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Predatorgate — Passenger rights — Crypto trouble – POLITICO

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POLITICO Brussels Playbook

By JAKOB HANKE VELA

with ZOYA SHEFTALOVICH

PRESENTED BY

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GREEK PREDATORGATE: Greek Prime Minister Kyriakos Mitsotakis will make a statement today on the wiretapping scandal that has shaken his country’s political scene.

Refresher: On Friday, local media reported that the phone of Nikos Androulakis, an MEP who is the leader of the opposition socialist PASOK party, had been bugged by the Greek intelligence service. The revelations came after Androulakis filed complaints over an attempt to hack his smartphone with Predator surveillance software.

First heads roll: Both Mitsotakis’ chief of staff (who is also the PM’s nephew) and the head of the intelligence service resigned on Friday, our colleague Nektaria Stamouli reports.

Athens blames foreigners: In the Greek media, government officials claimed that the “legal wiretapping” of Androulakis was carried out at the request of the Ukrainian and Armenian intelligence services, implying the MEP was being spied on because he is too close to Russia and Turkey. Other sources close to the Greek government said foreign intelligence services were interest in Androulakis due to his participation in a European Parliament committee dealing with EU relations with China.

Which backfired: Surprise, surprise, those foreign governments are not amused at being blamed for the Greek spying scandal. Ukrainian Ambassador to Greece Sergii Shutenko said the claims were “divorced from reality;” while Armenian Ambassador Tigran Mkrtchyan called them a “shameless lie.” 

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Coincidence? The surveillance started when Androulakis announced he would take part in an inner-party leadership race.

No contact: The government said in a statement on Friday that it had tried to reach out to Androulakis to explain its position, but he didn’t respond. But PASOK officials said Androulakis only received a text message from State Minister Giorgos Gerapetritis asking him to get in touch.

Please explain: Androulakis in a written statement on Sunday called on the PM to explain why was he under surveillance by the intelligence service and on whose behalf the Predator spyware was being used “against politicians and journalists to collect material to blackmail individuals.”

FISCAL RULES REFORM

GERMANY WEIGHS IN ON NEW EURO RULES: After opening salvos from France and Italy last year proposing to amend the EU’s Stability and Growth Pact (rules governing how much debt bloc countries can take on and how quickly they need to pay it back), Berlin has laid out its position, making important (though expected) concessions but demanding stricter enforcement. “Flexibility must go hand-in-hand with clearly defined limits and with improved mechanisms for enforcing the rules,” Berlin wrote in a position paper released Friday.

What’s in it: As our colleague Paola Tamma reports, Germany wants to have a bigger say in other countries’ compliance with EU fiscal rules. Berlin proposes that national fiscal plans be evaluated by other EU member countries, not just by the European Commission, as is currently the case. It also proposes giving the European Fiscal Board, an advisory body of the European Commission, full independence along with an enforcement role.

It comes after German Finance Minister Christian Lindner, in an interview with German daily Handelsblatt, proposed making EU countries’ so-called medium-term budgetary objectives (MTOs) binding.

Concessions: Crucially, Germany is ready to drop a key rule that governs how quickly countries need to cut their debt levels. Currently, the rule calls on those with national debt in excess of 60 percent of GDP to reduce any debt load over that threshold by a brutal 5 percent per year. That has long been criticized as impossible for heavily indebted countries such as Italy, with a debt-to-GDP ratio of close to 150 percent. Berlin now acknowledges the rule imposes “unrealistic adjustment paths.”

On carve-outs: While dismissing the proposals by France and Italy to exempt green or defense spending from the EU’s debt rules, Berlin does suggest countries could exceed investment limits on a “one-time, narrowly defined basis.”

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EUROPE’S LONG, HOT SUMMER

BRUSSELS MULLS WATERING DOWN PASSENGER RIGHTS: Brussels is mulling watering down rules that force airlines to compensate passengers for long delays, after decades-long lobbying from industry CEOs. The Czech Council presidency has hinted it plans to revive long-dead discussions on revising the EU’s compensation rules, our colleague Mari Eccles reports.

Three-hour window no more: Airlines have long argued it’s unfair that they are compelled to pay compensation after a three-hour delay — which they claim is unlikely to severely impact a traveler’s trip.

How to shoot yourself in the foot: Passenger rights, along with free mobile phone roaming, are among the top positive changes EU citizens associate with the bloc — but that hasn’t deterred Brussels from meddling. The European Commission tried to reform passenger rights in 2013, with a revised proposal that recommends a five-hour window before compensation kicks in and broadens the definition of the “exceptional circumstances” under which airlines don’t have to pay at all.

DROUGHT INTENSIFIES ACROSS THE CONTINENT: Europe is experiencing one of its driest summers, sending national and local authorities scrambling for ways to cope with water shortages.

In Germany, the Rhine is currently experiencing exceptional drought. Levels at the critical bottleneck at Kaub on Sunday fell below 50 centimeters. Freight traffic is already affected and will come to a halt if water levels keep falling, authorities warned. POLITICO’s Joshua Posaner and Hanne Cokelaere have more.

In France, some 93 regions are currently facing water restrictions — with 62 considered in crisis — and more than 100 towns don’t have access to drinkable tap water, instead relying on emergency water trucks. The government launched a crisis task force and hinted at tougher restrictions to secure tap water for consumers, our Pro Sustainability colleague Leonie Cater reports.

In Spain, water reservoirs are at their lowest point since the beginning of the millennium, operating at 40 percent of capacity — a decline exacerbated by an increase in consumption and evaporation due to high temperatures. Some municipalities, mostly in Galicia, Catalonia and Andalusia, have restricted water use.

Over in the UK, which is experiencing its driest eight-month period since 1976, water companies have imposed hosepipe bans in some regions, with residents told not to water gardens, clean their cars or fill swimming pools.

In the Netherlands, the government last week announced a water shortage due to evaporation and very low river supply from abroad. The government said it may implement new measures in the coming weeks to “distribute the water,” such as banning spraying crops with surface water and introducing lock restrictions for ships.

UKRAINE LATEST

ZELENSKYY CALLS FOR SANCTIONS ON RUSSIAN URANIUM: Ukrainian President Volodymyr Zelenskyy called for sanctions on Russia’s nuclear industry and nuclear fuel exports after the Zaporizhzhia power plant in Ukraine was shelled. “Russian nuclear terror requires a stronger response from the international community, [including] sanctions on the Russian nuclear industry and nuclear fuel,” Zelenskyy tweeted after speaking with European Council President Charles Michel over the weekend.

Why Russia’s nuclear energy has not yet been hit: Sanctions could be a problem for Hungary, where Russia’s Rosatom is building new nuclear plants, but also potentially for France’s EDF, which has cooperated with Rosatom on nuclear fuel assemblies, fuel reprocessing and hydrogen production, among other things.

UN demands access: U.N. Secretary-General António Guterres overnight called for international inspectors to be given access to Zaporizhzhia, saying “any attack on a nuclear power plant is a suicidal thing.” Guterres was speaking at a press conference in Japan. Reuters has a write-up.

ICYMI: Here’s a timeline of how Russian President Vladimir Putin sent EU energy prices rocketing, by our colleague America Hernandez.

GRAIN DEAL FEARS: Ukraine’s seaports are finally reopening, but officials in Kyiv are warning that a Russian missile strike could close them again at any moment. “The only risk is Russian behavior,” Ukraine’s Deputy Economy Minister Taras Kachka told our colleagues Sarah Anne Aarup and Eddy Wax in an interview. Nobody knows “if they will shell, or distract, or [if they’ll just threaten] to shell” the Odesa ports or the maritime route itself.

TALKING TURKEY: Ivo Daalder, the former U.S. ambassador to NATO, argues in an op-ed for POLITICO that while President Recep Tayyip Erdoğan’s Turkey is difficult to live with, it’s also nearly impossible to live without.

IN OTHER NEWS

GAZA CEASEFIRE: Israel and Palestinian militants agreed to a truce in Gaza starting Sunday evening after three days of fighting which left dozens dead.

ITALY ELECTION LATEST: Carlo Calenda, the leader of Italy’s centrist Azione, announced on Sunday that his party will withdraw from a center-left political alliance created with the Democratic Party last week, dealing a blow to the coalition’s chances ahead of next month’s snap election. Reuters has more.

JOHANSSON DEFENDS ONLINE CHILD SEXUAL ABUSE LAW: European Home Affairs Commissioner Ylva Johansson has written a blog post defending the EU’s draft child sexual abuse material regulation, proposed in May. The law seeks to clamp down on illegal content on tech platforms, including messaging services, amid a spike in the horrific material, but critics argue it is too invasive.

Making the case: The European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) last month lambasted the Commission proposal, saying it poses “serious risks for fundamental rights.” Johansson gives a “line-by-line response” to the privacy regulators, arguing that “children deserve protection and privacy” and that the Commission proposal “is well-reasoned, legally solid and entirely necessary to fight the scourge of child sexual abuse online.”

US CLIMATE BILL MOVES: Senate Democrats passed their signature climate, tax and health care package on Sunday, in a victory for U.S. President Joe Biden. Our Stateside colleagues have the details.

MORE TROUBLE FOR CRYPTO: Short-sellers are arguing that Tether is lying about its finances and betting that the days of the crypto giant are numbered — in a brewing systemic risk for the entire cryptocurrency system, our fintech correspondent Bjarke Smith-Meyer reports. Tether, which issues “stablecoins” to the crypto market, has dismissed attacks against it as unfounded.

Explainer: Stablecoins are digital tokens that are supposedly tied to a national currency — in this case the U.S. dollar — and backed by a reserve of financial products that can be sold quickly. The idea is that for every stablecoin there is a dollar to back it up, which can be redeemed at any time. That’s made Tether’s USD₮ stablecoin by far the most popular cryptocurrency.

Systemic risk: If Tether collapsed, it would take out much of the market and deliver a huge blow to investor confidence, which is already low, Bjarke writes. That’s because crypto investors use Tether as a safe haven to park their cash between bets. But that doesn’t matter much to short sellers, whose concern is that Tether may in fact not have the reserves it claims.

Open the books: Short sellers are calling on Tether to prove they’re wrong by unveiling what commercial bonds it has in reserve. Tether has refused, stressing the need to protect its brokers’ identity from crypto trolls. All commercial paper will be gone from the reserve by early November anyway, Tether said, promising the fund will only hold cash and U.S. Treasuries bonds from then. Read Bjarke’s full story here.

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BRUSSELS CORNER

BIRTHDAYS: MEP Thierry Mariani; Former Italian Prime Minister Giuseppe Conte, now the president of Italy’s 5Star Movement; POLITICO’s Matthew Karnitschnig; Fauna & Flora International’s Charlie Cooper; Swiss tennis great Roger Federer; Ralph Gonsalves, prime minister of Saint Vincent and the Grenadines.

THANKS TO: Nektaria Stamouli, Bjarke Smith-Meyer, Leonie Cater, Paola Tamma and our producer Grace Stranger.

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Jakob Hanke Vela



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