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EU summit: Leaders endorse temporary measures for energy crunch and dialogue for Polish legal row

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After a two-day summit in Brussels, EU leaders opted for moderation to tackle two of the bloc’s most pressing crises: the ongoing energy crunch and the Polish challenge to EU law primacy.

The two issues were rare items for the European Council, which is considered the supreme political authority of the European Union and usually deals with strategic, long-term matters. But the urgency of both crises thrust them to the very top of the agenda – without yielding major breakthroughs.

On the energy crunch, which has sent electricity bills soaring in recent weeks, EU leaders endorsed the middle-ground approach unveiled last week by the European Commission, which includes measures such as direct income support for vulnerable households, state aid for struggling companies and reductions in taxes and special levies.

All these measures, the Commission noted, must be targeted, tailored and temporary, an opinion shared by Germany and other Northern member states, who are reluctant to forceful intervention.

The executive considers the situation is the result of free market dynamics: countries recovering from the pandemic around the world are thirsty for energy to kick start their economic activity but the stronger demand hasn’t been met by stronger supplies, leading to a pronounced hike in natural gas prices. The surge is expected to last until April.

In the summit’s conclusions, EU leaders commit to make the best use of use of this “toolbox” to provide short-term relief but also urge mid- and long-term measures to make energy prices affordable for EU citizens, secure stable supplies and ensure the transition towards climate neutrality.

The final text, however, doesn’t mention any concrete plans for the long haul, an omission that is seen as a defeat for Southern countries who have been pushing for structural reforms like the creation of a EU-wide strategic gas reserve – an idea championed by Spain – or the decoupling of the electricity and natural gas prices – a cause spearheaded by France.

The energy crunch was the first item of the meeting on Thursday and took up over four hours. Czech Prime Minister Andrej Babiš complained about the impact of the Emissions Trading System (ETS) on energy bills, an assessment disputed by the Commission.

The ETS is a mandatory scheme that puts a price on carbon emissions released by Europe’s most polluting industries, including the electricity sector. Companies have to buy and trade carbon permits in order to meet their industrial needs. Permit prices have also increased this year, from €33 in early January to almost €60 in October.

The Commission estimates this rise has contributed to over a fifth of the total energy crunch, but several Eastern member states have capitalised on soaring bills to attack the EST and, by extension, the EU’s climate policies. Some countries have raised concerns over alleged market manipulation inside the ETS, claims that Brussels said were unfounded.

Still, Babiš, who recently lost reelection, managed to hijack the summit’s conclusions: the text now asks the Commission to “study the functioning of the gas and electricity markets, as well as the ETS market” with the help of ESMA, the bloc’s independent authority of the financial system.

The energy crunch will be further discussed during an extraordinary meeting of national ministers next week and will be revisited by EU leaders in the next summit, scheduled for mid-December.

Polexit before dinner

The talks on energy crunch were followed by a brief discussion around the coronavirus pandemic. Leaders pledged to fight vaccine disinformation, facilitate cross-border movement and boost international donations for developing countries. As of today, only 3% of people in low-income countries have received at least one dose.

Then, European Council President Charles Michel gave the floor to Polish Prime Minister Mateusz Morawiecki, who shared with his colleagues his point of view regarding the defiant ruling issued earlier this month by the Polish Constitutional Court.

In its majority ruling, the tribunal directly challenged the longstanding principle of EU law primacy and openly rejected two key articles of the EU treaties: Article 1, which establishes the conferral of competences from member states to the institutions, and Article 19, which sets up the EU’s Court of Justice (ECJ). The judges said these provisions were incompatible with the Polish constitution.

The verdict is considered unprecedented in nature and is raising fears of an imminent “Polexit” that would put Poland right outside the EU’s legal order. It also brought harsh condemnation from other member states, with Irish Prime Minister Micheál Martin calling it a “slap in the face”.

The debate on Thursday evening had a less combative tone, with EU officials describing a “serene atmosphere”. Leaders reaffirmed the “fundamental” importance of the rule of law and independent judiciary and agreed to use political dialogue with “mutual respect” to find a solution.

“There was a clear message from an overwhelming group of leaders at the table that we are highly worried about the situation in Poland. Of course, there’s always an element of dialogue,” said Dutch Prime Minister Mark Rutte after exiting the meeting on Thursday night.

“But at the same time, there’s also an understanding that we fully support the Commission, most of us, in clearly putting forward the necessary measures to react to what the Polish government is doing.”

European Commission President Ursula von der Leyen has promised to use all of her executive powers to reassert the primacy of EU law inside Poland. Potential actions include opening a new infringement procedure, an avenue already tried and tested with mixed results, or triggering a new conditionality mechanism to freeze EU funds, of which Poland is the largest recipient.

The budgetary scheme, in place since January, has never been used and is considered uncharted territory for Brussels. The Commission is said to be ready to activate the mechanism, but officials prefer to wait for a pending ECJ case that is examining its legal validity. The Council’s renewed calls for dialogue are poised to strengthen the precautionary approach.

Farewell to Merkel

After the Polish debate and right before dinner, Charles Michel gathered all leaders outside the main room to take a family picture and bid farewell to the European Council’s most veteran and influential member: German Chancellor Angela Merkel.

In her 16 years leading Germany, Merkel had guided the EU through some of its greatest challenges, like the Great Recession, the migration crisis, Brexit and the coronavirus pandemic. Many have described Merkel as Europe’s de-factor leader and her green-light is considered a must for any big project.

This month’s summit was Merkel’s 107th and most likely her last before being succeeded by socialist Olaf Scholz, who’s negotiating a three-party coalition with the Greens and the liberal FDP.

The European Council’s family picture, with Merkel on second row.

President Michel paid tribute to her wisdom during complex times and “extreme sobriety” and simplicity of character, as well as to her scientific mind and intellectual curiosity.

The European Council without Merkel is like “Rome without the Vatican or Paris without the Eiffel tower”, said Michel.

“You are a compass and a shining light of our European project.”

Angela Merkel, together with Swedish Prime Minister Stefan Löfven, who’s also departing, were handed a personalised gift from their colleagues: an artistic impression of the Europa building, the seat of the European Council.

Merkel received a standing ovation, although she was later placed in the second row for the family picture, whereas Emmanuel Macron was put next to Michel in the first line.

On Thursday, leaders also debated trade, foreign relations and preparations for the COP26 summit, while on Friday they touched upon migration management and digital transformation.

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