The statement outlines that the trading of shares with a European Economic Area (EEA) ISIN on a UK trading venue in UK pound sterling (GBP) by EU investment firms will not be subject to the EU STO. This currency approach supplements the EEA-ISIN approach outlined in a previous ESMA statement of May 2019.

This revised guidance aims at addressing the specific situation of the small number of EU issuers whose shares are mainly traded on UK trading venues in GPB. ESMA, based on EU-wide data, regards that such trading by EU investments firms occurs on a non-systematic, ad-hoc, irregular and infrequest basis. Therefore, those trades will not be subject to the EU STO, under Artcile 23 of MiFIR. 

ESMA has done the maximum possible in close cooperation with the European Commission to minimise disruption and to avoid overlapping STO obligations and their potentially adverse effects for market participants. The approach put forward by ESMA will effectively avoid such overlaps if the UK adopts an approach that does not include EEA ISINs under the UK STO. ESMA however notes that the scope of the UK STO after the end of the transition period remains unclear at this stage.

In the absence of an equivalence decision in respect of the UK, the potential adverse effects of the application of the STO after the end of the transition period are expected to be the same as in the no-deal Brexit scenario considered in the previous ESMA statement.

The application of the STO to shares with a different ISIN should continue to be determined taking into account the previous ESMA guidance published on 13 November 2017.

NATO was created in 1949, with the dual aim of keeping the peace among the Allies and providing a security alliance against the Soviet Union, there has been a tension between whether or not NATO should drive the security agenda in Europe.

Since 1949, a number of European-wide organisations have tried to coordinate European defence policy – from the failed attempt at a French proposal for an integrated European Defence Community in 1954, to its alternative, Western European Union (WEU), former association (1955–2011) of 10 countries (Belgium, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom) that operated as a forum for the coordination of matters of European security and defense.

The precursor to the EU, the European Community, didn’t really put security matters on its agenda. So it was in the mid-1990s following the Maastrict Treaty that the newly-formed EU began to develop its own common foreign and security policy and the relationship with NATO began to shift.

NATO had already developed a good working relationship with the WEU, but this really became relevant in 1996 with attempts to use the WEU as an institutional bridge between the EU and NATO. As long as the EU remained an organisation without a defence component to support its common security policy, and NATO an organisation focused strictly on collective defence of its members, the EU had little need to develop military ties with NATO. However, as some EU member states started to consider an autonomous EU defence and security instrument towards the end of the 1990s, this relationship became unavoidable.

After a 1998 joint summit between the UK and France at Saint Malo, the formal process began towards creating the EU’s Security and Defence Policy (ESDP – now termed CSDP). Attention started to focus on an alternative arrangement to the WEU as the bridge between the two institutions.

Once the EU formally adopted the WEU’s “Petersberg Tasks”, which set out the conditions under which militaries could be deployed, the relationship between the EU and NATO changed from one of informal meetings to something more institutionalised. Formal committees and structures began to be mapped out by 1999.

However, cultural and institutional differences between the EU and NATO still had to be reduced before any official arrangements could be finalised. NATO retained a very strict security regime dating back to its Cold War years, while in contrast, the EU was designed as an open and transparent organisation. In order to adapt to a stricter security policy, the EU modelled its security framework on NATO. This was also helped by the fact that most EU states have also been NATO member states – currently 22 are members of both.

A new Era of EU-NATO Cooperation

EU-NATO relations facing new challenges and these are confronting both the European Union NATO today are severe and complex, including terrorism, refugee and migration crises, hybrid threats, disinformation. The importance of EU-NATO cooperation, based on shared values and interests, has become more critical than ever.

Both organizations need to pay growing attention to hybrid threats. A shared understanding is gradually emerging about the need for active countermeasures and improved resillence to malicious influence by external actors seeking to undermine Western democracies and current international order. The EU in particular has an important role to play in strengthening Europe’s resillence, but has yet to buil a coherent response including shared analysis drawing on relevant EU policies and improved crisis-response mechanisms. The second major challenge, capability development, has been at the focus of EU-NATO cooperation ever since the creation of the EU’s Common Security and Defence Policy, but with few results. New EU initatives are being developed which can potentially make an important positive contribution also to NATO.

EU and NATO Member States are slowly waking up tp the new reality that there will be no bussiness as usual. It is hard to dispute the extensive progress the EU and NATO have made in deeping their cooperaiton. However, the direction in which the relationship should head is far from being decided. Some argues that there is a need for NATO to Europeanise as a result of the EU’s increasing strategic autonomy. The argument goes that if the EU were progressibely phase put its defence related dependence on the US, NATO could become primarily European. In contrasts, others see the feasibility of division of labour between the two, one that could eventually be conducive to an EU-US alliance in lieu of NATO as such. Others meanwhile argue for a US withdrawal form NATO and for leaving European security to the Europeans.

As Members of the European Parliament we will have to take important decisions that will make one or the other of these options a reality.

Twitter : @r_czarnecki

Ryszard Czarnecki:
Politician from Poland, Former Vice-President of European Parliament, Minister of European Affairs and Minister in Prime Minister Office

The European Union achieved spectacular market success this month when it launched its new “Support to mitigate Unemployment Risks in an Emergency” bond programme (SURE). 

The €100bn programme will be used by the EU to support member nations addressing pandemic job security and social welfare weakness over the next year.  

The first €17bn bond issue off the SURE programme achieved perhaps the largest order book for a financial asset in history: €233bn in demand from investors. 

Read more: Deja vu: Eurozone businesses back in decline as Covid cases jump

That could mean a number of things — that investors just love the EU, or most obviously that the deal was mispriced too cheaply. And the 10-year bond tranche was sold at a negative yield.

But credit where credit is due, the deal’s success is truly remarkable. No doubt it will win every Debt Capital Award there is (yes, there are such things). It represents a real turnaround for the EU, which actually managed to agree an initiative to finance jobs and growth, and got the plan underway.

The staggering demand for the bond also highlights just how easily nations are financing the emergency costs of the pandemic in today’s ultra-low interest rate environment via increased borrowing — something the US and UK should be watching carefully.

The truth is investors value the European Central Bank Put: the ECB can buy up to 50 per cent of the deal via its quantitative easing programmes, therefore guaranteeing liquidity in the bond.

However, like all things involving Brussels, it’s really not just a simple success story. 

For a start, the ECB is now tied into guaranteeing liquidity in perpetuity. The merest hint that the QE programme is not perpetual will cause the price of all its bonds to crash. Should the ECB ever try to raise European rates, the price of all bonds will demonstrate the effects of financial gravity — and destroy the reputation of the EU as an issuer.

The real story that the EU doesn’t want to talk about is how the SURE Bond Issue represents a massive step forward in the creation of the European Superstate — bypassing any meaningful discussion of what that entails for European democracy. What the EU bond achieves is the transfer of fiscal sovereignty from member nations to Brussels. And no one got to vote on it. 

Back in Frankfurt (the not-quite-the-centre of European finance the Germans imagine it to be), that solo EU critic, Bundesbanker Jens Weidemann, has been desperately warning against EU joint-borrowing initiatives. If it happens, he argues, it should be strictly one-off, and should not become a common budgetary tool. 

Sadly, no one is listening to Weidemann. He is a lone voice in the Frankfurt financial wilderness..

Pre-euro, the Germans had the curious notion that countries joining the Eurozone would meet the strict membership rules of the single currency by exercising sound fiscal responsibility, reforming their economies, and ensuring solid accountable finances. Silly Germans. 

There are no doubts as to the credit quality of the EU bond. Moody’s, the credit rating agency, rates the EU as Aaa (the same level it rated a lot of stuff before 2008). Although Brussels is out raising new EU debt, the EU has still not agreed on banking union, common fiscal policy, or closer political tie-up. All that is agreed are the rules of the monetary union restricting how much states can borrow and the size of deficits — rules that are completely unenforceable in the current pandemic economy. 

The new SURE Bond was sold as near-equivalent to the German Bund, but yielding 40 basis points more. Its equivalency to German state debt is “implicitly” true. Note the subtle difference: it’s true, but not “explicitly” true. (That’s what being a debt capital markets banker teaches you.) Although there is no joint and several liability requiring EU members to repay the bond, it’s hardly imaginable that the Germans would ever walk away if Brussels found itself unable to repay… or is it?

What all this essentially shows is that the implicit guarantee promises of the bond are yet another Brussels fudge, hoping the wobbly construct never gets tested. Every single investor who bought the bond understands this was a cheap Bund — just don’t tell the German political classes they are on the hook for it.

Funding Europe directly from Brussels very much suits the agenda of the autocracy of EU bureaucrats whose objective is oversight over member states’ budgets (and everything else), and also of the ECB (for the same reason). ECB president Christine Lagarde is not a banker or economist, but a very smooth French political operative. She sees common issuance of “Eurobonds” to finance Europe as a convenient policy tool to quell dissent between members over the impossibly troublesome monetary rules, and to centralise control of European debt.

After next year’s Recovery EU bond binge, the next stage will be an initiative to coordinate and align the joint issuance of European debt. It already looks inevitable. It will be argued that a larger, more liquid single European sovereign bond market will improve funding and the economic relevance of the EU. The fact it further diminishes national sovereignty will be a small price to pay. 

Lagarde wants joint issuance to be part of her armoury. That plaintive wail you heard in the wind was Weidemann’s warning that “closer political integration would be needed and for the EU to develop into a democratic state” before common bond issuance is even contemplated — but the reality is it has already happened. The fantastically successful SURE bond was the first step in Brussel’s state-capture of European states financial sovereignty. 

European states will no longer need to go to the market to raise euros to bulwark unemployment or stem job losses — now they apply to Brussel for handouts. No longer will they need to finance much-needed projects via markets in their own name.The new EU funding programmes fit perfectly with the rules of single currency membership: independent nations can’t run up large state deficits under the terms of the euro, but client states beholden to Brussels just need to ask nicely.

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p class=”wp-block-tpd-block-tpd-read-more-block”>Read more: MPs ‘seriously concerned’ that British businesses are not ready for Brexit

Main image credit: Getty

The European Union has allocated P3.76 billion in green financing as part of its commitment to support the Philippines’ sustainable economic activities.

“The EU, therefore, stands ready to continue its engagements with the Philippines on approaches to ensure environmentally sustainable economic activities,” said  Thomas Wiersing, Chargé d’affaires of the EU Delegation to the Philippine in a speech at the webinar on ”State of Play: Green Recovery and Sustainable Reporting” organized by the EU.

According to Wiersing, the P3.76 billion fund under EU’s Access to Sustainable Energy Programme “responds to the Philippines’ goal to increase energy access, promote renewable energy sources to decrease the use of polluting power sources and reduce the negative impact on the environment and health.”

The fund also supports the Philippines’s thrust in making energy efficiency and conservation a national way of life, he said.

Wiersing cited the Philippines for pursuing the implementation of an ambitious climate adaptation and mitigation pledge with EU support in line with its ratification of the Paris Agreement.

On top of the financing aspect, the top EU official of the EU Delegation to the Philippines is also collaborating with the Department of Science and Technology on the delivery of a national support project on remote sensing centered on the EU Copernicus Earth Observation program.

He said, EU has reconfirmed its commitment to a green, digital, and resilient recovery and will stick to its goal to be climate neutral by 2050.  “The European Green Deal provides an action plan to boost the efficient use of resources by moving to a clean, circular economy, restore biodiversity and reduce pollution,” he said.

Meanwhile, Finance Assistant Secretary Paula Alvarez, in a presentation at the same webinar, cited the  EU assistance and international cooperation with EU countries for green finance or sustainable financing towards more green and resilient projects especially at this time that the effects of the pandemic have negatively limited the government’s budget.

Alvarez said that due to the COVID 19 pandemic and the impending threat of climate change, the Philippines is also one of the most disaster-prone economies.

She noted that strong typhoons such as Yolanda, Sendong, Pablo cumulatively

claimed over 3,000 lives and affected 10 million people. “The economic damages caused by these typhoons and the losses amounted to approximately P256 billion,” she said adding this amount is projected to increase on a long-term basis because of climate change effects.

The Philippines is also located in the Pacific Ring of Fire. In addition, there will an estimated additional 8.3 million vulnerable Filipinos by 2022.

This means the government has to spend more money to keep these Filipinos relocate to much safer areas.

from the but-massive-lobbying-and-dirty-tricks-will-soon-fix-that dept

By Glyn Moody

The EU is now starting to work in earnest on what is likely to be its most important new law for the online world, the Digital Services Act (DSA). Techdirt wrote about this last year when the European Commission started sketching out (bad) ideas for the new law. The basic impetus for the DSA is to replace the EU’s e-Commerce Directive, which was passed 20 years ago and is clearly in need of an update. As the European Commission’s page on the DSA explains, there are two core elements:

First, the Commission would propose clear rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights. The legal obligations would ensure a modern system of cooperation for the supervision of platforms and guarantee effective enforcement.

Second, the Digital Services Act package would propose ex ante rules covering large online platforms acting as gatekeepers, which now set the rules of the game for their users and their competitors. The initiative should ensure that those platforms behave fairly and can be challenged by new entrants and existing competitors, so that consumers have the widest choice and the Single Market remains competitive and open to innovations.

Those aims mean that the DSA touches on several of the most contentious issues in the online world, such as the introduction of mandatory pan-European rules for tackling online hate speech and disinformation, and efforts to control platforms that are “gatekeepers” — basically US companies like Google and Facebook. In other words, the DSA is going to be important, and not just for the EU. One of the key players in the drafting of the DSA is the European Parliament. The good news is that in a series of votes MEPs have made clear that they want protection for key human rights to be an integral part of the new law.

The votes concerned reports from three of the Parliament’s specialist committees: those for the Internal Market and Consumer Protection, Legal Affairs, and Civil Liberties (pdf). The three reports are couched in a rather impenetrable EU-speak; fortunately, the European Parliament has put out a press release on the votes that provides a more comprehensible summary of the three reports. The European Parliament is quite open about what the EU hopes to achieve with the DSA: “With the upcoming package, the European Union aims to shape the digital economy at EU level as well as setting the standards for the rest of the world, as it did with data protection.” One of the priorities of the DSA is tackling illegal content online. On this, MEPs say:

A binding “notice-and-action” mechanism must be set up so that users can notify online intermediaries about potentially illegal online content or activities. This would help online intermediaries to react quickly and be more transparent regarding the actions they have taken on potentially illegal content. Users should be able to seek redress through a national dispute settlement body.

The European Parliament wants a distinction made between illegal content and harmful content, with a legal liability only for the former. MEPs say that there should be no general monitoring of users, and that platforms should not use upload filters for controlling harmful or illegal content: “The final decision on whether content is legal or not should instead be taken by an independent judiciary and not by private undertakings”. It’s hard to square that with the awful Article 17 of the EU Copyright Directive, which inevitably requires precisely this kind of upload filter to block allegedly infringing content. MEPs say that harmful content should be dealt with through “enhanced transparency obligations and by helping citizens to acquire media and digital literacy regarding the dissemination of such content.” According to the European Parliament, another priority of the DSA should be enhancing consumer protection and user safety:

Platforms and online intermediation services will need to get better at detecting and taking down false claims and tackling rogue traders, e.g. those selling false medical equipment or dangerous products online, as happened during the COVID-19 outbreak.

MEPs also call for a new “Know Your Business Customer” principle to be introduced, requiring platforms to check and stop fraudulent companies using their services to sell their illegal and unsafe products and content.

More controversial is a call for rules to prevent — not merely remedy — what MEPs called “market failures by big platforms”. The stated aim is to open up markets to new entrants. Some of the most striking ideas to emerge from the reports are: to allow online users to opt out of content curation, to be informed if a service is enabled by AI, and to ban microtargeted advertising:

Targeted advertising must be regulated more strictly in favour of less intrusive, contextualised forms of advertising that require less data and do not depend on previous user interaction with content. MEPs also call on the Commission to further assess options for regulating targeted advertising, including a phase-out leading to a ban.

As Techdirt has noted, such targeted advertising doesn’t really seem to bring much in the way of benefit to advertisers, but certainly causes people to be tracked relentlessly, and huge amounts of personal information to be gathered. Getting rid of it in the EU could encourage companies to re-think their advertising strategies globally, just as the GDPR has had a big knock-on effect on data protection everywhere. That would be welcome, as would a move to enshrine in the DSA a right to use digital services anonymously “whenever possible”. Adding a right to strong encryption without backdoors would be even better: at the moment, one report simply “Stresses the importance to apply effective end-to-end encryption to data”.

Two of the reports approved by the European Parliament are what are known as “legislative initiatives” (PDF). Although not binding on the European Commission, such initiatives require a much fuller response if any of the proposed ideas are rejected. This gives the European Parliament’s ideas more chance of making it into the final text of the DSA. Against that, some of the most powerful companies in the world will be deeply affected by the EU’s new law, which guarantees years of fierce lobbying and dirty tricks, as the dispiriting experience of the Copyright Directive demonstrated.

Follow me @glynmoody on Twitter, Diaspora, or Mastodon.

YEREVAN, OCTOBER 25, ARMENPRESS. The European Union considers unacceptable Turkish President Recep Tayyip Erdogan’s remarks addressed to French President Emmanuel Macron where he said that the French President needs “mental treatment, EU’s High Representative for Foreign Affairs and Security Policy Josep Borrell said on Twitter.

“The statements of the Turkish President addressed to the French President are unacceptable. We call on Turkey to stop that dangerous confrontation chain”, Borrell said.

He also stated that the conclusions of the European Council contain a real proposal for restoring the relations with Turkey, however, added that the political will of the Turkish authorities is needed for this positive agenda.

“Otherwise, Turkey will be further isolated”, he said.

Editing and Translating by Aneta Harutyunyan