EU news focus

EU news focus: 20-26.09.2013 – German elections, economic news, European elections, Iran, Telefónica/Telecom Italia

EU News Focus

In this new edition of our weekly newsletter, we discuss Angela Merkel’s triumph at the German federal legislative elections, initiatives to mobilise citizens in view of the upcoming European elections, diplomatic talks with Iran, and more… 

Internal affairs

German federal legislative elections

On Sunday 22 September, the much-awaited German federal legislative elections took place. The CDU/CSU of Chancellor Angela Merkel obtained one of its best results ever, with 41.5% of the vote, and flirted with an absolute majority of seats in the Bundestag. The SPD (social-democrats) slightly improved their share of the vote, compared to 2009, reaching this time 25.7%. The elections were also marked by the crash of the liberals: the FDP obtained 4.8%, failing to pass the 5%-threshold required to be represented in Parliament. The anti-Euro party Alternative für Deutschland also failed to enter the Parliament, getting 4.9% of the vote. On the left side of the political spectrum, both Die Linke (a party which arose from the ruins of the communists in Eastern Germany) and the Greens lost influence compared to the previous legislature: they respectively obtained 8.6% and 8.4%.

The consequences are important, as Mrs Merkel needs to find a new ally. Indeed, the current coalition partner, the FDP, is out of the Parliament, and despite the CDU/CSU’s brilliant score, Mrs Merkel does not have an absolute majority. An alliance SPD-Greens-Linke is mathematically possible, but not politically, so the two plausible coalitions are CDU/CSU-SPD and CDU/CSU-Greens. The SPD is not very motivated to take part in another “grand coalition” led by Angela Merkel, as it lost many votes in 2009 after the first experience (2005-2009). Moreover, the “grand coalition” would have a nearly 80% majority, thus reducing the opposition to nearly total powerlessness. On the other hand, the relationships between the CDU/CSU and the Greens have deteriorated in the recent months, and the Greens’ disappointing results sparked a series of resignations within the party. In addition, the two centre-left parties want to consult their basis, which may be less ready to compromise than some pragmatic leaders. So, discussions to form a coalition should last a few weeks. The President of the European Parliament, the German socialist Martin Schulz, congratulated Angela Merkel on her victory and reminded of the main challenges lying ahead of the future government and the European Parliament: youth unemployment, smart investment programmes, the banking union and the financial transaction tax.

Sources: Spiegel, Tageschau, Die Zeit, BBC, Corriere della Sera, La Stampa, Le Monde, European Parliament, El País.

Note: Some observers have said that the FDP debacle was a warning sign for Angela Merkel, but this is ridiculous: since when is a leader of one party responsible for the bad results of another party, even if it is the coalition partner? On the contrary, the FDP problems were self-created and German citizens gave a clear mandate to Angela Merkel and the CDU/CSU. However, she will have to compromise on some issues in order to build a stable coalition. From a democratic point of view, an alliance with the Greens would be better – otherwise, the opposition would be marginalised – but Horst Seehofer, leader of the CSU, does not want to talk with the Greens. So, a grand coalition is equally possible, all the more as the Bundesrat (the other Parliament House) has a SPD majority. Negotiations to form a coalition can be expected to last a few weeks, but pragmatism should enable to form a stable coalition within a reasonable amount of time. After that, the new government and the new parliamentary majority will have to deal with urgent domestic and European issues. If you are interested in discovering the European policy programme of the German parties, read here our article.


Some economic news from Europe

Italy’s exports to non-EU countries slightly rose while imports decreased, allowing for a positive Italian trade balance vis-à-vis third countries. And consumers’ confidence reached its highest level in two years. However, alarming signals concerning the Italian competitiveness and industrial decline come from a European report. The des-industrialisation is happening at one of the fastest pace among the EU Member States, even quicker than Greece, although other countries are hit by the problem as well. Spain, which also faces the dramatic consequences of the economic crisis, has become more productive thanks to bolder labour market reforms. The report identifies in particular following handicaps for Italian firms: high energy costs, bureaucracy, low investment in research and innovation, and huge difficulties to access funding.

Meanwhile, in Germany, there are no talks of industrial decline at the moment and the Ifo index which measures business leaders’ confidence rose slightly, although less than expected. The GfK’s index measuring the consumer climate also rose; this is a further sign that the German economy is recovering. Business sentiment also improved in France, though not in the industrial branch.

Sources: Corriere della Sera (trade balance, industrial decline, Ifo index), Republicca, The Guardian.


Initiatives in view of the European elections

The Mouvement Européen France has recently mentioned in its newsletter several initiatives by civil society movements and organisations aiming at mobilising citizens for the 2014 European elections.” helps you to determine which European and national political party is closer to your positions on the basis of the MEPs’ votes during the 2009-2014 legislature. It also offers a game to test your knowledge about European politics. Finally, you can compare the votes of the MEPs with those of the users of the website on 15 topics. The website was set up by VoteWatchEurope with several partners, including the League of Young Voters.” promotes a deeper integration. Created by Daniel Cohn-Bendit and Felix Marquardt, it describes itself as a transnational, intergenerational, trans-partisan and progressive European movement.

In France, the European Movement and the Youth European Federalists are also active with the “Objectif 25 Mai and Ton vote, ton Europe” campaigns.

Finally, let us note the campaign launched by the European Parliament with the slogan “Act, React, Impact”.

International Relations

Diplomacy with Iran

Catherine Ashton, the EU High Representative for Foreign and Security Policy, met Iran’s minister of Foreign Affairs, Mohammad Javad Zarif, in New York. Following the meeting, Lady Ashton declared that the talks had been “constructive” and would continue this week, in the E3+3 (3 EU Member States – France, Germany and the UK – and the USA, China and Russia) meeting that she will chair, and then in October, in Geneva. She welcomed the “energy and determination” of the Iranian minister and expressed hope for future progress in discussions on Iran’s nuclear programme. The minister of Foreign Affairs also met his British counterpart, William Hague, to discuss the Iranian nuclear programme and the Syrian issue and also a gradual restoration of full diplomatic relations.

The Iranian president, Hassan Rouhani, has recently reaffirmed that Iran had the right to civil nuclear power but “would never build nuclear weapons” and was ready to reopen talks about his country’s nuclear programme without conditions. In exchange of the recognition or Iran’s rights, he is ready to full transparency regarding the nuclear energy programme. During the session of the UN General Assembly, Mr Rouhani also met François Hollande, the French President. Mr Hollande, in his speech to the General Assembly, asked for concrete acts from Iran. In an interview with the Washington Post, Mr Rouhani expressed the hope that a deal would be reached within months. Mohammad Khatami, former President of Iran and leader of the reformist movement, urged the Western powers to work with Mr Rouhani, as this was a major opportunity to relaunch diplomatic initiatives and improve the situation in the Middle East.

Sources: BBC (23.09, 26.09), Le Monde, The Guardian (Khatami, live from UN GA), EEAS (European External Action Service).


Obstacles to the Telefónica – Telecom Italia deal…

The Spanish telecom operator Telefónica announced its intention to increase its share of the capital of Telecom Italia. The premium on Monday’s share trading price would be 84.7%. If the deal succeeds, Telefónica’s stake will increase from 46.18% to 70% of Telco (a company created by Telefónica and three Italian banks to protect Telecom Italia from hostile bids from American operators) which itself owns 22.4% of Telecom Italia. The Italian shareholders were frustrated by disastrous financial results in the recent years, and Telefónica wishes to contribute to stabilising Telecom Italia. Telefónica would also have an option to buy 100% of the capital of Telco and then become the major shareholder in Telecom Italia.

However, the deal faces some headwind. The Italian Copasir (Commission on Security, in the Parliament) has raised risks for national security if the network falls within the hands of a foreign operator. The minister of Economy, Fabrizio Saccomani, assured that the government would find a solution to keep the control over the network. Enrico Letta, the head of government, also declared that Italian strategic interests should be preserved in a deal.

The markets were not enthusiastic either about the deal: the trading of the shares of Telecom Italia even had to be suspended for a while because of an excessive price decline. At the end of day, the shares had lost 4.6% of their value. The trade unions also expressed fears and asked for an urgent meeting with the competent minister.

Finally, South American countries also raised concerns about competition in their countries. Indeed, Telecom Italia owns TIM, the second most important operator in Brazil, while Vivo is owned by Telefónica. The minister of Communications indicated that if Telefónica were to fully own Telco, one of the two Brazilian operators would have to be sold. The possible sale of TIM caused its share price to rise by nearly 10%, but Telecom Italia’s boss does not want to hear of it at the moment, claiming that TIM is a very important source of revenue for its struggling Italian parent.

Sources: Corriere della Sera, El País (the deal, Brasil, difficulties).

Next week…

Ministers for Sports and ministers for Culture and Audiovisual Affairs will meet on 1 and 2 October.

And on October 3rd, there will be the “European Competition day” in Vilnius. This event, which takes place every six months, aims at disseminating the competition culture. Stakeholders, members of competition authorities, of national and European judiciary, and of other bodies, meet to share experience on the implementation of competition law and on potential evolutions of the competition policy. For more information, click here.

Source: Lithuanian Presidency of the Council.

Pierre-Antoine KLETHI

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