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#EuroDole: A German initiative that Berlin doesn’t welcome

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youth-unemploymentIn the eyes of most Europeans, the EU is cold and remote. “Nobody could ever fall in love with the Single Market,” warned Jacques Delors in the late 1980s, when the pioneering Commission president was at the height of his popularity and making the single market a reality, writes Giles Merritt.

There’s little love of any sort for the EU nowadays. The Union plumbs new depths of distrust and antagonism. To survive and flourish, the EU must become more directly relevant to the people of Europe – and there is a way to do it.

An EU-wide unemployment benefit system has been mooted since 2012, if not before. Earlier models have been refined into one that looks feasible.

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But while the details are important, the key point is a bigger one: the need to rebrand the European Union as a caring organization rather than an arrogant and unfeeling bureaucracy.

Youth unemployment is widely seen as symptomatic of the EU’s failure to deliver the economic benefits it promised. It’s an unfair criticism: job creation policies to overcome mismatches and speed young people into work are defined at a national level – and often locally. But as we all know, in politics, perception is everything.

And that’s why a European benefits scheme is a good idea. It would be a high-profile sign that the EU is recovering the spirit of solidarity between member states that is currently in full retreat. Another reason – more complicated, but fundamentally more important still – is that it would move social policy back near the top of the EU’s agenda.

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Saving the euro is vital, and a European benefits scheme would be a first step towards the fiscal integration the eurozone needs. It would also focus attention on Europe’s huge but overlooked demographic problem. By the middle of this century there will be only two working-age Europeans per pensioner (down from a four-to-one ratio today). Social protection will fast become the hottest political challenge of all time.

The latest European unemployment benefits model comes from a German research outfit – the state of Baden-Württemberg’s Centre for European Economic Research (ZEW). Its approach would be to harmonise national systems and pool relevant national budgets to create common levels of benefits.

Quite apart from the scheme‘s public relations value, its authors claim significant economic advantages. They reckon it would help smooth out the disparities between regions suffering from the uneven impacts of unemployment, and in the longer term would cushion the asymmetric shocks that have been a feature of the eurozone crisis.

Not everyone shares this view. Critics of the idea raise the ‘moral hazard’ question and ask whether it wouldn’t encourage weaker eurozone countries to keep on delaying reforms. They also argue that the wider benefits system could serve as a magnet to ‘benefits scroungers’ – and so encourage even more joblessness.

But the bottom line is, of course, the potential cost to the eurozone’s richer northern countries. Led by Germany, they are already opposed to proposals for eurozone bonds to help tackle sovereign debt problems.

So on the face of it, the unemployment benefits scheme stands no chance at all. But that is to ignore populist Euroscepticism – a far greater threat to the European project.

If the benefits scheme could be presented as a more human face of the EU, as well as a means of breaking the deadlock over the eurozone’s future, then maybe it has a future. That would offer Berlin an opportunity to refute the notion that, in the words of Oscar Wilde, it “knows the price of everything, but the value of nothing”.

Giles Merritt reported for the Financial Times as a foreign correspondent for 15 years, five of them from Brussels, and subsequently was an International Herald Tribune Op-Ed columnist on EU affairs for 20 years. He is the founder and chairman of the Friends of Europe think tank and author of the recently published book Slippery Slope: Europe’s Troubled Future (Oxford University Press).

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Commission approves €500,000 Portuguese scheme to further support the passenger transport sector in Azores in the context of the coronavirus outbreak

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The European Commission has approved a €500,000 Portuguese scheme to further support the passenger transport sector in the Region of the Azores in the context of the coronavirus outbreak. The measure was approved under the State Aid Temporary Framework. It follows another Portuguese scheme to support the passenger transport sector in Azores that the Commission approved on 4 June 2021 (SA.63010). Under the new scheme, the aid will take the form of direct grants. The measure will be open to collective passenger transport companies of all sizes active in the Azores. The purpose of the measure is to mitigate the sudden liquidity shortages that these companies are facing and to address losses incurred over 2021 due to the coronavirus outbreak and the restrictive measures that the government had to implement to limit the spread of the virus.

The Commission found that the Portuguese scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid (i) will not exceed €1.8 million per company; and (ii) will be granted no later than 31 December 2021. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the conditions of the Temporary Framework. On this basis, the Commission approved the measure under EU state aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case number SA.64599 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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EU collaborates with other OECD countries to propose ban on export credits for coal-fired power projects

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Organization for Economic Co-operation and Development (OECD) countries hold an extraordinary meeting today (15 September) and Thursday (16 September) to discuss a possible ban on export credits for international coal-fired power generation projects without measures compensation. Discussions will focus on a proposal presented by the EU and other countries (Canada, Republic of Korea, Norway, Switzerland, UK and US) earlier this month. The proposal supports the greening of the global economy and is an important step in aligning the activities of export credit agencies with the goals of the Paris Agreement.

Export credits are an important part of promoting international trade. As a participant in the OECD Arrangement on Officially Supported Export Credits, the EU plays a major role in efforts to ensure a level playing field at international level and to ensure the coherence of the common objective of combating climate change. The EU has pledged to end aid for export credits for coal without offsetting measures, and at the same time commits at the international level to a just transition.

In January 2021, the Council of the European Union called for the global phasing out of environmentally damaging fossil fuel subsidies on a clear timetable and for a resolute and just global transformation. towards climate neutrality, including the gradual phase-out of coal without compensatory measures in energy production and, as a first step, the immediate end of all funding for new coal infrastructure in third countries. In its February 2021 Trade Policy Review, the European Commission pledged to propose an immediate end to export credit support for the coal-fired electricity sector.

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In June this year, G7 members also recognized that continued global investment in non-reduction coal-fired electricity generation was inconsistent with the goal of limiting global warming to 1.5 °C and pledged to end new direct government support for global coal-fired power generation internationally by the end of 2021, including through government funding.

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Week ahead: The state we’re in

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The big set piece of this week will be European Commission President von der Leyen’s ‘State of the EU’ (SOTEU) address to the European Parliament in Strasbourg. It’s a conceit borrowed from the US, when the President of the United States addresses Congress at the start of each year laying out his (and it has always been a he to date) plans for the year ahead. 

I am always amazed by American self-confidence and almost indestructible belief that America is the greatest nation on earth. While thinking you’re just great must be an enjoyable state of mind, the parlous state of the US on so many levels at the moment makes me think that the excessively critical eye Europeans cast on their lot may be a healthier perspective. Still, sometimes it would be nice if we could acknowledge the many pros of the EU and be a bit more ‘European and proud’.

It’s hard to gauge how much interest SOTEU exerts outside those most engaged in the EU’s activities. As a rule Europeans, other than a small group of the most devout, don’t go around bumming about how just bloomin’ great the EU is, or generally being enthused about its direction. While we might have mused on the counterfactual, the UK has provided every EU citizen with a very stark look of “what if?” 

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Looking at where the world, the EU looks like it is in a healthier state than most - this also has a literal meaning this year, we are probably the most vaccinated continent on earth, there is an ambitious plan to turbo charge our economy out of its pandemic slump and the continent has stuck its chin out and decided to do nothing short of lead the world on tackling climate change. I personally feel a great surge of hope from the fact that we appear to have collectively decided enough is enough with those within the EU who want to backslide on democratic values and the rule of law. 

Several proposals will be coming from the Commission this week: Vestager will be presenting the plan for ‘Europe’s Digital Decade’; Borrell will lay out the EU’s plans for links with the Indo-Pacific region; Jourova will outline the EU’s plan on protecting journalists; and Schinas will present the EU’s package on health emergency response and preparedness. 

It is, of course, a plenary session of the Parliament. Other than SOTEU, the humanitarian situation in Afghanistan and the EU’s relations with the Taliban government will be debated; media freedom and the rule of law in Poland, the European Health Union, the EU Blue Card for highly skilled migrants and LGBTIQ rights are all up for discussion.

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