ECONOMY

French fury over submarine deal grows as leaders meet in New York

Good morning and welcome to Europe Express.

It’s that week in September when world leaders gather in New York for the UN General Assembly — the first time in person since the pandemic and with much smaller delegations than usual. The EU’s Charles Michel and Ursula von der Leyen will both be there, focusing on climate talks.

A notable absence is France’s President Emmanuel Macron, who is still fuming from the bruising Aukus deal. By contrast, Britain’s PM Boris Johnson will address the UN assembly in person and will also meet Joe Biden at the White House to cement the security deal and prepare for the upcoming UN climate summit in Glasgow.

Topping off the week will be the highly-anticipated German elections that are taking place this coming Sunday. Last night, the three main candidates to succeed Angela Merkel as chancellor squared off in their last televised debate, with a snap poll among viewers showing Social Democrat candidate Olaf Scholz clearly in the lead. For the latest on where German voters stand and which coalition formations they prefer, do follow our live poll tracker.

Following a rare exercise in EU direct democracy over the weekend in Strasbourg, we explore what the Conference on the Future of Europe has managed to achieve so far.

And we’ll also look at the state of Dutch politics, where ministerial resignations sometimes appear to carry few consequences, prompting some to question the country’s parliamentary accountability.

This article is an on-site version of our Europe Express newsletter. Sign up here to get the newsletter sent straight to your inbox every weekday morning

French fallout

World leaders — at least, a select few — will congregate for an in-person UN General Assembly for the first time since the pandemic this week, writes Anna Gross in Paris. One notable absence will be France’s President Emmanuel Macron, who planned to skip the event even before the surprise Aukus deal came to light.

While Macron passed up the opportunity to meet US President Joe Biden in New York, his spokesperson said that the two will talk over the phone in the coming days. Instead, it will be up to their foreign ministers — US secretary of state Antony Blinken and French foreign minister Jean-Yves Le Drian — to square off in New York during the UN assembly.

Le Drian did not mince his words over the weekend, accusing the US and Australia of duplicity and lying. As for the UK, the French minister said the Aukus deal was yet another proof of its “permanent opportunism”. Britain was the “fifth wheel on the coach”, he said, which is why France only recalled its ambassadors to Washington DC and Canberra, not London.

One of the topics likely to be discussed in the coming days is the suggestion that Canberra opted to terminate its submarine contract with France at least in part because of operational issues, including project delays and cost overruns. (Here is a primer on the nuclear technology Australia opted for instead of the French offering).

During a press conference yesterday, Australia’s prime minister Scott Morrison defended the decision to renege on the A$50bn contract, alluding to the “range of issues earlier in the contract and throughout the contract that we had . . . discussed on numerous occasions”. He also deplored the “great cost to the Australian taxpayer”.

This was a subtle departure from Morrison’s statement earlier in the week in which he made no mention whatsoever of operational problems. Instead, he praised the programme and blamed “accelerating changes to regional security” for making the shift from conventional submarines to the nuclear type.

Could it be that as tensions fray further, more of the project’s past problems get an airing?

Europe tries direct democracy

Voters were the star attraction in the European parliament’s Strasbourg home this weekend as the EU kicked off the first citizens panels of the Conference on the Future of Europe, writes Mehreen Khan in Brussels.

Europe Express was there to witness what is arguably the EU’s first experiment in bottom-up participatory democracy (the Convention of the early 2000s ran by Valéry Giscard d’Estaing was very much a citizen-free zone).

European Commission President Ursula von der Leyen delivers a speech during a debate on ‘The State of the European Union’ at the European Parliament in Strasbourg, France © REUTERS

From Friday to Sunday, 200 citizens from across the EU gathered in the Alsace city to discuss sweeping topics such as Europe’s economy, competitiveness, and culture. “The debates can help politicians see how people see the EU and our problems,” said Kriisti Paakspuu, a 28-year-old IT consultant from Tallinn.

But whether Brussels and its member states really want to listen remains to be seen. The Conference has been beset by internal strife between the EU’s institutions since its inception. Guy Verhofstadt, the parliament’s main representative at the Conference, told the FT about his “battle” to convince the Commission and member states to translate the citizens’ will into concrete outcomes.

That battle is due to rage until the bitter end of the exercise, which concludes next March. Officials running the Conference are already bemoaning the resistance from parts of the EU in taking the exercise seriously. Tellingly, Commission president Ursula von der Leyen gave it only a passing mention in her State of the Union speech last week.

The EU has yet to agree on what a successful Conference means. For some reticent member states, the mere fact that the EU is reaching out to voters is proof enough that it is chipping away at a democratic deficit. They are less concerned about ensuring that its conclusions are fed into future legislation.

Corina Stratulat from the European Policy Centre said some participants in Strasbourg voiced concern about what the fruits of their labour would really be. But she thinks that if the Conference can usher in more attempts at participatory democracy, all will not be lost.

“This is a step further than the EU has ever gone before” said Stratulat. “It is something to build on and can be the start rather than an end of a process.”

Chart du jour: Fossil-fuelled inflation

Line chart of Euro per Megawatt Hour showing European future gas prices are soaring

Benchmark European gas prices have already tripled this year, even before peak winter demand kicks in, raising concerns about inflation rising faster than expected across Europe. The rise in carbon prices is also likely to fuel inflation, economists say. (More here)

Dutch damage control

Resigning is shaping up to become a competitive sport for cabinet ministers in the Netherlands, writes Mehreen Khan in Brussels. 

Sigrid Kaag, foreign minister, fell on her sword last week after parliamentary criticism of the government’s handling of evacuations from Afghanistan. Defence minister Ank Bijleveld followed her out the door.

Their resignations come after the entire cabinet of prime minister Mark Rutte resigned over a tax benefits scandal at the start of the year. 

After resigning en masse in January, most of the Rutte cabinet simply resumed office in a caretaker role following inconclusive elections in March, however. Rutte himself remains interim prime minister.

The fact that recent resignations seem to carry few electoral consequences for governing parties or the politicians themselves risks chipping away at the Netherlands’ famed parliamentary accountability.

Kaag’s resignation may even boost her chances of finally dethroning Rutte as prime minister. Kaag is the leader of liberal democrat D66 party that came second to Rutte’s rightwing liberals in March. Coalition talks between the two have gone nowhere for six months.

Unlike his rival, Rutte also lost a parliamentary vote of censure in April but did not step down from his caretaker role — a decision that Kaag pointedly chastised him for at the time.

The perennial “Teflon man” of Dutch politics has begun to lose his shine after a bruising few months. Rutte’s once-celebrated ability to dodge accountability for government mishaps is threatening to become his biggest liability.

By contrast, Kaag’s decision to carry the can for events in Afghanistan — despite being in the foreign ministry for only three months — may show voters that she really does represent a new style of political leadership.

What to watch today

  1. British PM Boris Johnson travels to New York and Washington to meet US President Joe Biden

  2. EU internal market commissioner Thierry Breton meets US officials in Washington to discuss vaccines, cyber and space policies

  3. French foreign minister Jean-Yves Le Drian speaks in New York on the sidelines of the UN General Assembly

. . . and later this week

  1. EU affairs ministers meet tomorrow to prepare the next European Council and to discuss EU-UK relations

  2. European Commission on Wednesday is set to approve the start of a public consultation on how to tighten the preferred trade status for developing countries

  3. German federal elections take place on Sunday

Notable, Quotable

  • Russia elections: Russia’s ruling pro-Kremlin party is set to renew its supermajority as parliamentary elections conclude. The United Russia party, which backs President Vladimir Putin, was on track to win a majority in the 450-seat State Duma, the lower house of parliament, election officials said after 20 per cent of the vote was counted. Turnout was about 45 per cent, one of the lowest totals on record, according to Tass, a state-run Russian news agency.

  • Charting the Merkel effect: How did Germany change under Angela Merkel’s 16 years of chancellorship? Here are eight charts, including on public investment, green policies, immigration and digital.

  • Brexit gardening: UK gardeners can expect higher prices and a reduced choice of plants in nurseries as a result of more post-Brexit bureaucracy imposed by the UK on imports from the EU, the industry has warned. It now takes 59 steps to import a petunia from the Netherlands.

FT Live event: New opportunities for banking and finance

Join political leaders and CEOs of Europe’s top financial institutions at this Future of Europe event tomorrow, to discover their views on the direction of the banking and finance sector and to assess the appetite for greater integration and collaboration in the post-Covid world.

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Today’s Europe Express team: [email protected], [email protected], [email protected]. Follow us on Twitter: @annasophiegross, @MehreenKhn, @valentinapop.


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