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EUROPEAN UNION

EU commissioner seeks Balkans reforms

EU Enlargement Commissioner Štefan Füle has urged candidate countries to step up reforms so their efforts to join the European Union have an immediate impact on people and the economy.

EU commissioner seeks Balkans reforms
Štefan Füle. Photo: European Commission

"I am talking about not just reforms but credible ones. Bringing the benefits of the accession process to the people throughout the process rather than at the end," Füle told journalists at a Western Balkans conference in Vienna.

"Enlargement is not just a ticking-of-the-boxes exercise, but delivering on a track record," he said.

Füle's comments came just two weeks after European parliament elections saw anti-EU parties hostile to further enlargement scored major victories in several member states.

At a time of increasing reluctance to accept new members into the European Union, Füle hailed enlargement as the EU's "most powerful instrument" to bring about reform in aspiring countries.

The commissioner also spoke amid rising concerns that countries have not been adequately prepared for membership despite reforms made to join the EU.

Failure to undertake deep economic reforms are seen as a major reason why Croatia, the second former Yugoslav nation to join the EU, has seen its economy stagnate since joining last year.

Bosnia's efforts to join the EU suffered a setback earlier this year when Brussels cut back aid after the nation failed to remove laws that restricted the rights of minorities to hold senior political offices.

Meanwhile Serbia, which began EU membership talks in January and hopes to join the bloc by 2020, called it a "national priority" and appealed for the process to be completed swiftly.

"Serbia is committed to membership in the EU. We think that this work should be done as soon as possible," Foreign Minister Ivica Dacic told journalists.

He also called for continued talks with Kosovo, although Belgrade still refuses to recognise the independence of its former province.

"We should support the continuation of the dialogue with Pristina and the reestablishment and maintenance of stability and peace," he added.

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ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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