Brussels blinks first in France’s game of chicken over trade deals

Good morning and welcome to Europe Express.

With EU trade ministers gathering in Brussels today to discuss the bloc’s state of play on trade deals with other countries — many eyes will turn to France. We’ll give you the low-down as to why Paris has postponed two agreements until after next spring and what other topics ministers will discuss.

Rekindling our Thursday profile tradition, today we’re looking at Petr Fiala, who is likely to replace Andrej Babis as Czech prime minister — and who couldn’t be more different from his predecessor.

And with the months-long consultation process on the bloc’s future strategy for defence and security finally resulting in a draft paper, I’ll unpack what the so-called Strategic Compass is all about.

Meat-less talks

Trade ministers are preparing for a lively lunch when they discuss the bloc’s recent lack of trade deals today.

Chicken and lamb are unlikely to be on the menu after worries about meat imports prompted France to hold up plans to conclude talks with Chile and New Zealand, writes Andy Bounds in Brussels.

Emmanuel Macron, president of France, has an election to win in April and does not want headlines about cheap foreign food putting farmers out of business.

He had personally lobbied Ursula von der Leyen, European Commission president, to ensure the deals were not signed until after the polls, two diplomats told Europe Express. When word reached Jacinda Ardern, New Zealand’s prime minister and many European leaders’ favourite leader outside the bloc, she scrapped plans to visit Brussels this month.

That has sparked a backlash from other member states, which feel French electoral sensitivities could gum up Brussels’ policymaking wheels for the next five months, especially as Paris takes over the council presidency on January 1.

“It is going to be heated,” said one diplomat, criticising the European Commission for agreeing to delay the deals. “Trade is an EU competence. There is a mandate and the commission should not be stopped by one member state.”

“What is the purpose of EU trade policy? We are good at opening talks but not good at closing them,” mused another EU diplomat. The EU’s Comprehensive Agreement on Investment with China was shelved when Beijing put sanctions on some MEPs.

Talks with Mercosur, a trading bloc of some South American nations, have dragged on for more than a decade and those with Australia are stalled by Canberra’s decision to cancel a French submarine contract to work with the UK and US instead.

It adds to a sense that the EU’s sleek trade cruiser is being encrusted with barnacles slowing it down. In return for access to their consumers, who are becoming more hostile to globalisation, EU leaders say they must ask overseas countries to improve labour and environmental laws.

The parliament and many voters are pushing for more and more conditions in deals on issues such as climate change and forced labour in non-EU countries. The Mercosur deal has been delayed as the EU tries to find a way to commit Brazil to protect the Amazon rainforest.

Today’s discussion includes a request by the Netherlands, backed by Belgium, Luxembourg and France, to debate how the EU can better enforce sustainability clauses about labour rights and other issues in countries that are part of negotiations.

“Is the Christmas tree getting too many balls?” wondered one diplomat in festive mood.

New face in Prague

Petr Fiala could not be a much bigger contrast to the man he is set to replace as Czech prime minister, writes FT’s Central Europe correspondent, James Shotter.

For the last four years, the country has been run by Andrej Babis, a combustible, extroverted billionaire-turned politician. But if all goes according to plan, the central European nation’s next leader will be a mild-mannered former academic, who has authored publications on everything from secularisation to the theory of political parties.

Like Babis, however, Fiala is a relative latecomer to politics.

The bespectacled 57-year-old began his political career in 2011 as chief science adviser to the then prime minister, before becoming a non-partisan education minister. He only joined ODS, the biggest party in the rightwing coalition he led to a surprise victory in last month’s parliamentary election, in 2013.

“He was not part of the political establishment. He entered politics a decade ago . . . as somebody from the new generation,” said Milan Nic, senior fellow at the German Council on Foreign Relations. “This will be a new style, he seems to be consensus-orientated.”

He will need to be.

To oust Babis, Fiala’s three-party Together coalition has teamed up with a second coalition of the Mayors and Independents, and Pirate party. Between them, the five parties control 108 seats in the Czech Republic’s 200-member parliament. But keeping them together over a four-year term will not be straightforward.

“I would say they are all centrist or centre-right parties. But there are different approaches, more conservative or more liberal,” said Vladimira Dvorakova, a political scientist at the University of Economics in Prague. “What could be a problem for Fiala is ODS itself. There are different factions, and for some, Fiala is too moderate.”

Managing his coalition is not the only challenge Fiala will face.

Even before Fiala takes office, there is speculation that President Milos Zeman, who asked Fiala to lead talks on forming a new government earlier this week, could still complicate the process by objecting to some of the proposed cabinet ministers.

Assuming that Fiala can navigate that process, he will then have the small matters of a ferocious surge in Covid-19 cases, as well as vaulting inflation, a yawning budget deficit, and problems in the energy market to deal with. “He’s taking over in a crisis,” said Nic.

Chart du jour: Germanophone anti-vaxxers

Switzerland, Austria and Germany — all German-speaking countries — are experiencing surging case numbers far worse than those of their western neighbours. (More here)

Fear of ‘strategic shrinkage’

Forget FOMO (fear of missing out). Brussels has come up with a new phobia: fear of strategic insignificance. Or as they put it, in the latest draft of the bloc’s Strategic Compass seen by Europe Express: “to prevent the major risk the EU is facing: that of ‘strategic shrinkage’, or the risk of being always principled but seldom relevant”.

The “compass” — a defence and security strategy paper — “is neither a crystal ball for predicting the future, nor a ‘silver bullet’ that will magically enable Europe to develop a common defence policy overnight,” the draft paper reads.

Nevertheless, it puts forward proposals and assessments that will be discussed by foreign ministers on Monday, with the aim of adopting the new strategy in March, under French EU presidency — this being yet another Paris initiative with little buy-in from countries in the east and south which fear this will be seen as a side-project challenging or duplicating Nato.

Here are a few of the ideas in the “compass”:

• Don’t call it an EU army: The bloc should set up a force of up to 5,000 troops by 2025, called the EU Rapid Deployment Capacity — with regular exercises starting from 2023, aimed at improving readiness and interoperability. (Never mind the EU’s existing “battle groups” created in 2007 which have never been deployed.)

• Naval gazing: Next year, the EU seeks to expand its co-ordinated maritime presence in the Indo-Pacific and starting from 2023, organise regular naval exercises.

• Cyber musketeers: The bloc will organise drills on mutual assistance in case of an armed aggression, including cyber exercises starting from next year.

• Defining China: The strategy defines Beijing a partner (on climate change), an economic competitor and a systemic rival that gains from EU divisions, shuts out European companies from its markets and seeks to push its own global standards. China “pursues its policies including through its growing presence at sea, in space and online”.

• Zero-sum Russia: The draft describes Moscow as an “important global actor who attempts to widen its geopolitical sphere of influence based mostly on a zero-sum logic”. Use of hybrid tactics, cyber attacks and disinformation are “part of the reality in dealing with Russia”. The EU strategy aims at engaging the country on climate change while pushing back aggressive acts and constraining its capacity to undermine EU’s interests.

What to watch today

1. European Commission puts forward its autumn economic forecast

2. EU trade ministers meet in Brussels

Notable, Quotable

We will widen our sanctions against Belarus very rapidly at the beginning of next week

• Belarus sanctions: The EU has vowed to broaden its sanctions on the country as it accused Minsk of seeking to destabilise its democratic neighbours by engaging in a “cynical” power play over migration on its borders with member states.

• Brexit clearing: Brussels will extend its temporary permit allowing European banks to access UK clearing houses, heading off a potential threat to financial market stability when the arrangement lapses next summer.

• Google battles: The US tech group yesterday won an appeal at the UK’s Supreme Court, blocking a class-action lawsuit over the tracking of personal data. Over in Luxembourg, however, the EU’s General Court dismissed the company’s appeal against a €2.42bn fine for anti-competitive behaviour.

• Le Covid-vaccin: The EU has approved a deal to buy up to 60m doses of Valneva’s Covid-19 vaccine over two years, boosting the French company’s fortunes after the UK cancelled its order.

• Croatia raid: EU public prosecutors teamed up with the country’s anti-corruption sleuths yesterday to raid the ministry for regional development and EU funds in Zagreb, arresting four people suspected of fraud.

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