Protecting Ukraine — Defense talks marathon — Market fright – POLITICO
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By LILI BAYER
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MOSCOW REACTS TO CRIMEA BLAST: Russian President Vladimir Putin on Sunday accused Ukraine of perpetrating a “terrorist act” in the fiery blast earlier in the weekend that damaged a bridge linking Crimea with Russia.
“There’s no doubt it was a terrorist act directed at the destruction of critically important civilian infrastructure of the Russian Federation,” Putin said during a meeting with the head of Russia’s Investigative Committee, according to media reports. The Russian president has called a meeting of his national security council for today.
Extending protection for Ukrainians: Meanwhile, this morning, EU Commissioners Ylva Johansson and Nicolas Schmit are expected to announce an extension of the Temporary Protection Directive for Ukrainian citizens until 2024. The EU for the first time activated the temporary protection directive earlier this year after the Russian invasion of Ukraine, giving immediate protection to Ukrainian citizens fleeing the war, as well as the right to live and work in the EU.
Details: While the full details have yet to be announced, POLITICO’s Suzanne Lynch reports that a new initiative to help Ukrainians wishing to return home will also be outlined, as well as a “talent pool” designed to help Ukrainians seeking work in the EU.
**A message from the EPP Group: The EPP Group has adopted a Position Paper calling for concrete measures to address the dramatic rise of prices. Energy and food prices, together with the rise of inflation, squeeze consumer purchasing power and businesses.**
GOOD MORNING. I’m Lili Bayer, filling in for Jakob.
Today we will focus on three key issues: Kyiv’s growing momentum in the fight against Russia, the next phase in Europe’s energy debate and the latest on U.S.-EU data-flows.
DRIVING THE DAY: SECURITY CHALLENGES
RUSSIAN MISSILE STRIKES: At least 43 people were killed by Russian missile strikes on Zaporizhzhia since October 3, Ukrainian President Volodymyr Zelenskyy said in a video address on Sunday. “The absolute majority” of the strikes “were aimed at the civil infrastructure of Ukraine and civilians,” the president said, adding: “When someone wants to negotiate, he does not do so. And when someone is a terrorist, that’s exactly what he does.”
DEFENSE TALKS MARATHON: Senior defense officials from across the globe will gather in Brussels later this week for a session of the U.S.-led Ukraine Defense Contact Group — also known as the Ramstein format — to discuss further military assistance to Kyiv. NATO defense ministers will also hold a meeting, which is set to include a session on nuclear planning.
What Kyiv wants: Asked what Ukraine will prioritize during the sessions, Yuriy Sak, an adviser to Ukrainian Defense Minister Oleksii Reznikov, said that Kyiv needs more artillery and ammunition. Ukraine, the adviser told Playbook on Sunday, “must maintain the supply all the time.” Sak also noted a need for more armored personnel carriers and tanks. Pointing to the recent missile attacks, he also said Ukraine needs air defense and missile defense, as well as electronic warfare for jamming.
Air defense has become an important ask for Kyiv. “It is necessary to accelerate the provision of a sufficient number of effective air defense systems to Ukraine,” Zelenskyy said in his address. “The negotiations on the provision of such air defense systems, the negotiations on increasing other defense, political and financial support for Ukraine are the only possible negotiation format that can really bring peace closer.”
RAILWAY SABOTAGE SPARKS SECURITY CONCERNS IN GERMANY: Politicians and security services in Berlin are worried that the sabotage of two critical communication cables, which led to a three-hour breakdown of train services in large parts of northern Germany on Saturday, might have been a professional attack by a foreign state, Hans von der Burchard writes in to report.
Expertise required: The fact that two different cables — in Berlin and hundreds of kilometers away in western Germany — were cut at the same time, causing a critical communication outage between operating centers and trains, means that the unknown perpetrators must have had very detailed knowledge of the communication infrastructure of the German railway network. Authorities are investigating the cases.
Between peace and war: The latest incident, which comes merely two weeks after the Nord Stream pipeline explosions, has intensified a debate about boosting the protection of critical infrastructure in Germany. “Any electrical substation, any power plant, any pipeline” could be a target, German Major General Carsten Breuer told weekly Bild am Sonntag. Germany, he said, is “in a state between no longer being fully in peace but also not really being in a war yet.”
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ENERGY DEBATE: WHAT’S NEXT?
SEE YOU IN TWO WEEKS: Leaders meeting in Prague on Friday kicked the can down the road on the thorny question of how to reduce energy prices.
Ball back to the Commission: “There is a common will for a common approach,” European Council President Charles Michel said following the informal gathering. The European Commission is now set to come up with more proposals for leaders to consider — and all eyes are on the next European Council summit, scheduled for October 20-21.
PRAGUE PERSPECTIVE: Tomáš Pojar, a top foreign policy adviser to Czech Prime Minister Petr Fiala, said that when it comes to the upcoming European Council summit, he hopes “at least some decisions will be taken and it is possible.”
But, Pojar cautioned in a text message on Sunday, “it is impossible to expect consensus on all aspects of the energy crisis solution.”
VIEW FROM THE BALTICS: Following Friday’s summit, Playbook caught up with Latvia’s prime minister, Krišjānis Kariņš. Asked if he is optimistic that leaders can reach an energy deal at the next European Council later this month, the Latvian leader said “it is possible.”
“At the end of the day,” the prime minister said in a phone interview, “if a solution can be proposed that would actually bring the result, I think we all have a combined responsibility towards citizens and our industry.”
Kariņš, a former MEP, said that “the system has to be really rethought,” pointing to “more renewables, probably seriously looking into hydrogen technology for energy storage in the future, and diversification of where you’re getting gas.”
But he acknowledged some new infrastructure “will take time.” For now, he said, “we need a shorter term solution, which would be a sort of short-term intervention into the markets to get the prices down.”
UNHAPPY PARLIAMENT: Some MEPs expressed disappointment with the Prague summit. “In times of war, every meeting of the European Council without significant progress is a lost opportunity,” said European People’s Party Group Chairman Manfred Weber. “Unfortunately, this is the case of the Prague informal.
“Opec’s decision to lower production last week should be considered as just short of a declaration of an energy war against the US and Europe,” Weber said in an emailed statement, adding that “in the meantime the EU is divided and countries like Germany are not helping to overcome the differences, on the contrary.” Europe, he said, “cannot afford any more of this indecisiveness.”
Socialists and Democrats Group President Iratxe García Pérez, meanwhile, said the Prague meeting “showed that the different positions are still far apart, but if we look at the positive side, everyone seems to agree that the solutions have to be European.” At their next summit, she said in a note to Playbook, leaders “have no other option but to agree: the crisis is deepening and we already lost too much time.”
Stéphane Séjourné, president of the Renew Europe group, also offered a critique. “We must regain the constructive spirit of these last 2 years,” he said in a note on Sunday, adding: “The European Council on October 20 must be one of action and unity.”
Catch up on our full summit coverage: The continuing energy discord among Europe’s most senior politicians emphasized the scale of the challenge facing European leaders, write POLITICO’s Suzanne Lynch, Clea Caulcutt and Hans von der Burchard. During the leaders’ discussion, German Chancellor Olaf Scholz proposed a plan to bring down gas prices by forming a buyers’ alliance with energy-hungry countries in Asia to convince big exporters to lower costs, Hans reported.
New sec-gen: Meanwhile, the heads of government on Friday agreed to select Thérèse Blanchet as the next secretary-general of the Council of the EU. My colleague Jacopo Barigazzi has the story on the backroom negotiations that led to the decision.
WASHINGTON MOVES: U.S. President Joe Biden on Friday signed a much-awaited executive order on transatlantic data flows.
Washington now can review European surveillance practices — something Brussels has refused to accept for decades. At the same time, the order limits the ability of American national security agencies to access personal information and creates a new Data Protection Review Court within the U.S. Department of Justice.
The move is a key step in implementing a political agreement between Brussels and Washington on a new data pact — but the saga is far from over.
Legal challenge: Max Schrems, a privacy advocate who filed suits that dismantled Privacy Shield in 2015 and 2020, told POLITICO that he was reviewing the details of Biden’s executive order and intends to prepare for a potential challenge.
“As there is no change to bulk surveillance, I guess this will go back to the [Court of Justice of the European Union],” Schrems said.
View from the Berlaymont: Justice Commissioner Didier Reynders told Playbook following the White House’s move that he is confident the new safeguards will survive legal scrutiny.
“I’m quite sure that we will have a new legal challenge because there are so many activists, and I’ve seen the first reaction too,” the commissioner said in a phone interview. But, he added, “we have worked a lot to try to have a very precise framework” and “we are sure that we have a very good result in the negotiations with U.S. colleagues.”
“I’m quite confident,” the commissioner said, “that it will be possible to have a positive reaction from the different authorities.”
Read my colleagues Vincent Manancourt and Mark Scott’s essential explainer on the order and what to expect next.
**POLITICO’s Green 28 unveiling event is taking place this Wednesday at 4:30 pm CEST. This online event will also feature a one-to-one interview with the European Parliament’s chair of the ENVI Committee MEP Pascal Canfin and a joint interview with T&E Executive Director William Todts and ACEA Director-General Sigrid de Vries. Register here.**
AROUND THE BLOC
SCHOLZ’S ‘GERMANY FIRST’ MENTALITY: With Europe reeling from the impact of Russia’s war on Ukraine, German Chancellor Scholz has paid lip service to solidarity, while blazing his own trail for his own country. Whether the issue concerns arms deliveries to Ukraine or how to cushion the impact of surging natural gas prices, Scholz’s approach has been clear: Germany First. Matthew Karnitschnig has more.
Olaf and Orbán: EU coordination and Russia’s war in Ukraine are meanwhile on the agenda for Scholz today as he meets Hungarian leader Viktor Orbán in Berlin at 2 p.m. A German spokesperson said that economic policy and “intensive coordination with all EU and NATO partners” will be of particular importance, my colleague Hans reports.
Win in Lower Saxony: Scholz’s Social Democrats are poised to win a state election in the northern region of Lower Saxony, giving the party a key boost as it grapples with a national energy crisis, according to preliminary results announced after voting closed Sunday. More here.
MARKETS FRIGHT: Leaders like the U.K.’s Liz Truss and Italy’s Georgia Meloni are having a hard time convincing financial markets that their plans for the economy are credible — as gyrations in the value of the pound and the uptick in Italy’s borrowing costs have shown, writes my colleague Paola Tamma. In the U.K., the Bank of England was forced to make an emergency intervention to shore up the pound after the newly-elected PM’s plans for radical, unfunded tax cuts prompted a sell-off in government bonds and a shock depreciation of the currency. In Italy, borrowing costs shot up this past week after Moody’s ratings agency warned it would slash the country’s debt rating to “junk” if Meloni backslides on planned economic reforms, amplifying fears of a new debt crisis.
Takeaway: While there are big differences between the two leaders, the lesson is the same: Financial markets are allergic to instability, and will quickly punish leaders who fail to convince them that everything is safely in hand. Read more from Paola.
Speaking of Truss, our colleague in London Esther Webber has a great explainer today on the other issues that could trip the British PM up before the end of the year, as MPs return to Westminster.
HOSPITALS UNDER STRAIN: The energy wars set in motion by Russia’s invasion of Ukraine have spilled onto the wards and hallways of health care institutions, whose staff are exhausted and depleted more than two years into the coronavirus pandemic. Now, hospitals are turning down the thermostats, or having to temporarily close units as energy and other costs bite. Some even face closure. Sarah-Taïssir Bencharif has the full story here on how European hospitals are grappling with the rising costs.
**Mark your calendar! The fourth annual edition of the Future Sustainability Week will take place from November 29 to December 1. Take part in discussions about the most current and pressing sustainability policies together with our expert speakers. Join this three-day-long summit, either in Brussels or online, by registering today!**
— Commission President Ursula von der Leyen will speak at the Tallinn Digital Summit.
— NATO Secretary General Jens Stoltenberg will meet Slovakia’s Foreign Minister Rastislav Káčer at NATO headquarters in Brussels.
— Budget Commissioner Johannes Hahn hosts the Annual EU Budget Conference 2022.
— German Chancellor Olaf Scholz meets Hungarian Prime Minister Viktor Orbán in Berlin, 2 p.m.
BELGIAN BUDGET WOES: Belgium’s budget was already sliding off the rails before the coronavirus pandemic. And now a raft of emergency measures to cushion consumers from soaring energy prices are pushing the government into even more precarious territory, writes POLITICO’s Barbara Moens.
State Secretary for the Budget Eva De Bleeker told Barbara the country had no choice but to try to tackle the debt bomb “but at the same time, we have to provide one-off resources to support citizens and businesses during this crisis.”
CONGRATS TO: POLITICO’s own James Randerson and Bloomberg’s Jillian Deutsch, who got engaged at the weekend. Here’s the tweet.
BIRTHDAYS: MEP Katrin Langensiepen; Former MEP Élisabeth Morin-Chartier; European Commission’s Christine Frayne; Vincent-Immanuel Herr of Herr & Speer; OMMAX’s Stefan Sambol; Anca Păduraru-Niculescu.
THANKS to Hans von der Burchard, Mark Scott, Suzanne Lynch editor Emma Anderson and producer Grace Stranger.
**A message from the EPP Group: “We welcome that the European Commission came forward so quickly with a proposal addressing soaring energy prices. Now it is up to the Member States to come to an agreement and act in a united manner. We will not solve a problem if everyone goes in different directions”, says Esther de Lange MEP, EPP Group Vice-Chairwoman in charge of Economy and Environment. The EPP Group has put forward concrete proposals to fight inflation and tackle rising energy costs. Among our recommendations, we call on the Commission to allow all Member States to introduce further temporary exemptions or reductions of excise duties and energy taxes to alleviate the burden on households and businesses. “Zero VAT should apply to fruit, vegetables, dairy and other basic, primary food products in the entire EU, should prices continue to rise in the winter”, says Markus Ferber MEP. Learn more about the EPP Group proposals.**
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