One Week in Europe: Commission start, LuxLeaks and the British bill

Catherine Day, Jean-Claude Juncker and Martin Selmayr, head of cabinet, at the first weekly meeting of the Juncker Commission

The new European Commission started its work in Brussels this week and released on Tuesday (04.11.2014) its forecast for economic growth in the EU. The next day, Commission President Jean-Claude Juncker personally met with the press to answer questions on the first meeting of the College of the Commissioners. And on Thursday, Juncker – former prime minister of Luxembourg – found himself under pressure over leaked tax documents in his home country.

The new figures on the economic growth forecast were presented by the two commissioners in charge of financial matters: vice-president Jyrki Katainen and Pierre Moscovici.

Both explained that the Commission expects weak economic growth for the rest of 2014 and only slow growth over the course of 2015.

The Commission’s 300-billion-euro investment plan, which Juncker plans to introduce before the end of the year, was also a topic in their presentation.

Moscovici said that the EU needs to focus on “credible fiscal policies, ambitious structural reforms and much-needed investment,” both in the public and private sector.

“Our first priority now is to boost investment, to kick-start growth and sustain it over time,” he said. “We will be working at full speed under the coordination of Jyrki Katainen to put in place the 300 billion euro investment plan announced by President Juncker, which is of course of decisive importance.”

UK struggling with European bill

Meanwhile, the United Kingdom has tried to save face this week as it struggles with its bill of 2.1 billion euros from the European Union.

An agreement was reached on Friday (07.11.2014) at the Ecofin Council meeting of the EU’s economics and finance ministers, giving the UK the right to make its payments in instalments until September 2015.

But the total amount to be paid has not been lowered.

Speaking on the issue, President Juncker expressed his unhappiness about some of the EU’s heads of government and said that they refuse “to accept lessons from Brussels bureaucrats.”

Juncker continued in French, saying ”I don’t have a problem with Mr. Cameron, Mr. Cameron has a problem with other prime ministers.”

Speaking to the press following the first meeting of his new College of Commissioners on Wednesday (05.11.2014), Juncker explained that given the high expectations on his team he was “afraid to disappoint.” He asked journalists to nevertheless be critical in their reports.

Rising pressure on Juncker

The press had the opportunity to take Juncker up on his offer just a day later, after the International Consortium of Investigative Journalists (ICIJ) published documents linked to secret tax deals between Luxembourg and more than 300 international companies.

This major tax evasion scandal put the spotlight on the new president of the Commission, as he was Luxembourg’s prime minister and finance minister at the time the deals were signed.

So far, Juncker has not commented on the scandal in public.Instead, his spokesman faced many uncomfortable questions from Brussels correspondents about the credibility of the new head of the Commission.

On Thursday afternoon (06.11.2014), Luxembourg’s current finance minister, Pierre Gramegna, spoke to reporters on the sidelines of the Eurogroup meeting in Brussels.

“The Luxembourgish tax rulings are conform with the European and the international laws and convention that exist on this matter,” he said.

“The results of the application of today’s international, European and national laws can sometimes lead to a result where companies are confronted to a very limited tax rate or even to a non taxation,” he continued. “The Luxembourgish government together with most countries around the globe consider that this is not a satisfactory solution.”

Robin Hood tax to be buried?

On another tax issue, there is still no progress in sight on the design of the EU financial transaction tax (FTT), discussed by EU’s finance ministers at their Ecofin meeting in Brussels on Friday (07.11.2014).

The only possible agreement seems to be the watered-down tax proposed by France, Italy and Spain. In this case, the instrument would be “useless,” as many organizations have argued.

Green member of the European Parliament Sven Gielgold has said that this FTT would not be deserving of its name.

“A dirty compromise means the French idea, the Italian idea, one has to say, of a minimum tax which only brings 3 or 4 billion euros a year, which is more or less almost nothing. For this we don’t need a financial transaction tax. This is not a financial transaction tax,” he said.

Internet tax on hold

Another controversial tax, this one on Internet use, will in the end not be introduced in Hungary. At least not for the moment. After mass demonstrations against the tax last week, the Hungarian government decided to withdraw the proposal and analyse the possibilities on taxation of online transactions next year.

Tibor Szanyi, Hungarian member of the European Parliament from the Socialists & Democrats, said in our weekly debate “U Talking to Me?” debate that the Hungarian government has not officially dropped the proposal,

“The original proposal has not yet been withdrawn,” he said. “Which means that even yesterday the cultural committee in the [Hungarian] parliament has dealt with next year’s budget and within that framework still the original text prevails. Which means that in an administrative sense nothing has been done by the government.”

Triton: a small replacement for Mare Nostrum

On Saturday (01.11.2014), the European Union border agency Frontex launched the follow-up to Mediterranean search and rescue operation Mare Nostrum, called Triton.

Triton has a significantly smaller budget (2.9 million euros per month) when compared with Mare Nostrum (9 million euros per month), and the European Council on Refugees and Exiles (ECRE) has warned that Triton will never be able to replace Mare Nostrum in terms of rescuing illegal migrants.

“We fear that we will see more migrants dying at sea,” said Kris Pollet, policy officer at ECRE. “We don’t believe that the number of people trying to make the Mediterranean crossing is going to diminish.”

• Author: Danièle Weber, Euranet Plus News Agency

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