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Spotlight Issue

Politics: New Juncker Commission made public

12 September 2014

The President-elect of the European Commission published last Wednesday (10 September) the distribution of the Commission portfolios among the 27 Commissioner-nominees. Also, he presented a new way of working of the European Commission, better suited for today´s challenges the EU is facing. The main point is strengthening the Vice-President positions. The new Commission will have 7 Vice-Presidents, of whom one will be High Representative-appointee Federica Mogherini, and one will be a “First Vice-President”, a true right hand of the President according to Mr Juncker. The post of the First Vice-President was attributed to the Dutch Frans Timmermans. The other five Vice-Presidents are distributed among four ex-Prime Ministers (Bratušek, Katainen, Dombrovskis, Ansip) and the Bulgarian K. Georgieva. Each of the Vice-Presidents will newly be responsible for a “project” and will work closely with a “project team” of Commissioners. Some of the “projects” are quite close to one another, which will necessitate close cooperation of the two teams. Also, some Commissioner portfolios make part of more than one project teams. The “projects” are better regulation, growth and jobs, energy union, digital market, the euro and budget. As seen above, four of the Vice-Presidents are from new Member States and 3 out of 7 are women.

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Economic Policy: Czech Natural Gas Reserves

14 September 2014

On Tuesday 9th September Minister of Industry and Commerce Jan Mládek visited natural gas reservoir in Háje near Příbram. This reservoir belongs to RWE company that owns 92 % of total natural gas storage capacity in the Czech republic. Minister was pleased to hear that the reservoir of natural gas are now at their full capacity. The capacity of RWE owned reservoirs is around 2.7 bn cubic meters. As representatives of RWE said the reservoirs are at their full capacity approximately one month earlier than usual. RWE chose to speed up its winter preparations as a reaction to the situation in Ukraine. The reserve of 2.7 bn cubic meters according to the RWE equals to approximately one third of Czech yearly consumption.

In its survey the team of university of Cologne (Germany) simulated the case where the Russia would stop its supply of natural gas to Europe. Some of the states such as Finland are completely dependent on Russian gas and as it has no reservoirs it could use in the event of Energy crisis it would feel the impact almost instantaneously. On the other hand the Czech Republic belongs to those countries that would even after 6 months forced to use almost no restrictions. In her interview on Sunday 14th September the director of Energy Regulation Department Alena Vitásková said that the legal framework dealing with the energy security needs to be renewed and made stricter as she wants the companies to have resources for the whole winter to be stored on the territory of the Czech Republic. She also spoke of the dispute between ERÚ and Net4gas about the costs of construction of the new pipeline Storch II and Moravia that would mean access to the newly built terminal for the liquefied natural gas in Poland. Net4Gas feels that it has no obligation to build another pipeline because it already used the customers’ money and invested to into domestic infrastructure.

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Politics: Another wave of economic sanctions against Russia comes into effect

12 September 2014

Following the special meeting of the European Council of 30 August, the Committee of Permanent Representatives was presented on 3 September with a set of new restrictive measures prepared by the EEAS and by the Commission. These are seen as EU´s reply to the undeniable fact of Russian military presence in Eastern Ukraine. The sanctions were formally adopted by the Council on 8 September through a written procedure, but their application was postponed until last Friday (12 September) due to the cease-fire negotiated by Ukraine with the pro-Russian separatists. By the end of September, the Council will assess the eventual progress in the peace negotiations between the two fighting parties and if it is satisfactory, EU might take action and lift some of the sanctions. President of the European Council has stressed that EU´s sanctions are always conditional and scalable according to the actual situation.

The recent wave of sanctions bans providing loans to 5 largest state-owned Russian banks, as well as buying their bonds with a period of maturity longer than 30 days. These financial measures are now active also against 3 major defense and 3 major energy companies. Brokering of deals involving one of the mentioned financial instruments is also prohibited. Providing services related to deep-water or ice drilling or shale-gas to be carried out one the Russian territory is also prohibited. Also, export of dual-use goods has been further limited. As usual, more persons and entities were added to the visa ban and asset freeze list. These include now also persons taking action against Ukrainian territorial integrity, the leadership of the Donbass rebels, the government of Crimea and some Russian politicians and oligarchs.

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Economic Policy: ECB tries to tackle low inflation and growth, indicates important financial institutions

05 September 2014

At the meeting of the ECB Governing Council on Thursday 4 September, the eurozone´s central bank took an expected step and announced bond-buying program in an effort to reverse the low inflation and growth prospects. Eurozone´s growth reached only 0.2% in the first half of 2014 and the inflation rests far below the ECB´s 2% target – it reached only 0.3%. Starting in October, the central bank will start to buy debt products from commercial banks. This should provide credit incentive and foster growth of GDP and of inflation. Also, the continuation of the cheap loans providing program was announced. Together with these unconventional measures, the Governing Council of the bank decreased its main refinancing interest rate to a new record low of 0.05%. The deposit facility interest rate was also lowered to -0.20%. Mario Draghi, President of the ECB, indicated that not all the decisions were consensual, although a comfortable majority was found. He also called on eurozone governments to proceed with structural reforms. He stressed, that politicians cannot rely on the central bank to provide for growth. Reforms and fiscal measures are also needed, both of which lie in the hands of national politicians.

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Politics: European Council decides on top EU posts

31 August 2014

On 30 August at a special meeting of the European Council in Brussels, the heads of state and government of EU Member States completed the quartet of top EU posts for the next institutional cycle. Following the appointment of Jean-Claude Juncker as President of the European Commission and the election of Martin Schulz by the MEPs to the post of President of the European Parliament, the EU leaders elected the successors of Herman Van Rompuy, President of the European Council, and Catherine Ashton, the High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the Commission. The European Council will be headed by the incumbent Polish Prime Minister Donald Tusk and the current Italian foreign minister Federica Mogherini will be responsible for the EU´s foreign policy. Both will have to resign their current posts to take up their new responsibilities later this year. Ms. Mogherini was appointed after consultation with Mr. Juncker, as she will act as his Vice-President in the Commission as well. As a member of the Commission, she will be “grilled” by the MEPs and then put to a vote by the EP plenary.

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