Coming on the heels of the European Parliament elections – and mere days prior to the EU Council meeting – Southern Europe’s heads of state will come together for the sixth South EU Summit on Friday, June 14, in Malta’s capital city, Valletta. This summit follows a previous informal gathering in Romania amongst leaders of the EU27, which resulted in the signing of the Sibiu Declaration – setting forth intentions to keep Europe united, and safeguard its democracy.
The South EU Summit (also referred to as the Southern EU Countries Summit) was first piloted in Athens a little over two years ago, in September 2016. Bringing together the premiers of France, Italy, Spain, Portugal, Greece, Cyprus and Malta – jointly representing close to 40 percent of the total EU population and GDP, along with half of its coastline – the Summit has evolved into a perennial gathering amongst Southern European government leaders, leveraging similarities across Member States to present a united front on various economic, geopolitical, and policy objectives.
These summits aim to be both a catalyst and a role model for similar dialogue and reform for the EU writ large, while illustrating the function of the region in upholding the core democratic values of the European project. The last South EU summit was held in Cyprus, in January of this year, and issues on the table spanned from Brexit and migration, across to economic growth and climate change; many of which are still outstanding.
But what should we expect from the upcoming South EU Summit in Valletta? Here is our analysis of the main topics that are likely to be discussed this Friday:
Strengthening the EU
The results of the EU parliament elections were a decidedly mixed bag. While eurosceptic parties and the far-right did very well in some states, they were trounced in others, leading to a fractured political landscape – failing to win enough seats to paralyse the EU government, yet gaining sufficient presence to potentially foil the plans of pro-European parties. It is likely that governance will become more unwieldy, rather than less, as more careful compromises will be required.
In addition, a number of top jobs are open in key European Union institutions, and finalising who lands where is likely to involve a lot of horse-trading to reach conclusions amenable to as many heads of state as possible. The five positions that will open up this year, are for the new heads of the European Council, the executive European Commission, the European Parliament, the European Central Bank, and the joint diplomatic service.
The outgoing Parliament has already picked their preferred candidates for the leadership of the Commission. The two top picks are: conservative German Manfred Weber, and Dutch socialist Frans Timmermans. Brexit negotiator and French citizen Michel Barnier, and Denmark’s current Commissioner Margrethe Vestager, are also in the running. To that end, it is probable that the Summit will see the Southern European states work together to develop a unified stance on who will take the post of Commissioner, along with other top posts.
Southern EU heads of state are also likely to develop a unified stance on eurozone reform and models for future growth, with a particular focus on the Multi-annual Financial Framework, which – while still in negotiations – lays out spending plans for the EU’s policies and programmes from 2021 to 2027.
With Brexit looming, it is estimated that Britain’s departure from the Union will generate a hole in the EU budget equivalent to €10 billion per annum. However, new policy priorities such as migration, security, climate change and innovation entail that the EU is expected to do, and spend more. To bridge this gap, EU member states must decide whether to raise contributions, cut funding of existing policies – such as cohesion and agriculture – increase the Union’s own resources by means of additional contributions, or strike a combination of the three.
According to Malta’s Minister for Finance, Edward Scicluna, the heart of the matter comes down to solidarity – one of the EU’s founding principles. “We have new challenges”, said Scicluna in an exclusive interview, “climate change, migration, terrorism, and solidarity, and having one voice for the future (…) then the budget for research and development. Europe is one of the richest blocks in the world and you would expect for them to invest in the future.”
“Unfortunately, there is no enthusiasm for increasing the budget,” warned Scicluna, highlighting the fact that increasing the MFF will ultimately rely on whether net contributors – namely, Germany, France, Italy, The Netherlands, Austria, Finland, Sweden, Denmark and Ireland – have an appetite to increase their contributions.
“You can’t make big dreams and big expectations when down to earth there’s no appetite for giving more, but it would be a tragedy if we reduce the budget, definitely. Europe now wants to make a big stride forward, and to show globally that we are timid, would be a pity, it would be a retrograde step,” concluded Scicluna.
In addition, we expect to see reference made to the European Pillar of Social Rights, which was first proclaimed by EU Commission President Jean-Claude Juncker, in 2017. These twenty principles can be broken down into main categories: equal opportunities and access to the labour market, fair working conditions, and social protection and inclusion. The declaration thus enshrines things like the right to fair wages, the right to healthcare, and gender equality. These core principles are a way to protect the rights of European citizens across the continent, and act as a cultural bulwark against the erosion of the Union.
Migration has long been an important issue, that has been in the limelight of discussions of each and every South EU Summit to date. The majority of Southern EU countries are considered ‘frontline’ countries or ‘hotspots’, having had to tackle the arrival of a disproportionate number of migrants since the peak of the migrant crisis in 2015.
While of diminished importance when push came to shove, migration was a key issue to the EU at large, both during the run-up to EU Parliament elections and in the fallout after the votes were tallied.
“We don’t have the luxury to not talk about migration,” said Malta’s Minister for Foreign Affairs and Trade Promotion, Carmelo Abela, during an exclusive interview. Abela has called for the EU to show solidarity and frankly discuss migration, to find a long-term solution to the ongoing crisis.
While all Southern European states have been on the frontline of the ongoing crisis, as an island nation of only 460,000, Malta feels the pressure especially intensely, and hosts the second-highest number of refugees per capita, with the fourth-highest proportion of positive decisions on asylum applications in the EU. As a result, similar to other Member States, Malta considers the establishment of a common immigration and asylum policy to be a very high priority.
“We need to talk about migration” explained Abela, “and we have been saying this for quite some time now. At times we’re on our own, trying to deal with the situation. At other times we’ve found a number of Member States that came in to help.”
Even so, trying to manage anti-migrant and nationalist tensions has resulted in the drastic cutback of Operation Sophia, which may result in a renewed surge of human trafficking, as European forces in the Mediterranean are rolled back. And just a week after EU Parliament elections, anti-migrant sentiment has spiked again in Southern Italy. This has, in turn, put more pressure on other states, including Malta.
One memorable incident in early 2019, when both Malta and Italy refused to allow a ship carrying 49 migrants from off the coast of Libya to dock, made international headlines. Pope Francis then appealed to European leaders to show “concrete solidarity”, and give the migrants “a safe port”. Malta eventually reached a deal with eight EU countries – including Italy – to divide up and take in the migrants, who had been stranded at sea for weeks.
We therefore expect to see reference made to the EU-Africa Alliance during the Summit. First announced in September 2018, the Alliance was created to boost investment in Africa, strengthen trade, create jobs, and invest in education and skills. At the time of its announcement, High Representative of the Union for Foreign Affairs / Vice-President of the Commission said, “Europe and Africa share many of the same interests: we both want a stronger Africa – with quality jobs for its youth, a better business climate, and peace and security for all. In these years we have started to build a real partnership of equals with Africa. We are already strong political partners, the next step is to be true economic partners, and deepen our trade and investment relationship. We want to give young people opportunities to achieve their aspirations. Boosting responsible investment in Africa is a win-win for both sides.”
At the 5th African Union – European Union Summit in 2017, the parties agreed that economic investment, job creation, and trade were common priorities, requiring a joint commitment, as the EU is Africa’s first partner in trade, and foreign investment, as well as in development.
Supporting investment in Africa poses the possibility of reducing migratory inflows into the EU by tackling the core issues that force people to migrate in the first place: lack of economic opportunity, violence, and instability. In the meantime, countries like Morocco are hard-pressed to limit the flow of migration from Africa to nearby Spain, and other Southern European states.
Similarly, the 2016 EU-Turkey statement was a joint commitment to both ease the plight of Syrian refugees, work to improve conditions within Syria, and work together to curb the flow of refugees to Europe via the Mediterranean, including returning refugees to Turkey in accordance with international law.
“We need to manage the situation, and not try to stop the issue of migration, because it will never stop”, stressed Abela. “But managing it means that we have to find legal ways for migrants to migrate from one place to the other. Today it’s Europe, one day it could be the other way around.”
The EU already has ambitious goals to go carbon neutral by 2050. In May, a joint statement signed by France, Belgium, Denmark, Luxemburg, Netherlands, Portugal, Spain, and Sweden said the EU should have net-zero greenhouse gas emissions by 2050 “at the latest”, demanding a full 25 percent of the EU budget go towards this goal. The group said their plan can “go hand in hand with prosperity” and “set an example for other countries to follow”.
Teen climate activist Greta Thunberg from Sweden took politicians to task ahead of the EU Parliament elections as part of the youth-led strike movement, Fridays for Future, saying that “There’s no political party that’s doing anywhere near enough. It’s frustrating that I can’t vote yet, because this is my future – I’m among the ones who are going to be most affected by it.”
“I just hope that we, during the next five years until the next elections, have really started the transformation required so that we start treating this crisis as a crisis”, added Thunberg. She has met with multiple world leaders and energised millions of youths around the world, and even won a human rights award, but remains frustrated that emissions have yet to drop. She promotes declaring a global climate emergency, a proposition backed by the UK and Ireland, but not her native Sweden.
And the bloc – as a whole – must figure out how to finance transitions to environmentally-friendly policies as part of a five-year agenda. During EU parliament elections, the Greens widely increased their seats, showing that citizens see climate change as a major issue. Unfortunately, there is not a single European country on track to meet the 2030 climate goals, though there is still time to adjust and hopefully, catch up. Finland has already set the bar, as their government wants to go completely carbon-neutral by 2035.
France, Spain, and Portugal have all been investing in new technologies to promote renewable energy and cut carbon emissions, and we are likely to see a laser-focus on these initiatives and ground-breaking new technologies during the upcoming summit.
Cyprus and Energy Security
The “Cyprus issue” has only become hotter since the previous summit in Nicosia, earlier this year. In part, that is due to successful hydrocarbon exploration in Cyprus’ EEZ, potentially offering huge natural gas reserves and greater energy diversity for Cyprus, Southern Europe, and the entire EU. This in turn would reduce reliance on importing natural gas from Russia.
Cyprus currently imports most of its energy needs, and a combination of natural gas and renewable energy infrastructure would put the nation on the path to total energy independence. However, tensions have risen as Turkey has already sent two ships to begin drilling in the area, claiming rights to do so in the name of the citizens of the breakaway Turkish Republic of Northern Cyprus (which is only recognised by Turkey) – to the disagreement and consternation of the United States, Cyprus, and the EU.
Cypriot President, Nicos Anastasiades, described the Turkish drilling bid as “by far the most serious violation of Cyprus’ sovereign rights in a very long time” and an “unprecedented escalation of illegal action” in the region. He added that “the EU should consider the use of restrictive measures against all those involved in Turkey’s unlawful actions in the Republic of Cyprus and the Eastern Mediterranean”.
“The time has come for a collective response to these challenges – with actions beyond the usual messages that have proven ineffective”, Anastasiades concluded.
This, in turn, has stalled attempts made to renew talks over Cyprus between Turkish Prime Minister Erdogan, Greek Prime Minister Tsipras, and Cypriot President Anastasiades.
As a result, the upcoming South EU Summit is expected to pay particular attention to the ongoing tensions in Cyprus, including potentially even reviving the EU accession process for Turkey – thereby bringing Turkey in line with international norms, and holding it accountable for violations thereof.
Blockchain, AI, and Disruptive Technology
Digital innovation has taken the world by storm, and many governments worldwide remain unsure about how to regulate the field. The European Parliament voted in favour of a resolution in October, 2018 on Distributed Ledger Technology (DLT) – the technology underlying both blockchain and cryptocurrencies – setting forth ambitions for the EU to be a leader in the DLT space, while proposing a number of policies to boost the implementation of DLT and associated technologies across the Union.
The European Parliament’s push is part of a broader strategy focused on the regulation of DLT, that was initiated by the European Commission with the implementation of the EU Blockchain Observatory and Forum in February, 2018. And yet, given the nascent nature of the fast-growing industry, regulating the DLT space does not come without its challenges. According to the EU Parliament, any regulatory proposal “should be innovation-friendly (…), be guided by the principles of technology neutrality and business-model neutrality, while at the same time promoting consumer, investor and environmental protection (…)”
However, digital innovation is a major part of the Maltese economy, and an area where it excels – and is undoubtedly leading within the EU. In a world first, in late 2018, Malta launched three new Acts that regulated in favour of blockchain, cryptocurrency, and related industries, under a newly-formed Malta Digital Innovation Authority.
Earlier this year, the island-nation hosted the Malta Blockchain Summit, which brought together 8,500 delegates, earning the island the nickname “Blockchain Island”. Since then, some of the world’s largest crypto exchanges; the likes of Binance, ZBX, and OKEx, have set up shop in Malta.
Shortly after the summit, the six other South EU Summit countries – namely, France, Italy, Spain, Portugal, Greece and Cyprus – followed the initiative taken by Malta, and together signed a declarationto promote and share information and knowledge on the use of DLT in a range of sectors, including shipping, education, healthcare, and company registration. Deepening cooperation within the DLT space, along with its regulation – and the potential implementation of the technology in transforming the economies of the region – is, therefore, likely to be on the table this Friday.
In an exclusive interview, Malta’s Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister, Silvio Schembri, noted that Malta’s economy has grown and diversified thanks to its investment in blockchain, iGaming, and tourism. “We have to keep diversifying our economy so that we will be prepared for future economic shocks.”
“Many times, the Maltese government would say we are a disruptive government – because we try to disrupt ourselves, disrupt our normal way of doing things, and try to come up with a number of ideas”, he continued. “So we must embrace technology, we must embrace a lot of new ideas, and Europe must be home of these [new ideas].”
Through such a strategy – as has been the case with both the DLT and iGaming sectors – Schembri explained that Malta wants to continue to play a leading role within the European Union, when it comes to embracing new technology, and driving digital disruption forward.
“The question that we posed at an EU level was whether the European Union wants to lead or to follow in this area. And our answer to that question was, we want to lead,” says Schembri.
“It’s a question of mentality and it’s a question of whether you are ready to embrace change or not. As a country we are in a situation where we have no other choice but to embrace change. We are a small country, and we cannot dictate international politics simply by our size. But by embracing change we can do that.
In this way, Malta is acting as a sandbox and launchpad for new technologies in Europe, and their regulation, particularly within the DLT space – something they plan to extend to other areas such as AI and IoT as the technologies evolve.