EU-Qatar corruption scandal: big, but not surprising

Good morning and welcome to Europe Express.

Today we’re both writing this newsletter as Belgian prosecutors kept us rather busy yesterday. More on the European parliament’s shocking, but not unpredictable corruption scandal in a moment.

We’ll also hear from Rome where two migrant rescue ships were somewhat surprisingly allowed to dock over the weekend.

And we’ll look at the chances for an EU-Latin America trade deal bonanza and why the new president in Brazil is not 100 per cent good news.

Watching the watchers

The Qatar cash for favours scandal has shaken the European parliament which convenes in Strasbourg this week, but it has certainly not surprised many longtime observers.

To recap, of the four people charged by Belgian police with “participation in a criminal organisation, money laundering and corruption”, three hail directly from the European parliament. Raids on home and parliamentary offices uncovered $600,000 in cash.

Fight Impunity may be the name of the NGO of former MEP Antonio Panzeri, but the charges brought against him and his associates suggest the contrary. Panzeri, who was arrested on Friday in Brussels, served in the EU parliament until 2019. His wife and daughter were also arrested over the weekend at their home in Bergamo, for allegedly having been on an undeclared, Qatar-sponsored €100,000 vacation with him, according to Italian prosecutors. They deny any wrongdoing.

This is not the first time the EP is in the limelight for alleged corruption. In 2011, journalists from the Sunday Times posed as lobbyists offering bribes to several MEPs in return for influence on draft legislation. Three MEPs were convicted and served prison sentences as a consequence.

Multiple other cases of mismanagement of EU funds and straight-up expenses fraud had also engulfed several UK and French MEPs. Some British members made good use of the proverbial “sign in and sod off” tactic, collecting a daily attendance allowance and then heading back home.

As Juvenal asked in ancient Rome “who watches the watchmen?” MEPs pride themselves in holding the European Commission to account — in 1999 they forced Jacques Santer’s commission to resign over corruption allegations. But they largely police themselves.

Olaf, the EU’s anti-fraud office, is overworked and has to forward its investigations to national authorities. The Belgian police are in charge of criminal activity in their country and rarely pursue such cases — except this latest one, which may have been just too big to ignore.

“While this may be the most egregious case of alleged corruption the European parliament has seen in many years, it is not an isolated incident,” said Michiel van Hulten, director of Transparency International in Brussels and a former MEP, who blamed a “combination of lax financial rules” and near-inexistent ethics oversight on creating a culture of impunity in the parliament.

“Every serious attempt to improve accountability is blocked by the Parliament’s ruling bureau, with the acquiescence of a majority of MEPs,” he said.

In September 2021, MEPs did vote to set up a new EU Ethics Body that would be able to initiate investigations on possible conflicts of interest or “revolving door” cases for commissioners, MEPs and staff.

It would have nine members (possibly including former MEPs) and powers of inquiry.

But a year on from the parliament’s vote, commission president Ursula von der Leyen, who pledged to set up the body in 2019, has yet to make a proposal. Perhaps the latest revelations will jolt her into action.

Chart du jour: Migration waves

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

As Covid-19 restrictions ease and economic pressures mount, Europe is recording the highest influx of newly arriving migrants from north Africa, the Middle East and Asia since the migration crisis in 2015-16.

Course correction

Italy’s new rightwing government caused a stir in Europe last month with its stand-off with France over several charity-operated ships that rescue migrants attempting to cross the Mediterranean Sea. But over the weekend, there was somewhat of a course correction, write Amy Kazmin and Giuliana Ricozzi in Rome.

Two NGO ships with a total of 509 rescued people on board were allowed to dock in Salerno and Bari — and all migrants were able to disembark without a hitch.

But Italy’s interior ministry still has no love lost for these charity ships, accusing them of “risky and provocative actions”.

A ministry official said that the government had only given the ships permission to dock because the approaching bad weather and sea conditions would expose the passengers on board to greater risk.

However, the official said NGOs “favour the entry into Italy of economic migrants who have no right to enter and remain in Italy”, and said that the ministry would continue its effort to strengthen the security of Italian borders and “crush the trafficking of human beings”. 

LatAm deals

After finally clinching a trade agreement with Chile on Friday, the European Commission is aiming for a hat trick of Latin American deals in the next few months.

Chile was finally unlocked after France dropped its opposition to increased chicken imports. And Mexico is expected to give the go-ahead to its deal soon, EU officials say.

The biggest deal is proving the toughest. Mercosur is the region’s largest trading bloc (Brazil, Argentina, Paraguay and Uruguay), but there are now doubts on both sides about moving ahead with a pact concluded in 2019 after almost 20 years of negotiations.

The EU wants to add a side agreement about protecting labour rights and the environment — in other words the Amazon rainforest.

As long as populist Jair Bolsonaro was in power in Brazil, that was a non-starter. The recent election of Luiz Inácio Lula da Silva, who has pledged to protect the Amazon, has raised hopes, especially after he travelled to the UN climate conference in Egypt and pledged to reverse course on his predecessor’s anti-environmental stance.

Two developments since have lowered them.

Argentina, the other big Mercosur member has gone public with its doubts. President Alberto Fernández told the Financial Times last week that the deal needed renegotiating as EU imports threatened domestic industry.

On Friday, EU trade commissioner Valdis Dombrovskis ruled out any renegotiation of what he described as a “balanced” agreement.

Also last week, the EU approved its deforestation regulation. Companies will have to conduct strict due diligence with respect to seven commodities and derived products, including palm oil, coffee and timber. They could face fines if they fail to carry out checks and Brussels will also brand countries as at high, standard or low risk for deforestation.

Brazilian officials say there is a big difference between negotiating a joint agreement on the Amazon and having Europe defining deforestation and taking unilateral measures.

The country’s EU ambassador said he expected the country to be deemed “high risk” which would lead companies to avoid its products, regardless of whether they contributed to deforestation.

“The Brazilian private sector has reached out to me and is very concerned about this legislation,” Pedro Miguel da Costa e Silva told Europe Express. This could “create trade barriers, increase the costs of doing business and become a hurdle for small producers”, he added. “Our hope, our expectation is that this regulation will be implemented in full consultation and co-operation with Brazil and other countries.”

Brazil was among 14 countries, including Argentina and Indonesia, that wrote a letter in July protesting the draft law.

Hardly the best, erm, environment to conclude a trade deal.

What to watch today

1. EU foreign ministers meet in Brussels

2. European parliament meets in Strasbourg this week

. . . and later this week

1. EU energy council takes place in Brussels tomorrow

2. EU leaders meet south-Asian countries on Wednesday and stay in Brussels for an EU summit on Thursday

3. European Central Bank decides on key interest rate on Thursday

Notable, Quotable

A central bank can continue to operate, at least temporarily, with a negative capital position

• Central bank woes: The National Bank of Belgium, one of the European Central Bank’s shareholders has said that it expects to make €9bn of losses over the next five years. Other central banks sharply raising interest are also expected to make sizeable losses as they now have to pay more in interest to commercial banks than they earn from other areas.

• Fusion breakthrough: US government scientists have made a breakthrough in the pursuit of limitless, zero-carbon power by achieving a net energy gain in a fusion reaction for the first time.