of having corporate tax rules which offer stability, legal certainty and administrative simplification to large companies as well as small and medium sized enterprises (SMEs) and, in the light of this, WELCOMES further discussion on the proposal on a Common Corporate Tax Base (CCTB) and on a Common Consolidated Corporate Tax Base (CCCTB); 

8.           NOTES the  two step approach proposed by the Commission concerning the proposals on a Common Corporate Tax Base (CCTB) and on a Common Consolidated Corporate Tax Base (CCCTB) and SUPPORTS the view that work should focus as a priority on the elements of a common tax base; 

9.           TAKES NOTE of the incentives for research and development, and innovation as well as investment incentives at EU level proposed by the Commission and INVITES Member States to continue discussion on assessing the need and the  added value of the elements proposed on this matter; 

10.        CONCURS that current international tax rules can, in some cases, lead to double taxation and double non-taxation that should be eliminated through coordinated EU measures and Acknowledges that there is a need to review existing dispute resolution mechanisms to enhance tax certainty for business in the EU; 

11.        Therefore LOOKS FORWARD to the examination of the proposal for a Double Taxation Dispute Resolution Mechanism in the European Union for businesses in the EU; 

12.        NOTES the ambitious timeline proposed by the Commission in  the proposals on CCTB, CCCTB and Double Taxation Dispute Resolution Mechanism, and CALLS FOR swift progress on the examination of these legislative files; 

13.        INVITES incoming Presidencies to sequence the work on the CCTB and CCCTB proposals along the lines of the following: 

(a)     As a start, Member States should concentrate their efforts on the rules for calculating the tax base and, in particular, on the new elements of the relaunched initiative (chapters I to V); 

(b)     Member States should then concentrate on the remaining elements of the common base (chapters VI to XI), that is: i) those that have already been extensively discussed under the 2011 proposal for a CCCTB, and ii) those that are included in the recently adopted Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market; 

(c)     Tax consolidation should be examined without delay once the discussion on these elements has been successfully concluded; 

14.        RECALLS its statement on hybrid mismatches at the Council (ECOFIN) meeting on 12 July 2016, and therefore WELCOMES the proposal amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries; 

15.        ACKNOWLEDGES that these initiatives may contribute to building a fair, competitive and stable corporate tax system for the EU. 

 [1]         Communication from the Commission to the European Parliament and the Council of 25 October 2016 on building a fair, competitive and stable corporate tax system for the EU (doc. 13729/16). 

Shortly after the UK referendum, EU leaders met Western Balkan leaders in Paris. The EU message was clear: enlargement would continue as usual. But in the Balkans, fears abound that their region may slip off the radar, as the EU gets mired in the unprecedented task of British withdrawal.These fears accurately reflect the relationship between the EU and its Balkan partners. Balkan countries want EU membership, but the driver of change is still the EU.

Europeanisation in the Western Balkans has been equated with building regional peace and stability. The EU made integration conditional on cooperation with the International Criminal Tribunal
for the former Yugoslavia (ICTY), tackled the region’s political and economic fragmentation through a policy of regional cooperation, and took the lead resolving outstanding conflicts, such as over
Kosovo. Yet Croatia is the only Western Balkan nation to reach the final destination, leaving five countries – all at different stages of integration – now making up a non-EU enclave inside the EU. The Balkan states’ long road to the EU suggests a need for vigilance of two risks: benign neglect and geopolitics.

Political declarations by local elites favouring European integration haven’t necessarily been accompanied by deeds. The political vision is not yet a reality. Countries have shied away from implementing EU laws, causing delays in visible improvements to people’s lives. In recent years, months and weeks, people in all five Balkan countries outside of the EU have held public protests over poor governance, corruption and abuse of the law. Their ire has been directed at local political elites, but the risk is that it may also damage trust in the European project’s ability to improve their societies. The EU’s biggest ally in the Balkans is the people who demand the rule of law and a better quality of life. That is why the EU shouldn’t allow Brexit to divert its attention from the Balkans. Benign neglect may allow elites to subvert the European project permanently by eroding popular attraction to a future in the EU.

The related risk of Brexit for the Western Balkans is the ascendance of geopolitics. European integration as a political project is based on the idea of interconnectivity, and the conception of power
as cooperation. Europeanisation of the Western Balkans entails forging political, economic and cultural connections with the EU, as well as between Balkan states. But the geopolitical outlook is its
antithesis – all about going it alone, and the conception of power as a threat. The Balkans has been a geopolitical battleground throughout history, and its position as a non-EU enclave within the EU makes it particularly conducive to the logic of competition and protection. Russia and Turkey have each stamped their mark on the region while the EU tries to exercise its magic power of
attraction and transformation. But unlike the EU’s vision, which is future- and norms-orientated, Russia and Turkey have drawn on historic links reinforced by religious affinities. Russia appeals to
the idea of Slavic brotherhood – a notion that resonates with large sections of the population in the Christian Orthodox areas. Turkey is seen as a natural guardian of fellow Muslims.

Russia and Turkey’s economic investments in the region have been on the increase, but they are still dwarfed by those of the EU. But this fact barely affects popular perceptions that Russia and Turkey can better understand – and possibly better protect – people’s interests.

Such sentiments persist despite Russia’s use of the Balkans to assert its own position towards the West. Russia has been seen to deliver when Serb nationalist interests are at stake. Its opposition to Kosovo’s independence in the UN is only one example. Brexit has been embraced by nationalists in the region, who interpret the UK’s departure from the EU as a blow to interconnectedness and a vindication of their Euroscepticism. Brexit leaves open the risk that both Russia and Turkey may increasingly provide a vision of an alternative future, exposing the region to open geopolitical competition.

If Brexit forces the EU’s Balkan involvement to stall, the critics will have a field day. They already say that Europeanisation has created weak states that are producers of instability and insecurity,
through illegal people trafficking and trade, organised crime and the appeal of Islamic fundamentalism. But EU membership is a goal that continues to unite all Balkan states despite their divisions
– both within states and between neighbours. In the post-Brexit climate, the EU needs to step up its engagement. Alternative visions for a non-EU future for the Balkans are as perilous for the security of the region as they are for the EU.

IMAGE CREDIT: F. De la Mure/MAEDI

The post Brexit’s twin risks for the Balkans appeared first on Europe’s World.

The Council (ECOFIN) adopted the following conclusions: 

A number of positive developments in the EU since the global economic and financial crisis signal the resilience and recovery of the European economy. All Member States' economies are growing again, investment has started to pick up and 8 million new jobs have been created since 2013. However, since the global economic and financial crisis, the level of investment in the EU has fallen substantially. Economic recovery, job creation, long-term growth and competitiveness are being hampered as a result. In this context the Investment Plan for Europe presented in November 2014 aims to address this low investment via three mutually reinforcing pillars: mobilising private finance for investment; targeted initiatives to ensure investment reaches the real economy and improving the investment environment by removing sector specific and other barriers to investment. 

Under the first pillar, the European Fund for Strategic Investment (EFSI) is expected to have already mobilised total investment of 154bn euros. The European investment Advisory Hub, which constitutes the second pillar, together with the European Investment Project Portal, has been active since September 2015 and has been providing advice to projects in a majority of the Member States. Furthermore, the Council RECOGNISES aggregate demand as a driver of investment and CONSIDERS that in order to unlock the full potential of the opportunities provided by the Investment Plan, and to mobilise its full multiplier effect, relevant and appropriate measures including structural reforms to remove barriers to investment under the so-called "third pillar" of the plan are critical. This requires implementing an ambitious agenda to further strengthen the Single Market, providing greater regulatory predictability and removing remaining bottlenecks to investment through combined actions at EU and at Member State level. Against this background, the Council WELCOMES the work conducted by the Economic Policy Committee, in cooperation with services of the Commission and the European Investment Bank to identify bottlenecks to investment. 

The Council STRESSES that completing the Single Market is essential for the delivery and success of the objectives of the Investment Plan for Europe. Europe needs a regulatory environment which is predictable, reduces administrative burdens and encourages investment and needs to actively work to achieve these conditions. Favourable framework conditions for businesses across the Single Market are essential to unlock the full potential of investment. To this end the Council WELCOMES the Commission´s efforts to improve Europe´s investment environment and facilitate the financing of the real economy and CALLS on the Commission to continue with these efforts in the context of the Energy Union, the Capital Markets Union, the Single Market Strategy for Goods and Services, the Digital Single Market Strategy, the Better Regulation Agenda, as well as the Circular Economy package. The Council NOTES the Commission's legislative proposal amending Directive 2012/30/EU on insolvency procedures which will be assessed as a matter of priority. 

The Council STRESSES that further progress towards increasing investment in Europe, and the success of the Investment Plan are strongly contingent on the implementation of structural reforms to address bottlenecks to investment identified under the third pillar but, as noted by Council in July 2016, progress on improving the investment environment has been insufficient so far. 

In light of the work carried out so far, the Council HIGHLIGHTS the following specific bottlenecks to investment:   

• The most frequent barriers to investment are for example related to an unfavourable business environment, inefficiencies in public administration, frequent changes to regulation, market size and structure, and high sector-specific administrative and regulatory burdens. In some countries, access to finance particularly for SMEs, complex taxation systems and/or a high level of capital taxation, distortions in product and labour markets, and weaknesses in research and innovation frameworks can also hinder investment.
• Investment in Network Industries: Investment in sectors of transport, energy, and telecoms combined has constituted on average around 3% of GDP for the EU 28. Whilst often of a sector specific nature, there are substantial and growing synergies between networks across sectors which are shaping market dynamics through new uses for infrastructure and demanding changes in business models. In the energy sector, new services rely on fast precise telecommunication leading operators to invest in broadband infrastructure. In the transport sector, new services are being developed relying on quality electricity infrastructure and advanced telecoms.
• Whilst this varies across the EU, important bottlenecks hampering investment include a lack of interconnection of networks across the EU, complexity and heavy burden within the regulatory framework, lengthy permit procedures, the lack of competitive tendering often limiting the full benefit of public procurement, and time overruns due to unnecessary lengthy legal and administrative procedures.
• In energy markets, consistent price signals are important for a market based and efficient allocation of investment. Any public intervention should aim to minimise regulatory distortions and address misaligned incentives. Instruments to support the transition to the low carbon economy need to be designed to ensure environmental, social and fiscal sustainability over time.
• Investment into Energy efficiency and residential investment in renewable energy: households may face specific constraints leading to sub-optimal investment decisions for the long term. These can include a lack of awareness of the true costs and returns to investment as they are not matched over time. Households may also face a limited access to finance, with a need for affordable financing products to incentivise consumers, particularly low-income households for example through large scale or pooling solutions while also respecting their risk profiles. Investments are typically small and often only considered as part of periodic renovation projects. In the case of rental markets, incentives may be split between building owners and renters.
• Investment for the Digital Economy: investment in digital physical infrastructure is key in order for the EU to benefit from the wave of innovation brought by the expansion of the digital economy and to continue being competitive. However, important bottlenecks hamper investment. Deployment costs for very high capacity broadband networks are high and sometimes not commercially viable in less densely populated areas. Directive 2014/61/EU, which aims to help reduce those costs, still has to be fully transposed and implemented in most Member States. Quicker and more efficient administrative procedures would also help to reduce costs. Markets are often national which keeps costs high and may hamper the realisation of economies of scale. Uncertainty about the short-term uptake of very high capacity broadband implies low expected earnings compared to investment costs and acts as a brake on investment. In some countries, other obstacles than those linked to the physical infrastructure also exist, such as a lack of trust in security of digital systems and insufficient digital skills among layers of the population.  
• The use of Public Private Partnerships (PPPS): Public Private Partnerships can, when used appropriately, represent a facilitator for specific kinds of investment and offer an alternative way to deliver public assets and services. As long-term contractual obligations they however require strong and stable commitment from public and private sector partners and are a potential source of risk to public finances. Their use is often hampered by unfavourable framework conditions including a lack of administrative resources, unstable and ineffective regulatory framework and a lack of political commitment for longer-term investments. In certain circumstances EU funds may contribute to funding PPPs, and the recent changes in the regulations should facilitate the blending of EU funds and PPPs.
• Insolvency Frameworks: Well-functioning insolvency frameworks benefit economic growth and financial stability. Clear rules for cross-border procedures may contribute to cross-border investment, as well as reduced differences in insolvency systems across countries. Insolvency regimes differ significantly across the EU, with the length and cost of procedures, their predictability and transparency, second chances for entrepreneurs and consumers, and the possibility of restructuring debt all varying.  
• Important bottlenecks created by inefficient insolvency frameworks may include low recovery rates for claimholders, including secured creditors, the possible use of creditor priority ranking, and a lack of effective and efficient restructuring procedures. Adequate flanking policies that would help reap the benefits of effective insolvency frameworks include the resolution of Non Performing Loans including via the creation of a secondary market, at the national level, and adequate tax and prudential policies to ensure effective offloading of bad debt.
• There remains considerable potential to further promote synergies and complementarities between EU financial instruments to support blending of funds for infrastructure projects. Regulatory complexities and administrative bottlenecks for the use of EU funds can be reduced through the key principles of simplification and standardisation of process, combination of instruments, and pooling of resources irrespective of their origin.

The Council TAKES NOTE of the bottlenecks to investment identified by this work and INVITES the Commission to consider these findings into further draft recommendations in the framework of the European Semester and INVITES Member States to fully implement the 2016 Council Country Specific Recommendations issued under the European Semester and particularly those identifying investment bottlenecks. 

The Council HIGHLIGHTS the need to continue the work on identifying the barriers to investment and INVITES the Economic Policy Committee to continue its thematic work to identify further investment bottlenecks and best policy practices to address them. Furthermore, the Council INVITES the European Investment Bank to complement the work of the Economic Policy Committee through its findings on barriers and bottlenecks to investment identified when carrying out its market-based activities, notably under the Investment Plan for Europe.  

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Turkey is a candidate country for EU membership following the Helsinki European Council of December 1999. Accession negotiations started in October 2005. Turkey’s accession process is set to move forward with the opening of a new chapter on financial and budgetary provisions on 30 June 2016. 

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The resignation of Italian Prime Minister Matteo Renzi after the failed referendum in Italy has been delayed. At the request of President Mattarella, Renzi is to remain in office until parliament passes the budget for 2017. Some commentators are delighted that voters clearly rejected Renzi's reform. Others fear a new phase of political instability.

Young voters and people in southern Italy in particular voted against Renzi's constitutional reforms. Some commentators say Italy's prime minister made certain grave mistakes. Others argue that the Italians are simply too conservative to go along with reforms.

The UK's Supreme Court on Monday began hearing the appeal against the High Court ruling that parliament must have a say on the Brexit plans. The most senior judge stressed at the start of the four-day hearing that the court was dealing only with legal and not political issues. Not true, some commentators object. Others point out that parliament wouldn't block Brexit anyway.

The Eurozone finance ministers agreed on Monday to certain measures that will give Greece a little more time to repay its debts. At the same time they insisted that Athens must negotiate further austerity measures. This latest agreement is only seemingly good news for the country, commentators conclude.