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Budget extravaganza — Gold sanctions — Airline chaos – POLITICO | #cybersecurity | #cyberattack | #hacking | #aihp


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What’s driving the day in Brussels.

By JAKOB HANKE VELA

with ZOYA SHEFTALOVICH

Send tips here | Tweet @HankeVela or @suzannelynch1 | Listen to Playbook and view in your browser

MO’ MONEY, MO’ PROBLEMS: Today’s meeting of EU ambassadors could get heated when they discuss whether to rip up a budget pact with the European Parliament. EU countries aren’t amused about the Parliament’s request for another bump in funding, and are gearing up to oppose its budget for 2023 — a historic move that would break with a decades-old pact between EU institutions not to block each other’s spending plans.

Patience runs out: Already last year, Parliament requested — and got — more than a hundred new positions, despite criticism from EU countries, who saw the several million-euro bump to the institution’s budget (already over €2 billion) as ludicrous. Those who argue the Parliament needs more money “have been in this city too long and lost all sense of perspective,” one diplomat told Playbook. Another said Parliament promised the Council that last year’s would really be the last budget increase they would ask for during the EU’s seven-year budget cycle. Now, Parliament wants another 52 staff and 116 assistants.

Gentlemen’s agreement’ from the 70s: “Apparently the EP is immune to what happens in the real world,” a third diplomat told Playbook last night via text. “The only reason the EP gets away with it is because in the 70s, the institutions made a gentleman’s agreement to not interfere in each other’s budgets. Member states have now reached the limits of their acceptance of that arrangement.”

Backroom deals hurt Parliament’s standing: “The way the EP uses these extra posts to play politics” further undermines Parliament’s case, the same diplomat said, pointing to Playbook’s revelations over the past week. It’s one thing if the institution requests additional cash to shield MEPs from hacking attacks or to deal with Russian spying — it’s another if it’s seeking millions to create dubious new posts for one political group so that it backs another’s candidate for Parliament secretary-general.

Expensive cronyism: According to a European Parliament resolution, each additional post costs an average of €107,500 a year (though the first diplomat quoted above put the real figure at €200,000 to €300,000). Even using Parliament’s lower figure, the 52 additional posts it is asking for would still amount to €5.6 million a year.

On top of expensive inflation adjustments: The request for new jobs come on top of automatic inflation adjustments to staff salaries (which our colleague Paola Tamma reported on last month). The estimated automatic pay rise as of July is 8.6 percent — amounting to €16.7 million more in 2023 just for MEPs, without taking into account thousands of administration staff.

Adults in the room: EU ambassadors will discuss the budget extravaganza in their Coreper meeting today — with a big group of at least 18 countries including France, Germany, the Netherlands, Nordic and Central EU countries warning that Parliament has asked for too much. The Czech Council presidency has proposed a text that takes Parliament’s budget demands on board — so expect pushback from a number of those countries.

RUSSIA LATEST

EU TO SANCTION RUSSIAN GOLD: The European Commission is preparing to unveil plans to sanction Russian gold in a so-called implementation package within a week, three diplomats told POLITICO’s Barbara Moens and Leonie Kijewski. The G7 countries announced at the end of June that they intended to ban imports of Russian gold, in a further tightening of the measures Western nations have imposed on Moscow over its invasion of Ukraine.

What happens next: The newest plans for sanctions will be discussed in meetings between the European Commission and the EU’s top envoys on Thursday and Friday, four diplomats confirmed. If all goes well, the Commission will put forward its new package after that. Barbara and Leonie reported last week that the next sanctions proposal would likely come before July 20. 

Difficult work ahead: The EU has drawn up six rounds of sanctions against Russia, but struggled to get the last one over the line.

PUTIN TO MEET ERDOĞAN IN IRAN: Meanwhile, Russian President Vladimir Putin is set to meet his Turkish counterpart Recep Tayyip Erdoğan in Iran next week, as efforts intensify to unblock Black Sea shipping routes. POLITICO’s Wilhelmine Preussen has the write-up.

BUNKER BALK: An EU plan to set up a secure bunker in the EU Council to protect high-level discussions from spies has outsiders wondering: Why only now? Our colleagues Antoaneta Roussi and Laurens Cerulus have the story.

NEW PUSH TO TACKLE KREMLIN DISINFO: To ramp up the fight against Kremlin-backed disinformation, social media platforms such as Twitter and Facebook should ban Russian ambassadors, Janusz Cieszyński, Poland’s digital secretary of state, told our colleague Clothilde Goujard. She has the story for POLITICO Cybersecurity and Data Protection and Tech Pros.

Background: After the EU banned state-sponsored media outlets RT and Sputnik, Moscow has in recent months used its embassies’ accounts to share its propaganda.

SPEAKING OF RUSSIAN DISINFO: The EU has missed an opportunity in its new anti-disinformation code, announced last month, by capitulating to Silicon Valley platforms, argues L. Gordon Crovitz, a former publisher of the Wall Street Journal and the current co-CEO of NewsGuard.

NOW READ THIS: A special adviser to EU foreign policy chief Josep Borrell has been parroting what the EU considers to be Chinese disinformation on the origins of the coronavirus, report POLITICO’s Stuart Lau and Luanna Muniz.

**During the ongoing Northern Irish border dispute, POLITICO Pro helps you keep track of all policy developments. Our newsroom follows post-Brexit cross-Channel relations closely to make sure you don’t miss any policy news. Request a free demo.**

TRAVEL UPDATE

AIRLINES SQUEEZE SUMMER TRAVELERS — WITH EU BLESSING: Traffic chaos has engulfed Europe this summer — but don’t believe airlines, politicians and the European Commission, who pretend they’re surprised. Everyone knew globe-trotting would pick up this year — travel agencies, tour operators and tourism boards predicted a record-beating 2022. But the EU decided to allow airlines to keep the number of flights artificially low, while carriers failed to hire sufficient staff in time for the summer — almost as if they planned on cashing in.

Chaos foretold: Just check out this Brussels Playbook from January, where we reported on economists warning that “airlines are artificially boosting prices and preventing competitors from entering the market” by holding on to their airport slots.

Strange prediction: There was also the suspicious messaging by IATA (the airline association that is seen by many economists as a cartel), which published detailed overviews of how it saw the market evolving during the pandemic, including a curious prediction that “passenger traffic … will not return to pre-COVID-19 levels until 2024.” That exact same prediction (or vow?) was parroted by the bosses of major EU airlines, including Air France and Lufthansa. So did they all listen to very pessimistic epidemiologists, or decide to keep capacity low?

Here’s where the EU comes into play: The key regulation that allows airlines to keep capacity low without losing market share to competitors is airport slots. The Commission is allowing EU airlines to hold on to their slots even if they keep one-third of their planes grounded. Under a rule introduced for the pandemic and updated this year, companies only need to use their slots 64 percent of the time in order to keep them.

Brussels has maintained that stance this summer. Asked by Playbook whether this was justified, the Commission replied that “the current raising demand doesn’t justify anymore lower slot usage,” but added that the exemption will only end October 30 — after the high season.

NO SPENDING MONEY: Assuming you’re able to get to your destination, you may find your money doesn’t get you as far as you thought it would, after the euro hit parity against the U.S. dollar for the first time in 20 years on Tuesday. Analysts are now asking how low it can go, amid concerns its rapid fall this year could worsen the cost of living misery for hundreds of millions of Europeans. POLITICO’s Johanna Treeck and Paola Tamma have the analysis.

IN OTHER NEWS

PARENTAL LEAVE CALL: Danish MEPs Nikolaj Villumsen and Linea Søgaard-Lidell have written to European Parliament President Roberta Metsola calling for the institution to introduce procedures to allow members of Parliament to take parental leave. In the letter, the MEPs say the Parliament doesn’t allow for MEPs to be replaced by temporary substitutes while they are caring for their new children. “This deprives the country we are from, and its citizens, of adequate representation,” they argue.

SPOTLIGHT ON EU ETHICS RULES: The Uber Files have shone a spotlight on weak enforcement of EU ethics rules, with watchdogs saying there’s nothing stopping ex-officials from breaking them. POLITICO’s Sarah Wheaton has the story.

ITALY’S BIGGEST STEEL PLANT VS. EU ENVIRONMENTAL RULES: The Taranto steel plant in southern Italy is infamous for pollution that — according to several experts — is a key factor explaining higher-than-average cancer rates. The future of the plant has been the subject of a long tug-of-war between environmental and economic interests — and critics say the European Commission is partly to blame for failing to resolve it. Read this story from our colleagues Leonie Cater and Antonia Zimmermann.

UK PRIME MINISTER UPDATE: Rishi Sunak leads a pack of eight candidates in the contest to become Britain’s next prime minister, the U.K. Conservative Party announced last night. Track the latest news, who is backing whom, and what the race means for the future of the British Tory Party via our hub.

AGENDA

— Informal meeting of EU environment ministers in Prague. Arrivals from 8 a.m.; signature ceremony of memorandum with Ukraine at 4:45 p.m.; press conference 5:30 p.m. Watch.

College of Commissioners meets in Luxembourg; President Ursula von der Leyen marks the 70th anniversary of the first meeting of the High Authority of the European Coal and Steel Community with a commemorative plaque. Info.

— Commissioners Věra Jourová and Didier Reynders hold press conference to present annual report on the state of rule of law in EU countries.

— Commissioner Frans Timmermans in Prague; meets with Czech Prime Minister Petr Fiala.

— Commissioner Janusz Wojciechowski continues visit to Vietnam.

— European Parliament’s special committee on COVID-19 pandemic holds exchange of views with the European Centre for Disease Prevention and Control (ECDC) and Health Emergency Preparedness and Response Authority (HERA) from 9 a.m.

— NATO chief Jens Stoltenberg holds exchange of views with joint meeting of the European Parliament’s Committee on Foreign Affairs and the Subcommittee on Security and Defence at 4:30 p.m. Watch.

— NATO chief Jens Stoltenberg meets with Prime Minister of Albania Edi Rama at NATO headquarters in Brussels. Press point at 1:15 p.m. Watch.

European Economic and Social Committee plenary session. Czech Foreign Minister Jan Lipavský presents priorities of Czech Council presidency at 5:30 p.m. Agenda. Watch.

BRUSSELS CORNER

NEW JOB: Fabrizio Porrino is joining software company ServiceNow to lead government relations efforts for Europe, the Middle East, and Africa.

BIRTHDAYS: Khalid Boufadiss, an adviser to Dutch deputy PM Sigrid Kaag; Martina Konečná; Emma Cassidy; Melissa Chevillard of UFC-Que Choisir; Occitanie Europe’s Marie Vaugeois; Chef José Andrés. Statehood Day in Montenegro.

THANKS TO: Clothilde Goujard, Sarah Wheaton and our producer Grace Stranger.

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Jakob Hanke Vela


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